Future Shaky For Surgery Centers

January 13, 2006
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GRAND RAPIDS — Call it a “no” and five “maybes.” With those recommendations from the staff of the Alliance for Health, the local health care watchdog group’s evaluation board will carefully weigh the future of six certificate of need applications when it meets later this week.

Three of those applications are from groups that want to build ambulatory surgery centers. With the board’s endorsement, the projects could go on to final state analysis and approval. Without it, they would likely go nowhere. However, recent changes in CON standards may make moot any endorsement given by the board.

In December, the Michigan Department of Community Health voted to amend the standards by which CONs are granted to surgical facilities. To qualify, a proposed facility must demonstrate that the practitioners who will operate there have handled at least 1,200 surgical cases within a 12-month period prior to application. The recent changes to those standards require that those cases are all handled in a licensed operating room. Since many outpatient surgeries are regularly performed outside of the operating room setting, the change greatly reduces the number of qualified cases on many applications.

Such is the case with a proposed facility of four operating rooms called Surgery Center of West Michigan. In its analysis, the alliance staff found the application to be lacking in terms of surgical case volume and, as a result, financial feasibility. Adding to those concerns, the staff pointed out that should the evaluation board endorse the project, and should the new changes in CON surgical standards go into effect before the state health department makes a final ruling on the application, the volume of surgical cases performed in licensed operating rooms would not satisfy the statutory requirements. As a result, the staff recommended that the board not endorse the project.

The similarly named West Michigan Surgery Center of Grand Rapids received a slightly more favorable analysis. The application is for a facility with one operating room. The alliance’s first objection to the application was that Blue Cross Blue Shield of Michigan, shown as a major payer in the center’s revenue forecasts, does not work with one-room facilities, except for those in rural areas. However, the applicants clarified the matter, stating that they expect enough volume to justify the addition of a second operating room before Blue Cross payment would begin in the third year of operation. The alliance went on to state its typical objections to the addition of competing surgical facilities, which it sees as potential cause for escalating health care costs. Nonetheless, the staff recommended that the board endorse the application. However, West Michigan Surgery Center would have the same volume problem mentioned above if the changes in CON standards are enacted before the state rules on the application.

The most promising application is that of Holland Surgery Center. The alliance staff found no shortcomings with the application and encouraged the evaluation board to endorse the project. However, as is the case with both of the other projects, this one would not be approved should the changes to the CON standards be ratified before the application is approved.

Three other projects are on the docket for the evaluation board’s recommendation this week. The alliance staff has recommended approval of a four-story, $55 million addition to Saint Mary’s Health Care’s Grand Rapids campus. The project, named the Hauenstein Center after lead donor Ralph Hauenstein, will provide a home for many of the hospital’s existing services, as well as housing a new neurosciences center and a rooftop landing pad for helicopters.

The evaluation board will also consider a renovation project at Carson City Hospital in Montcalm County, as well as the addition of a fixed-location magnetic resonance imaging facility at Gerber Memorial Hospital in Fremont. The alliance staff has recommended the endorsement of both projects.

Based on the evaluation board’s track record, it will likely endorse all but the Surgery Center of West Michigan, which was not endorsed by alliance staff. The evaluation board has historically agreed with the staff’s opinion, but occasionally it has voted to go against those recommendations. Also, the evaluation board’s endorsements are sometimes vetoed by the state department of community health. The changes in CON standards add yet another layer of uncertainty for the applicants.

The evaluation board meeting will take place at 9 a.m. Thursday, Jan. 19, at the offices of Grand Valley Health Plan at 829 Forest Hill Ave. SE. 

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