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News State / Region COPA agreement still under scrutiny

Committee may validate Sen. Davis’ concerns.

North Carolina state Senator Jim Davis (D – 50 District) took a lot of heat after introducing SB 638, a potential law that aimed to modify the Certificate of Public Advantage (COPA) agreement granted to Asheville’s Mission Hospital in the mid ’90s. The bill was introduced in the General Assembly last spring in response to an economic analysis report that evaluated the COPA agreement, and later discerned that the agreement gave Mission Hospital an unfair advantage over competitors in the region.

The 45-page report entitled “An Economic Analysis of the Certificate of Public Advantage Agreement Between the State of North Carolina and Mission Health,” was finalized and released in March 2011 and can be accessed online. After the report was released, Senator Davis was compelled to introduce the aforementioned bill, which has since failed to make it out of committee in the state legislature. Davis was the only sponsor of the bill, which sought to modify the COPA agreement in order to address the issues raised in the economic analysis report.

The State Houses’ Select Committee on the Certificate of Need Process and Related Hospital Issues later took up the study of the report in late August of this year, holding several public hearings across the state to seek input from experts and citizens alike. One such public hearing took place in Western North Carolina in October. The select committee consists of 11 members currently serving in state house, with each member being appointed by the Speaker of the House of Representatives, Thom Tillis.

The select committee has yet to release their final report, but according to Senator Davis, their research thus far has “validated my initial concerns regarding Mission’s advantages over smaller hospitals in Western North Carolina.” Davis added that he has nothing against Mission Hospital, but he fears that small community hospitals in Western North Carolina could be coerced into a merger with Mission due to the abuses of the COPA agreement.

Tim Hubbs, CEO of Angel Medical Center in Franklin, voiced his disagreement with Davis following the bill’s introduction. Back in April, Hubbs worried that Davis’ bill would prevent Angel Medical Center from partnering with Mission Hospital, as the bill required Mission Health Systems to “immediately halt all activities related to management agreements, acquisitions, affiliations, and joint ventures.” While Davis’ bill laid idle in committee, Angel Medical Center officially announced their partnership with Mission Hospital in May.

“I assured Mr. Hubbs and Angel’s board members that the bill would not impact their partnership with Mission Hospital in Asheville,” said Senator Davis on Dec.6, 2011. “I promised them that it wouldn’t and I don’t think it would have,” he said.

The COPA agreement was granted to Mission Hospital in 1995, after the hospital officially took over the operations of St. Joseph’s Hospital, its main competitor in Buncombe County. After the two corporations formed the partnership, the U.S. Department of Justices’ Antitrust Division implemented an investigation into the partnership, believing it had the potential to form a dangerous monopoly in Western North Carolina’s healthcare industry.

Following the Justice Department’s investigation, the COPA agreement was amended in 1998 when Mission bought St. Joseph’s Hospital for $90 million. The agreement allowed North Carolina to provide oversight in regards to Mission Hospital to protect consumers from rising costs that predictably emerge in the case of monopolies. Davis feels that the agreement between the State and Mission Hospital should be amended, based on the findings of the economic analysis report.

The report is at the heart of the controversy. The State, as part of their duties to adequately supervise Mission Hospital as a result of COPA, decided to hire an expert in health care economics and antitrust issues to conduct a study on the agreement. Dr. Gregory Vistnes, from Washington, D.C., was chosen by the State to perform the study and he later reported his findings to State officials in mid-March of this year. The report stated that Mission’s market share of patients in Buncombe County was more than 90 percent, a percentage that critics believe demonstrates Mission’s monopoly in the healthcare industry within Western North Carolina.

According to Vistnes’ findings, Mission Hospital was going around the original intent of the COPA agreement, using various incentives under the agreement to increase prices and costs, among other things that the State would deem a hazard to the public interest.

Mission Health Systems responded to Vistnes’ report in May, contradicting his findings by maintaining that they have fully abided by the COPA agreement and can choose to opt out of the agreement at any time, since it is voluntary. They also stated that Memorial Mission Hospital is the only one in North Carolina and one of the few in the United States that operates under such strict oversight rules.

Furthermore, Mission officials argue that they have consistently been one of the state’s lowest cost hospitals, while also fighting to keep their charges at a minimum, saying their hospital has the third lowest charges in the State, despite having to cope with a high number of Medicare and Medicaid recipients, in addition to people with no health insurance.

In its eight-page report released in May, Mission Health Systems said that in 2010 they had one of the worst payer mix of any large hospital in N.C., “with 75 percent of Mission patients having no insurance or having coverage through Medicare and Medicaid,” government programs that reimburse well below the costs of what Mission pays to provide care, according to their report.

The select committee in the state House is allowed to submit an interim report on the results of their study on or before May 1, 2012. They are obligated to submit a final report prior to the convening of the General Assembly in 2013.

When asked about the ongoing debate over whether or not Mission Health Systems has a monopoly in WNC, Tim Hubbs of Angel Medical Center stated, “we have not seen anything to indicate that Mission has a monopoly in Western North Carolina. I think both sides make some valid arguments, and I know Mission does very well in Buncombe County, but to say that they have a monopoly in WNC is ludicrious,” he said.

Hubbs added that out of the 15 hospitals in WNC, only four have partnered with Mission. He also said that those four hospitals, including Angel Medical Center, are relatively small in comparison to other hospitals in the region. Carolinas Medical Center, based in Charlotte, has formed partnerships with hospitals in Murphy, Swain, Haywood, and Sylva, which Hubbs believes demonstrates that Mission has plenty of competition in Western North Carolina.





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