August 2000 Bulletin

Hospital, orthopaedists end ASC battle

Two years of litigation puts certificate of need process under state review

By Sandra Lee Breisch

A two-year legal battle by a hospital that prevented a group of six orthopaedists from opening the doors of their ambulatory surgical center (ASC) finally ended in a collaborative partnership in June.

The agreement struck between the Orthopaedic Professional Association (OPA) in Gilford, N.H. and LRGHealthcare (formerly Lakes Region General Hospital) in Laconia, N.H. involves the group selling their surgical center and the MRI platform as one unit to the hospital for $1 million. The ASC, which is part of the OPA’s $3.2 million medical center called Hillside Medical Park, has sat empty since the center was opened in May 1999. OPA will retain ownership of the medical center.

"The $1 million will pay for the loss of revenue, construction costs, legal expenses and site development," explains John M. Grobman, MD, OPA’s medical director. "We’re going to do everything we would normally do at a hospital–virtually all of our arthroscopic procedures, hand surgery, and probably a limited amount of open upper extremity surgeries such as rotator cuff repairs. There’ll also be another group of anesthesiologists doing pain management in the one-bed ASC that has six recovery spots."

According to Dr. Grobman, the battle that had spread to the New Hampshire Supreme Court and the state legislature over Certificate of Need (CON) issues "wasn’t really won by anyone." "We declared a truce," he says. "The hospital decided to work with us and we decided we could work with them. But we both have to drop our legal proceedings against each other. This battle was certainly bleeding us dry after several years of intense litigating and lobbying. All we wanted was to have a convenient center that’s less expensive for our patients and an ASC that’s under one roof for our practice where we’re not subject to the pitfalls of the hospital environment to do these cases."

This means the OPA will drop their appeal to the state Supreme Court of the Certificate of Need (CON) board ruling that said they were above the $1.1 million threshold for capital development costs and over the $400,000 for equipment costs. The hospital will also withdraw their injunction to enjoin the OPA from offering ambulatory surgical services in the building and will have to go through the same CON approval process that the group did.

In September 1998, the OPA was given a waiver twice from the CON process by the Health Services Planning and Review Board. However, the hospital challenged the project’s construction costs for the surgical center by stating they were above the $1 million threshold requiring state approval.

To help physicians do battle with the hospital, SB 323 was introduced by Rep. Francine Wendelboe to repeal the CON law, but was unsuccessful. However, the final version of SB 323 created a task force to study the CON statute, adjusted current thresholds for inflation and provided a lower threshold for proposed new facilities located within a small (less than 70 beds) hospital service area.

"This permanent task force will sift through all of these health care issues and make recommendations to the legislature on an ongoing basis," explains Rep. Wendelboe. "We changed the format of the CON board by having a very broad coalition which includes members of the House, the Senate, the medical society, the ASC association, the nurse’s association, the hospital association, the insurance commissioner, and the commissioner of health and human services, etc. They are taking a very hard look at the CON process–if we need to continue it, what should be defined in threshold limits, should it include land, equipment, where’s the place of competition in healthcare, the ASC versus the hospital and the inpatient vs. outpatient care.

"We were also successful at redefining what the CON threshold should have been. Instead of $1 million, the inflation factor should have brought it up to current date $1.173 million."

Another bill introduced by Rep. Wendelboe last year attempted to remove outpatient surgery from the oversight of the Health Services Planning and Review Board. Whether or not outpatient surgery and other outpatient services should be regulated by the board will be discussed by the new task force created by SB 323.

Pending approval by the Gilford Planning Board and the state Health Services Planning and Review Board, the ASC will open by early next year.

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