Medical mettle: N. Idaho vs. Spokane

Question for readers: Can medical care in Kootenai County compete with that offered in Spokane?

By MIKE PATRICK

of the North Idaho Business Journal

They’re young, they’re passionate, they’re smart, they’re in an industry that’s changing at light speed, and they have every reason to fight like hell.

So why are Vaughn Ward, chief executive officer at Northwest Specialty Hospital in Post Falls, and Jon Ness, CEO of Kootenai Health in Coeur d’Alene, draining the moats and dismounting the cannon pointed at their castles?  Because they both know that to survive and prosper, they make better friends than enemies.

•••

It might be a stretch to say President Obama nudged Ness and Ward toward common ground, but the truth is, a dismal economy and governmental incursions haven’t made the practice of medicine any easier on hospitals.

According to Ness, 38 percent of U.S. hospitals lost money in 2010. With implementation of the Obama-sponsored national health care plan, providers will take an estimated $155 billion hit from Medicare reimbursements over the next 10 years.

There’s more.

Ness noted that the budget “supercommittee” has until the day before Thanksgiving to vote on a plan with $1.5 trillion in deficit reduction, and the full Congress has until Dec. 23 to vote on the committee bill.

“If there’s no resolution on the budget deficit an automatic trigger will take another 2 percent,” Ness said. For Kootenai Health, that further Medicare cut would be a $3 million punch to the gut.

So what are two local hospitals — one for-profit, the other a nonprofit community hospital — to do?

“Put patient care first,” Ward said emphatically from his office in Post Falls. “Continuity of care right here at home is what we’re both after.”

“We think outstanding care closer to home is better care,” Ness said from a conference room at Kootenai Health. “It’s not just Kootenai Health. It’s all the hospitals and all the physicians in North Idaho. It’s all of us — together.”

Both CEOs said North Idaho teamwork can extend from the northern tip of Boundary County to the southern side of Lewiston and, perhaps, beyond.

To the west? That’s a different story.

While both CEOs were complimentary of critical services rendered in Spokane and even Seattle, they spoke about the need for North Idaho to stem the flow of an estimated $200 million a year in medical services that ends up across the state line in Spokane.

That’s not just important for North Idaho hospitals, they said. It’s vital for North Idaho’s economic health.

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Northwest Specialty Hospital is one of 275 physician-owned hospitals in the U.S. Ward is anything but apologetic that his hospital is for-profit.

“Eight years ago, 11 or 12 guys put their financial lives on the line,” Ward said of Northwest Specialty’s creation. “In capitalism everything is a transaction, but the owners here are genuinely proud of what they’ve built.”

What the owners started was an alternative to Kootenai Health, previously called Kootenai Medical Center, and what they’ve built is a hospital that hits home runs on important patient ratings while performing a range of surgeries and providing numerous other services, all at competitive costs. It also offers up some of the best meals in all of hospitaldom. So despite the national gloom and doom, Ward says Northwest Specialty is on track for its best bottom line ever.

“That’s not so much from an increase of patients,” he said, “but because we’ve become increasingly efficient. It’s a testament to everyone who works here. Their future is tied to us being successful. Everyone is as committed clinically as they are to us spending money wisely.”

Ward says he’s keenly interested in doing all he can to keep patients happy and healthy right here at home.    “Idahoans taking care of Idahoans,” is how the former Marine and congressional candidate puts it.

For example, Ward related the story of how a friend has two children with heart conditions. Now those kids must go to Spokane for care, but with Kootenai Health’s acquisition of Heart Clinics Northwest — the deal should be completed in early 2012 — Ward’s friend will likely find expert care for the kids right here.

“It is about retaining those dollars, but it’s more than that,” Ward said. “Idahoans taking care of Idahoans; the things we can do with Kootenai Health to meet that end is unique to Jon and me, to reach that common goal.”

