Ozaukee News Graphic

Friendly competition or market domination?

Concerns rising over new Grafton hospitals effect on areas medical cost

Ozaukee News Graphic, August 7, 2007

By Tim Carpenter
News Graphic Staff

Is competition beneficial when it comes to health care? This question is a hot topic among regional health professionals since nonprofit Aurora Health Care and Advanced Healthcare announced last week plans to build a hospital in Grafton as part of their newly formed alliance.

Competition is supposed to be a good thing. In the United States, any area where multiple businesses are selling the same products or services is typically seen as beneficial to the consumer.

This is the guiding principle of capitalism: Competition is supposed to drive down prices, encourages development of new products, technologies and better service from providers. Right?

The regional medical center is slated for construction sometime in 2009 along the I-43 interchange at Highway 60 in Grafton.

The facility is expected to employ a 600-person staff and feature a 24-hour emergency room and Vince Lombardi Cancer Clinic among other services.

We believe the best and most cost-effective way to deliver care is through an integrated health care system, said Nick Turkal, Auroras chief executive officer, when he announced the partnership and new hospital plans at a press conference Wednesday. We believe over time we can drive costs down.

Not everyone agrees with Turkals assessment. Roughly six miles from where the new Grafton facility is slated to be built is the Columbia St. Marys Hospital in Mequon. A mainstay in Ozaukee County for over 60 years, the hospital was expanded in 2005 to become a full-service health care facility.

In addition to scrutiny from Columbia St. Marys, some health care professionals have criticized Advanced and Auroras plans to build a hospital in Grafton.

One major opponent of the project is the Wisconsin Federation of Nurses and Health Professionals, the states largest nurses union. The federation argues there is a lack of market demand for two hospitals in such close proximity to each other, and that the move will only continue to drive up health care cost in the Milwaukee region.

The federations decision to go public with its opposition of the project is an interesting move considering the group has an affiliate at the Aurora-operated Memorial Hospital of Burlington, but no union chapters within the Columbia St. Marys system.

Stephanie Bloomingdale, director of public policy for the federation, said the hospital will only increase Auroras already large share of the Milwaukee area health care market. Aurora currently has facilities in over 90 communities in eastern Wisconsin, which include 13 hospitals and 100 clinics.

Auroras mission is to integrate health care for the need of the community, and we question that, Bloomingdale said. We believe Aurora is putting profits above patients.

The high cost of health care in the Milwaukee region has been a long-standing issue addressed in a number of studies over the last few years.

A study released last year by The Greater Milwaukee Business Foundation on Health reported the average payment rate of patients of Milwaukee-area commercial hospitals was higher than seven other cities in the Midwest, including St. Louis, Detroit and Cincinnati.

Another study released by the foundation last year concluded physician costs in four medical specialties areas were higher in Milwaukee than the eight cities identified in the previous study, including Chicago.

Included in the foundations research were a number of recommendations to reduce the high-cost burden of health care on Milwaukee-area residents, including increasing the presence of competition for some services in areas where there are a limited number of system providers.

Ozaukee County is the only county in the greater Milwaukee-area that has one hospital, said Gene Monroe, president of Advanced Healthcare, which represents 250 primary care physicians and specialists in 14 clinics throughout the Milwaukee region. In most areas, competition is healthy and it drives groups to provide clients with better quality care. I think people will be better served by having more choices.

Monroe said Grafton was chosen as the site for the new hospital due to the growth the village has experienced since Advanced opened its Cedar Creek Clinic at 215 Washington St. almost 25 years ago.

Despite the plans for the new hospital, Monroe said, Advanced still intends to break ground this fall on rebuilding the clinic.

The new facility will be more than double the size of the current building, and increase on-site physician staff by as much as 50 percent.

The Cedar Creek Clinic currently ranks among Advanced Healthcares top five facilities in terms of size and demand of services.

About 70 percent of the residents of the village of Grafton are patients of either Advanced or Aurora, said Bill Ebinger at last weeks press conference.

Ebinger is a longtime internal medicine physician at the Cedar Creek Clinic and a member of Advanceds board of directors. For these people and many others in this area, we think this new medical center will be anew option for quality care close to home.

Gerald Frye is president of the Benefit Services Group, a Pewaukee-based consulting firm that services the local health care industry. He said the historical higher health care costs for Milwaukee-area residents can be attributed to the fact that most health care providers in the region tend to have facilities in areas where there is little or no competition.

From a basic economic standpoint, having competition makes sense, Frye said, If I dont have two systems in a geographic area, I dont really have any competition. So if I make the price transparent in an area where people only have one choice, what does that accomplish?