hospital merger

[armand larive <larive@completebbs.com>]

I’m a Pullman resident, but interested in the hospital merger
discussion, since it affects both communities.  Indeed, in many ways
there’s only one community already—a fait acompli, but not with the
hospitals.  It’s been slightly more than a year since the Quorum Report
was issued—a rather expensive study both hospitals undertook to look at
hospital care on the Palouse.  The expertise was provided by Quorum, the
corporation that helps manage hospitals around the country, including
Gritman (GMC), tho not Pullman Memorial. (PMH).  The report is marked
“confidential,” and was distributed to board members/commissioners of
both hospitals, but there’s been one available at Neill Public Library
for the past year.  Anybody can read it.

The Quorum Report is a careful study of the marketing area, the
resources available at both hospitals, primary care and specialists in
the region, which includes outlying towns, a marketing area of just
under 70,000.  It states that the two local hospitals together have a
market share of 50% within this region, since  many people go to Spokane
or Lewiston.  But the market share is being lost by about 1% a year.
Specialists tend to have to scramble to offices in several locations to
make ends meet.  The report also says that the hospitals are on a
downhill slide financially.  GMC will last longer because it has a
savings account of something like $9 million, but it was obliged to lay
off something like 15 FTEs last year in order to realize a profit of
about $400,000.  It also faces a loss of about the same amount because
it’s been obliged to get government reimbursements at a rate indexed to
Idaho wage scales where it used to be indexed to that of Washington.
PMH won’t be able to last much longer without an operation and
maintenance levy about three years hence.  Being a public hospital with
a tax district, it cannot invest its savings in the market, but must
invest at a fixed and very modest government rate.  But PMH has tied a
lot of its assets up into property development with a view to building a
new stand-alone facility, and that’s the proposal being brought to the
voters for discussion now.

The Quorum Report believes the best outcome for both hospitals would be
a new joint facility, and that an economy of scale could be achieved,
making it possible to amortize such a facility within a reasonable time
span.  The next best alternative would be to have both facilities under
one administration and divide up services to prevent duplication.
Hospitals get their main income from out-patient services, especially
same-day surgery.  In-patient care and critical care (emergency and ICU)
are loss leaders.   Since both hospitals seem bent on remaining
full-service, stand-alone facilities, they are not able to compete, say,
with Rockwood Clinic in Spokane for surgical costs.  Simple hernia
repairs or a laproscopic gall bladder procedure cost $2 – 3 thousand
more at GMC or PMH.  Other procedures much more.  It’s not likely to be
too long before insurance companies will require people having surgery
at either of our hospitals to make up the difference out of pocket in
view of considerably cheaper rates elsewhere.  There is also the further
consideration of quality of care.  Two Ers and two ICUs, and two
out-patient surgery suites in small communities don’t afford enough
patients for the staff to keep up their skills, let alone attract
skillful people in the first place..

PMH is (or was) willing to engage in either joint governance or a
merger, but GMC is not.  Right after GMC turned down the proposal, its
board took out a full-page explanation in the local paper regarding
their decision to remain a stand-alone facility.   The explanation
contained (in my opinion) a fair amount of disinformation, but one can
understand how a reasonably good community hospital would have
difficulty closing its doors and joining in a combined venture.  The
Quorum Report leaves little doubt that GMC can’t last indefinitely, but
was rather vague on the means of compensation required to establish an
equitable partnership, since GMC would be giving up more in order to
make such a move.

That’s a little of the story.  There’s quite a bit more.

Armand Larive