Specialty, Regency fight it out before Supreme Court

By By Suzanne Monk / managing editor
June 9, 2004
In a town where three major hospitals do business in a two-block radius, the competition is intense and creating a unique medical service translates into revenue.
Meridian residents are accustomed to reading about new surgical procedures, new diagnostic equipment, new ways of assessing treatment.
More than once in the last five years, hospital administrators have asserted their right to be the only hospital allowed to offer a specialized service and the resulting disagreement has played out before the Mississippi Supreme Court.
So it was on Tuesday, when lawyers for Meridian's two long-term acute care hospitals presented their arguments in Jackson before a panel of three Supreme Court justices.
The Specialty Hospital of Meridian, at Rush Foundation Hospital, is the older of the two. It started out with 20 beds and has been allowed two increases. It now has 49 beds.
Regency Hospital, at Riley Hospital, accepted its first patients in January 2003. It opened with eight beds and now has 31.
Both are independently incorporated, and are not officially part of the hospitals which house them.
History of litigation
New medical facilities are required to go through an approval process with the Mississippi Department of Health. The idea is to prove that the contemplated service is needed. Successful applicants are granted a "certificate of need."
Long-term acute care hospitals are fairly new.
They are largely for patients who need longer hospital stays, with more concentrated care, than their Medicare benefits will allow. The problem with patients like this is that hospitals are required to continue providing care without compensation regardless of when the patients benefits run out. It means hospitals lose money.
Hospitals like Specialty and, later, Regency fill the gap.
Regency Hospital went through the department of health's process and was granted a certificate of need in October 2002. Specialty asked for a hearing before the MDOH and got it; the MDOH upheld the initial decision.
Specialty filed suit in Hinds County Chancery Court. Why Hinds County? Because the Mississippi Department of Health was a named defendant and its headquarters are in Hinds County. Chancellor Pat Wise reversed the MDOH's decision.
Regency appealed to the Mississippi Supreme Court. Both sides submitted written arguments. Their lawyers appeared in person before the court on Tuesday.
Needed or not?
Jackson attorney Thomas Kirkland spoke for Regency Hospital. He described the process Regency officials went through to determine that the new hospital would have at least 450 patients a year, with an average stay of 29 days.
The result, he said, justified a request to the Mississippi Department of Health for 59 beds; Regency requested only 40.
Kirkland said 61 percent of Specialty's patients are referred by Rush physicians indicating that Rush patients are given priority over referrals from either Riley or Jeff Anderson Regional Medical Center.
Jackson attorney Kathryn Gilchrist spoke for The Specialty Hospital of Meridian. She challenged the Regency expert who did the math on how many beds were needed but had to admit, when asked, that Specialty had not provided expert testimony of its own.
Gilchrist could not explain the apparent disparity in the number of patients referred by Rush physicians, as opposed to Anderson and Riley physicians.
Finally, Gilchrist said the competition would result in Specialty losing about 50 percent of its patient base. She argued that Specialty hasn't grown since 2000, and operates at only 75 percent capacity.
Kirkland rebuts this number claiming that both hospitals operate at 90 percent capacity.
The Mississippi Supreme Court took that matter under advisement.
CERTIFICATE OF NEED
The last time two hospitals in Meridian took a "certificate of need" disagreement all the way to the Mississippi Supreme Court was in 2000. Jeff Anderson Regional Medical Center had an established heart unit; Rush
Foundation Hospital wanted to open one. Rush was granted a CON. Anderson appealed to a Hinds County Chancery Court judge, which ruled in favor of Rush. Anderson appealed to the Mississippi Supreme Court, which ruled in Rush's favor in October 2001.

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