Memorial continues fight to perform elective heart surgeries

YAKIMA, Wash. -- Rick Linneweh vowed several years ago that Yakima Valley Memorial Hospital would take its fight to perform elective heart angioplasties as far as possible. The Memorial CEO has kept his word.

The hospital recently was in a federal appeals courtroom, arguing to strike down the way the state determines which hospitals can perform the procedure on a non-emergency basis.

The appeal comes after a lower court last May said the hospital couldn't expand angioplasties -- which unblock arteries and heart vessels -- from an emergency basis to pre-scheduled procedures on stable patients.

The case began in 2009 when Memorial sued the state Department of Health after the agency decided on a methodology that effectively continued Yakima Regional Medical and Cardiac Center's monopoly on elective angioplasties.

Specifically, Memorial argues the state is violating federal anti-trust laws and a constitutional prohibition against the restraint of interstate trade by setting the bar too high for Memorial to compete with Regional.

At about $18,000 or more per procedure, coronary intervention -- as it's most commonly called -- is a significant revenue generator for hospitals. By many estimates, cardiovascular services can account for as much as 70 percent of a hospital's profit.

Linneweh said in a recent telephone interview that it was hard to discern what the judges on the Seattle panel of the U.S. Ninth Circuit Court of Appeals were thinking during oral arguments March 10.

But he's hopeful Memorial can prevail in what's been an uphill battle.

"I feel cautiously optimistic this will put us in the position of being able to argue that some actions allowed (by the state) are not right," he said.

The court will either send the case back to U.S. District Court in Richland for trial or deny the appeal, letting the lower court ruling against the hospital stand. Memorial could appeal to the U.S. Supreme Court.

A decision is six to nine months away.

Linneweh said legal fees for the battle are somewhere in the "mid to high five figures."

Regulation vs. competition

The case goes to the heart of the state Health Department's right to regulate medical-services markets through its certificate-of-need program.

Certificate-of-need programs have been used by Washington and many other states to license health-care services and facilities since 1974. That year, Congress required such programs in an effort to set up a more rational way to plan health-care growth and prevent unnecessary duplication of medical services.

Congress repealed the requirement in 1986, but 34 states continued their certificate-of-need programs, including Washington.

Hospitals apply for a certificate of need when they want to add buildings or services. The Health Department determines the need and either accepts or rejects a hospital's application. Many factors are considered, including whether a community lacks access to the proposed service.

Memorial argues the angioplasty rules developed by the Health Department in 2008 are biased in favor of Regional because they allow the hospital to manipulate its capacity to meet demand, making it difficult for Memorial to get a foot in the door.

Regional officials declined to comment for this story.

The state maintains that it has the authority to set the rules without regard to their impact on the competitive marketplace. Further, the state argues that it is immune to anti-trust law and that its regulations do not give "market power" to private parties such as Regional.

The effectiveness of certificate-of-need programs has been challenged by some health-care experts, who argue the free market is a better arbiter of supply and demand. Memorial lawyers made this case to the Ninth Circuit, quoting a 2004 report from the Federal Trade Commission and the Department of Justice.

The report found that certificate of need "programs are not successful in containing health-care costs, and that they pose serious anticompetitive risks that usually outweigh their purported economic benefits.'"

The Washington State Hospital Association stands behind the certificate-of-need process. Spokeswoman Cassie Sauer in Olympia said that while the process can be lengthy and frustrating for hospitals, states without such programs see an overbuilding of capacity and higher health-care costs.

Bart Eggen, who oversees the certificate-of-need program as executive director of Health Systems Quality Assurance for the Health Department, said experts hired by the state agreed that the "net need" for additional angioplasty capacity in the Yakima Valley is 300 procedures per year.

That is, when it can be shown that 300 additional procedures are needed in the market area that includes the Yakima Valley, a hospital would qualify for a certificate of need for elective angioplasty. But at that rate, Memorial, which does close to 200 a year on an emergency basis, would have to wait until 2022.

Eggen said the state's methodology was vetted by physician peer review groups. He also said it doesn't matter that Regional has a monopoly because the state Legislature has made it clear that the certificate-of-need process helps avoid costly and unnecessary duplication of services.

"In our state, we believe it does," Eggen said.

Using existing expertise

For Memorial, it's a question of deploying existing equipment and expertise. The hospital has invested in diagnostic equipment to perform angiograms, which detect blockages.

Linneweh said Memorial patients are frustrated that if they have a blockage but are not experiencing a heart attack, they cannot choose to stay with Memorial to have the procedure.

Patients have come to expect a certain "gold standard" when it comes to cardiac care and should be able to get it, Linneweh said.

"The standard of care in this community for heart attack is 24/7," he said. "Therefore if you have the people, the equipment, the space and the physicians, why not be able to do it for elective?"

During the procedure, a cardiologist inserts a thin catheter under the skin into a major artery near the groin, threading it up to the blockage which is then opened with the inflation of a tiny balloon. Typically the cardiologist will install a stent, a tiny wire scaffold that allows the blood to flow unrestricted.

Memorial has 10 years of experience performing angioplasties on emergency-room patients.

Performing emergency interventions, which don't require the state's certificate of need, was the hospital's first foray into the promising market for cardiac services, which was expected to grow like gangbusters as baby boomers aged and obesity rates soared.

The prediction has come true: heart disease is the leading cause of death in the United States, far surpassing cancer.

In Yakima, patients can go to either Regional or Memorial for an emergency angioplasty.

If they choose Memorial and something goes wrong during the procedure, they are transferred to Regional because it has the capability of handling open-heart surgery.