BY ERIN L. NISSLEY (STAFF WRITER)

Published: August 8, 2011

Separate deals involving two area hospitals may raise red flags because of the potential to shrink competition in the region, though it is too soon to say when federal and state officials may weigh in, experts said.

About two weeks ago, Community Medical Center announced plans to join with Geisinger Health System. The same day, it was announced that Moses Taylor Hospital and its affiliate, Mid-Valley Hospital, had forged an agreement to sell to Community Health Systems Inc.

The announcements came four months after CHS won approval to buy Mercy Health Partners for $150 million, a deal that included the sale of Mercy Hospital in Scranton, Mercy Tyler Hospital in Tunkhannock, Mercy Special Care Hospital in Nanticoke and several outpatient clinics.

A for-profit company that owns more than 133 hospitals in 29 states, CHS established its presence here in 2009 by purchasing Wilkes-Barre General Hospital for $271 million. If the sale of Moses Taylor and Mid-Valley Hospital is approved, CHS would own six hospitals in the region.

“CHS is a large system, and they know the impact they will have,” said Joshua Nemzoff, a consultant who has managed hundreds of hospital mergers and acquisitions. “They could become a virtual monopoly in your region.”

If the deal between CMC and Geisinger is approved by federal and state entities, it will be the Montour County-based health system’s first acute-care hospital in Lackawanna County. Geisinger owns one acute-care hospital that has two locations and two specialty facilities in Luzerne County, as well as several doctors’ practices in both counties.

The growing clout of both companies might make it difficult for other hospitals to compete, experts said, and could lead to changes that would drive health care costs up for patients and insurers.

Review pending

Ultimately, a Lackawanna County judge will decide whether to approve the proposals.

But before a hearing is scheduled, the state attorney general’s office and the Federal Trade Commission will review the details of the deal. Part of the reviews will focus on the impact on the region’s health care, according to Daniel West Jr., Ph.D., a professor at the University of Scranton’s Health Administration and Human Resources Department.

“The whole issue is that of market power,” he said. “If Northeastern Pennsylvania only has two major providers of care, is there still a choice for patients?”

For decades, Scranton’s three hospitals have struggled to stay financially viable. Selling to larger, more stable companies is a survival strategy, Nemzoff said. But it could lead to decisions to shutter certain services, consolidate others and allow hospitals to charge more for care, he and West said.

One big question is how Moses Taylor and the former Mercy Hospital, now renamed the Regional Hospital of Scranton, would change if CHS owned both, West said. The two hospitals are within blocks of each other, though officials at Moses Taylor have been assured the hospital will not close if the deal goes through.

But Moses Taylor’s CEO and President Karen Murphy, R.N., Ph.D., said there would certainly be changes at both facilities in the future, though she and officials at CHS say it is too soon to begin speculating on what those changes may be.

The attorney general’s office has been historically tight-lipped about their investigations and had no information on how soon their reviews would be finished. CMC CEO and President Robert P. Steigmeyer has said he believes the review will take about six months. Murphy was not sure how long the review would take.

Attorney general reviews have put the brakes on a deal involving local hospital in 2008, during a review of a proposal that would have brought together CMC, Moses Taylor and Blue Cross of Northeastern Pennsylvania.

After the attorney general’s office raised concerns about how the deal would affect competition in the local health care marketplace, plans were abandoned.

Last week, the attorney general’s office imposed restrictions on a merger involving Geisinger Medical Center and Shamokin Area Community Hospital because of concerns that the deal “may substantially lessen or eliminate competition in the region,” according to a press release.

The attorney general’s concerns revolved around Medicare Advantage plans, which offer better benefits and lower co-pays than traditional Medicare coverage available to those over 65. Geisinger offers a Medicare Advantage plan that competes with several other plans in the region, and the health system has limited participation in Medicare Advantage plans it does not own, Attorney General Linda Kelly said.

Geisinger Medical Center and Shamokin Area Community Hospital are the two largest providers of inpatient acute-care hospital services in Northumberland County and together would control 60 percent of the region’s hospital market, according to the attorney general’s findings.

To protect patients, Geisinger Medical Center was ordered to extend Shamokin Area Community Hospital’s Medicare Advantage plan contracts with other health plans for three years from the date of closing.

