Alliance Nixes Surgery Centers
GRAND RAPIDS — If the Michigan Department of Community Health's track record of following the Alliance for Health's recommendations holds up, two West Michigan surgery centers will be voted down in Lansing next month.
At a Dec. 15 meeting, the Alliance's evaluation board voted to advise the state not to grant certificates of need (CON) for proposed ambulatory surgery centers (also known as "surgicenters") in Big Rapids and Muskegon. The state will weigh the board's recommendations when it makes a final determination no later than Jan. 31. Alliance President Lody Zwarensteyn said that the department of community health has historically agreed with the Alliance's recommendations "99 percent of the time."
The evaluation board found that neither the Big Rapids proposal nor the
In the case of the Big Rapids surgery center proposed by West Michigan Surgery Center LLC, the board's major argument was that the applicants could not provide a satisfactory revenue forecast. More than one third of the proposed second-year revenue for the single operating room facility was forecast to come from Medicaid and Blue Cross Blue Shield of Michigan payments. That, according to the
"It apparently is the practice of Blue Cross Blue Shield of Michigan not to accept rural, single-room, multi-specialty surgical facilities, and the proposal indicates that 29 percent of its revenue will come from Blue Cross in its second year of operation. This is questionable at this time," the evaluation board wrote. "If unrealized, such a large proportion of revenue would seriously jeopardize the financial feasibility of the project. The state CON statute requires a positive finding that funds will be available to meet the project's operating needs."
In addition to the potential Blue Cross shortfall, the state's Medicaid program does not currently pay for treatments performed in ambulatory surgery centers. That may be in the process of changing, but not by 2006.
Medicaid officials recently indicated they may consider opening the program for participation … in 2008," the
The Alliance, which has a role in the CON process hinging on its mission to contain health care costs for the West Michigan community, also found that the Big Rapids area did not have enough demand to require the construction of a new facility.
"There is no pressing community need for the added capacity that will be represented by the
In the case of Muskegon SC LLC's application to initiate a three-room surgicenter in
However, the evaluation board seemed to consider some of the math in the application to be a bit fuzzy. The
In addition to these financial concerns, the evaluation board also found that the facility's plan "intends to offer desirable working hours and competitive wages and benefits to help attract staff. If successful, this may have the effect of aggravating shortages at other locations." The facility's potential to take business away from
The evaluation board did say that if the applicants could "clearly address questions raised about financial feasibility" that "the project can be considered to meet the minimum CON review standards for surgical services and is eligible for endorsement at that time."
However, changes in those standards were just approved by the CON Commission, allowing that only surgical procedures performed in licensed operating rooms can be counted in a CON application. If the legislature and the governor sign off on the changes before the department of community health makes a decision on the
In addition to the Big Rapids and