Ward said that perhaps unlike any time in Northwest Specialty’s history, staff and physicians are eager to exercise their transfer agreement with Kootenai Health. Transfer agreements are common in the medical industry, where one institution transfers patients to a higher acuity facility when necessary, but are rarely exercised among fierce competitors.

“We’re also cooperating on the technical side, exchanging information with Kootenai Health that’s transparent to the patient,” Ward said. “We’re working together for the benefit of the patient, putting patient care first.”

A strong bottom line, high rankings among patients and credible outside sources, and top technology have all made Northwest Specialty Hospital an attractive acquisition target, Ward acknowledged. But he said the hospital is focused only on delivering the highest quality medical care and growing in the increasingly cooperative atmosphere of a more unified North Idaho medical community.

“It’s only to the patients’ good that we’re working so well together,” Ward said. “What roads get built from here? I’m not sure, but the primary goal is how to provide the best medical care for the people of Idaho. We’ll do that by expanding services and keeping patients here at home.”

•••

In its just completed long range planning session, looking ahead at the next eight years, Jon Ness and the Kootenai Health board of directors identified 50 projects.

“Some are small,” Ness said. “Some are big.”

But all fit under the umbrella of what’s becoming a common theme: “Great health care at reasonable costs,” he said.

That’s why talking openly to medical professionals throughout North Idaho and figuring out how best to deliver outstanding health care is so important for them all, he said.

“Joe Morris did a nice job building relationships with other hospitals in North Idaho,” Ness said, deflecting credit to his long-time predecessor. “This is an era in health care where we need to work together and be collaborative.”

Ness pointed out that right here in Kootenai County, a strong model of health care has emerged. With Northwest Specialty focused on out-patient services and Kootenai Health on all aspects of a vibrant community hospital, a third entity — Northern Idaho Advanced Care Hospital — renders outstanding service for patients needing long-term care, recovering from serious illness or injuries.

“They do a great job too and serve an important role in the community,” Ness said of NIACC. “The grander picture is together, as a group of hospitals, we complement each other very well.”

Ness said better serving North Idahoans won’t exactly be a painless process when it comes to long-standing relationships outside the Gem State. He said Kootenai Health has worked closely with Sacred Heart in Spokane for years, amicably exercising a number of agreements.

“But we really feel it’s time for us to develop some services and be less dependent on out of state hospitals,” he said. “We think it would be better for our patients to be treated closer to home.”

Ness explained the importance of keeping the patients’ dollars closer to home, too. He said slightly more than 30 percent of North Idaho Medicare patients go to Spokane, representing roughly $100 million annually. At Kootenai Health, a full 49 percent of its revenue comes from Medicare billings. Therefore, if about half of all hospital revenue is for non-Medicare patients, then an additional $100 million a year is likely being deposited across the state line, totaling approximately $200 million a year.

Ness said that money should be staying home to boost not just local hospitals, but the local economy.

“The best quality of care at the lowest possible cost is in the best interest of the community,” he said.

Alivia Body, regional economist for the Idaho Labor Department, said that strategy will literally pay deep dividends in the area.

She said the “indirect and induced effects” of keeping that medical revenue in Kootenai County would generate an additional $132 million locally. Body used the sales multiplier of 1.6 for general medical hospitals.

Industries benefiting most from those wayward dollars staying home, Body said, include local government, physicians’ offices, temp services, restaurants and real estate agencies.

Moving forward, Ness said Kootenai Health will stick with its core strengths — founded upon a culture of quality for its patients and employees — while expanding where it makes sense.

“We believe we have an opportunity to grow and provide services to patients that haven’t been available in the past,” he said, citing the acquisition of the heart clinics as one major example.

Like his counterpart in Post Falls, Ness acknowledged that in the increasingly hungry and hostile hospital-eat-hospital world, Kootenai Health has been identified as a particularly tasty morsel. Twice already he has been approached from the outside to talk about Kootenai Health being acquired. And twice he offered the same reply.

“The answer was ‘No thank you,’” he said.