We generally view things from 50 feet. We focus on what is happening from day to day, week to week, and month to month. Every now and then, we need to step back, view things from 10,000 feet, and focus on what is happening over the course of five, 10, or 50 years. Here is a view from 10,000 feet of things that are happening with hospitals in West Virginia.
Renovations and Replacements
In West Virginia, most hospital buildings were built in the 1950's and 1960's as the result of the post-World War II Hill-Burton Program, which funded the construction of hospital buildings throughout the United States. These hospital buildings now are reaching the ends of their useful lives and hospitals are undertaking major renovation or replacement projects. Hence, the recent major renovation projects at Cabell Huntington Hospital, Camden-Clark Memorial Hospital, Charleston Area Medical Center, Princeton Community Hospital, and Thomas Memorial Hospital and the on-going construction of replacement hospitals by United Hospital Center and Highland Hospital.
Small Rural Hospitals
Fifteen years ago, there was great concern that the small rural hospitals in West Virginia would not be able survive financially and rural communities throughout West Virginia would be left without a hospital. Thanks to the critical access program instituted by the federal government, the small rural hospitals in West Virginia today are in stable condition. Under the critical access program, the federal government will reimburse a small rural hospital on a cost basis if the hospital agrees to operate no more than 25 beds, maintain an average length of stay less than 96 hours, and offer emergency care 24 hours per day.
Nevertheless, over the past 25 years, a number of hospitals have closed including Beckley Hospital, Guthrie Memorial Hospital, Guyan Valley Hospital, Kanawha Valley Memorial Hospital, Man Community Hospital, Memorial General Hospital, Richwood Area Medical Center, St. Luke's Hospital, Tucker County Hospital, Weirton Osteopathic Hospital, and West Virginia Rehabilitation Center.
Hospitals in West Virginia are very heavily regulated. The certificate of need program requires a hospital to obtain approval from the West Virginia Health Care Authority in order to incur a capital expenditure in excess of $2,000,000, establish a new health care facility, or add certain health care services. The hospital rate review program requires most hospitals to obtain approval from the Authority in order to raise their rates. And the discount contract approval program requires most hospitals to obtain approval from the Authority in order to give a discount to a non-governmental payor. These three programs give the State of West Virginia considerable influence over a hospital's most basic business decisions including what services it can offer, what rates it can charge, what equipment it can purchase, and what capital expenditures it can make.
Competition from Physicians
Hospitals and physicians generally were not competitors 25 years ago. Today, they are. Over the past 10 years, physicians have begun to develop health care facilities (such as imaging, diagnostic, and urgent care centers) and purchasing equipment (such as CT scanners) that previously were the exclusive domain of hospitals. For a number of years, hospitals and physicians have argued within the context of the certificate of need program about what facilities and equipment physicians should be able to develop. That argument in all likelihood will continue in the halls of the West Virginia Legislature during the upcoming legislative session.
Competition with Out-of-State Hospitals
The heavy regulation of hospitals in West Virginia has given out-of-state hospitals a competitive advantage over West Virginia hospitals, particularly those West Virginia hospitals located on or near the borders of West Virginia. Out-of-state hospitals (which are not subject to the West Virginia certificate of need, rate review, and discount contract approval programs) have more flexibility and can move faster, charge more, and give bigger discounts than border hospitals. This competitive disadvantage in all likelihood will also be an issue during the upcoming legislative session.
The federal government is the single largest purchaser of health care services in the United States. With the federal government now financing both the war in Iraq and the bail-out of Wall Street, hospitals are not expecting any significant increases in Medicare, Medicaid, or other federal reimbursement for a number years. The money simply is not there.
These big picture 10,000 feet issues are the most fundamental issues confronting hospitals in West Virginia today.
*As seen in the October 24th issue of The State Journal.