Focus on Cardiac Care Worries Some Insurers

Aug. 8–Park Nicollet’s new $52 million heart clinic in St. Louis Park is kind of like cardiac care at the Ritz-Carlton. The check-in areas look more like concierge desks. The CT scanners are housed in decorative, wood-paneled rooms. And if there is any doubt that the clinic is state-of-the-art, just look at the serial numbers on its two new nuclear imaging machines.

01 and 02.

The machines are the first of their kind in the world.

Health system leaders believe the new center, attached to Methodist Hospital, will provide more inviting and more effective cardiovascular care to patients. But they are not alone in making this claim.

There is Abbott Northwestern in Minneapolis, which opened a new $110 million heart hospital in May. And Fairview Southdale in Edina. And United in St. Paul. And Mercy in Coon Rapids. And Unity in Fridley. And others.

In the past five years, the largest health systems in the Twin Cities have invested heavily in cardiac care. The hospitals believe the expansion projects are needed to serve the state’s aging and more obese population, but the trend has drawn concerns from the state’s largest private health insurer, Blue Cross and Blue Shield of Minnesota.

A July 28 report from Blue Cross questioned the amount of hospital construction overall and took particular issue with the heart centers.

In 2003, Minnesota already had 28 percent more hospital beds per capita for intensive cardiac care than the nation, according to the Blue Cross report.

Methodist and other hospitals didn’t actually add more inpatient beds, but their new heart centers will allow them to provide more imaging and treatment services on an outpatient basis.

Blue Cross is already reporting rising cardiac costs, partly because of the increase in procedures involving drug-coated stents, which are expensive but generally better at keeping blood vessels propped open than regular stents. The insurer’s annual bill for inpatient cardiovascular surgery increased 17 percent from 2002 to 2004.

If hospital construction results in too many cardiac centers for too few patients, then insurers and patients may end up paying the bill. On the other hand, Methodist and other hospitals say the efficient designs of their new facilities will save money by reducing wasted time for nurses and other caregivers.

“There should be some efficiencies,” said Michael Marrow, Blue Cross’ senior vice president of business development and network management. “The question is, how do those play out and does the community see them in terms of better quality and lower cost?”

Hospital leaders said their expansions are partly needed to make space for the latest technology. Methodist plans to use a new “64-slice” CT scanner, for example, to search for blockages or other heart problems. The traditional method, an angio-graphy, is more invasive because it requires the insertion of a tube into a blood vessel.

Baby boomers are reaching retirement age, and hospitals expect a growing demand for cardiac care. Already, the poster child of the generation, former President Bill Clinton, has needed a heart bypass.

“We see the demographics as very clearly pointing toward an aging population with more vascular disease,” said Dr. Samuel Carlson, Park Nicollet’s chief medical officer. “All of which point to a very significant need for additional cardiovascular services.”

A concern for Blue Cross officials is that hospitals are investing in lucrative specialties such as cardiac care and overlooking others, such as mental health care. While the insurer found excess capacity in the state for cardiovascular care, it also found that Minnesota has 40 percent fewer mental health beds per capita than the nation.

A look at Medicare cost data for one local hospital shows why. It cost United Hospital $8,091 to implant a pacemaker, but the hospital received $11,538 for each procedure, according to 2003 data provided by the American Hospital Directory.

On the other hand, it cost United $10,132 to treat a patient with psychosis, but the hospital received only $4,284 per case. These are federal Medicare figures, but the same disparities exist in payments by private health plans.

Officials for the Allina health system, which operates United and Abbott, acknowledge that better reimbursement drives hospitals to expand in higher-dollar specialties.

However, the cash flow from those more lucrative areas of health care can cover the money-losing areas of hospital care, said Barbara Balik, Allina’s executive vice president for safety and quality systems. She added that United recently added 16 mental health beds to meet community needs.

Hospital leaders believe the new heart centers are justified because they will result in better and safer care. Heart attack survival rates at Fairview Southdale have been in the top 1 percent in the nation in the years since its heart center opened, said David Page, Fairview’s chief executive officer.

“We think we’ve got the proof that our investments have been good for the community,” he said.

HealthPartners, another major health insurer in the Twin Cities, shares Blue Cross’ concerns over the rapid expansions in cardiac care. But executive vice president Andrea Walsh said the hope is that competition among the providers will result in better care and give insurers leverage to negotiate.

“We will go out and we will find the providers that are most capable in a given specialty,” she said. “From that vantage point, competition is a good thing.”

Even if there is too much emphasis on cardiac care in the Twin Cities, hospital leaders don’t expect that to last long. Data from the Minnesota Hospital Association shows a 27 percent increase in patients discharged from hospitals in the seven-county metro area for cardiac care from 1995 to 2004.

Blue Cross officials worry about a “build it and they will come” scenario in which the availability of cardiac services will draw more patients to procedures they may not need. Still, the insurer’s report didn’t conclude that all of the construction is unjustified.

Marrow said the community needs more input and oversight of expansion projects to ensure they are appropriate. Payers also need to look at balancing the disparities that lead hospitals to focus on cardiac care. Until then, he said, he can understand why the hospitals have all focused on the same specialties.

“There are strong competitive reasons to make sure you are in the game on cardiac care,” he said. “It is a marquee service if you’re in the hospital business.”

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