Frank Trembulak, chief operating officer and executive vice president at Geisinger Health Systems, does not expect any restrictions on the deal with CMC, because the details are very different than the one forged with Shamokin.

Shamokin Area Community Hospital will become a Geisinger campus, but CMC will remain a free-standing acute-care hospital affiliated with Geisinger, he explained.

“There’s still two sizeable hospitals in (the Scranton) market to compete,” he said. “If a company came in and bought all three (hospitals), that would be a problem” for the attorney general’s office.

Likewise, Murphy and CHS spokeswoman Tomi Galin believe their deal will also be approved by the attorney general’s office.

“In advance of announcing plans to acquire Moses Taylor Health Care System, we considered the regulatory review process,” Galin wrote in an email, adding that CHS believes the changes occurring in the Scranton market “will result in a dynamic, competitive health care environment … good for the hospitals, their patients and the Scranton community overall.”

Should officials reject the proposed deal with CHS, Murphy said the hospital would likely go back to the drawing board.

“We would have to evaluate strategic options,” she said.

CMC spokeswoman Wendy Wilson said the hospital would continue to operate as it is should their deal with Geisinger not go through.

“Of course we would go on,” she said. “We are financially viable right now.”

enissley@timesshamrock.com

Sunday, August 07, 2011

By Bill Toland, Pittsburgh Post-Gazette

It has become health care industry dogma that electronic records can help improve efficiency. Reduce errors. Save lives. And — just maybe — put the brakes on runaway health costs, by allowing better sharing of patient information and eliminating duplicative services.

It’s why hospitals and physicians’ practices across the country want a piece of the $27 billion in federal stimulus incentive money to help doctors move their systems away from papers and manila file folders and toward computerization.

It’s why Highmark and West Penn Allegheny Health System recently announced a partnership with Allscripts and Accenture to provide Pittsburgh’s independent physicians with electronic health records.

And it’s why, starting in 2015, hospitals and doctors face cuts to their Medicare and Medicaid reimbursements if they haven’t adopted “meaningful” health information technology hardware, electronic prescribing systems and other elements of President Barack Obama’s Health Information Technology for Economic and Clinical Health act, known as HITECH.

Moving to a fully electronic system, Mr. Obama told Congress in February 2009 — citing a 2005 Rand Corp. study — could net $80 billion annual savings for the health system.

But do electronic records systems fully deliver on their promise? It’s not uncommon for doctors, especially those from smaller practices, to complain about the computerization process itself — it takes time and money to overhaul operations. Change is often unwelcome.

But it’s also becoming more common to question whether the measures themselves will meet their lofty expectations. More and more studies are questioning the efficacy of electronic health records, and the U.S. Food and Drug Administration has begun collecting reports involving electronic health and IT errors, some of which have resulted in death.

“I don’t think that we are getting our money’s worth from all this treasury that we are spending,” said Jaan Sidorov, Harrisburg-based health care consultant.

“The thing about these systems is that it doesn’t really look like they’re getting any cheaper,” he said. “And the upgrades and the upkeep represents a very significant cost, especially in outpatient clinics.”

Most clinics and hospital systems will say the return on investment for big IT projects is minimal in the short and medium terms.

And in some ways they can contribute cost to the medical system — some software systems, for example, have auditing components that allow practices to uncover billable services that the practice had been missing.

In other words, the “efficiencies” that are realized may benefit the provider but not necessarily the insurer.

But that’s just the cost side — what about quality of care?

The hope is that computerized decision support systems will warn a physician if a drug dosage is too high or too low; digital health records can be transmitted more quickly among practices and specialists; computers can use logarithms to flag patients who are at risk for high-cost conditions.

The proposed benefits are tantalizing.

But lots of experts say we’re just not there yet.

Overwhelming complexity

“Health information technology can meet the goals that are talked about,” said Scot M. Silverstein, a medical IT expert and adjunct professor at Drexel University, College of Information Science and Technology, in Philadelphia. “But only if done well. And the amount of complexity behind that simple phrase — ‘if done well’ — is enormous and largely unrecognized and ignored.”

The Journal of the American Medical Informatics Association published a report this summer suggesting electronic health records aren’t as error-proof as advertised.

Having analyzed 3,850 computer-generated prescriptions received by a commercial outpatient pharmacy chain, a clinical panel found that 452 of the prescriptions, or about 12 percent, contained errors. (A “computerized” prescription is one that is typed into a computer, rather than a note pad; an “electronic” prescription is one that has been transmitted by email or wireless to a pharmacy.)

Of those, 163 contained mistakes that could have led to “adverse drug events.” Most errors were mistakes of omission — a doctor left out an important piece of data.

Notably, this “is consistent with the literature on manual handwritten prescription error rates,” the report said. Also, the number and severity of errors varied by the type of computerized prescribing system, which suggests that some systems may be better designed than others.

But the larger point is computerized systems do not automatically outperform paper ones.

One prime example locally: the hepatitis C-postitive kidney that was accidentally transplanted from a live donor into a patient at UPMC.

The entire transplant team missed a highlighted alert in the hospital’s electronic records system; doctors later complained to the Post-Gazette that UPMC’s system “is, at best, cumbersome to use and difficult to adjust for any one doctor’s particular needs.”

As with any other science, it can take years of trial and error to determine what systems and alerts work in a real-world setting.

And if the software is lacking, or the implementation or system interoperability is poor, “there can be disastrous results. Errors can actually go up,” said Karen Caputo Nanji of Massachusetts General Hospital, co-author of the computerized prescription study.

“We can safely say that computerized prescriptions are safer” than handwritten ones, she said. “However, there’s a lot of room for improvement. … There are always going to be clinical errors or judgement errors” that a computer simply can’t detect.

One such error happened last year in Chicago: A baby, born prematurely, was killed when a computerized IV machine prepared a lethal dosage of an intravenous sodium chloride solution.

The dosage was 60 times the amount ordered by a physician, but because a pharmacy technician typed the wrong information into a computer, the machine administering the solution didn’t catch the error. Mistakes compounded, and the infant’s heart stopped.

The case is now being litigated.

Data vs. dogma?

Despite the political — and computer industry — push to adopt electronic health record systems, there are plenty of researchers who want to see proof before investing billions of dollars.

That’s one of the ironies often cited by skeptics: For an industry that relies on data and evidence-based measurements to make decisions on the clinical and pharmaceutical side, there isn’t a lot of evidence supporting the notion that electronic health records produce cheaper care or better outcomes.

“Health IT lacks the scientific rigor of medicine itself,” Dr. Silverstein said.

What rigorous studies do exist, he said, often point in contrary directions.

One paper published this year by the Public Library of Science, written by U.K. doctors, notes that “there is a large gap between the postulated and empirically demonstrated benefits of eHealth technologies [and] their cost-effectiveness has yet to be demonstrated, despite being frequently promoted by policymakers and ‘techno-enthusiasts.’”

Another study, this one published in 2007 by the Archives of Internal Medicine, concluded that of the 325 or so million ambulatory visits in the U.S. that utilized “electronic health records” in some way, there was no significant difference in performance between visits with versus without [electronic health record] use for most quality indicators.

“There is no really good data that shows that [electronic health records] reduce hospitalizations,” Ken Adler, medical director of information technology at Arizona Community Physicians, told Health Data Management Magazine. “The nation is investing a huge amount of money on a hope and prayer.”

In the U.K., those prayers appear to have gone unanswered: The National Health Service’s 10-year, $4.4 billion project to build a nationwide electronic records system is now being drastically curtailed because the massive system remains “unworkable,” according to an analysis of the system issued by a parliamentary committee just days ago.

In a statement to the British press, Labour MP Margaret Hodge said: “Trying to create a one-size-fits-all system in the NHS was a massive risk and has proven to be unworkable. The department has been unable to demonstrate what benefits have been delivered [so] far.”

Remaining moneys “might be better used to buy systems that are proven to work.”

John Mitchell, Rep. Dante Santoni (bill sponsor) and Craig Gassmann posing with HB500 and HB501 signed by Governor Rendell.

Peg Moyer(Lobbyist), John Mitchell, Rep Dante Santoni and Craig Gassmann