Hospital execs question Maricopa Medical Center bond initiative

AZ Central
Thursday, September 4, 2014
Ken Alltucker

Executives from the four largest private hospital systems in metro Phoenix question the need for voters to approve a $935 million bond issue that would pay for a new and expanded county hospital system.

Voters will decide Nov. 4 whether to approve Proposition 480, a bond measure that would fund $935 million to replace the aging Maricopa Medical Center and other county health district facilities.

Maricopa Integrated Health System is seeking voter approval to upgrade and replace the hospital at 2601 E. Roosevelt St. in Phoenix, build a behavioral-health facility and expand, renovate or replace community health clinics across metro Phoenix. The taxpayer-funded district has historically served as a safety net for the region's uninsured, underinsured and difficult-to-treat populations such as HIV patients and burn victims.

Yet executives with Abrazo Health, Banner Health, Dignity Health and Scottsdale Lincoln Health Network said health care's changing economics make a newly built hospital a throwback in an era that increasingly requires health systems to treat all but the sickest patients outside the hospital.

These private-sector hospital-system executives also suggested a public-private partnership that uses the metro region's excess and available hospital beds may be a better public investment than a newly-built Maricopa Medical Center.

The large hospitals are not formally opposing the bond measure, but the executives said they are expressing their individual concerns about taxpayers authorizing such a large amount.

"Why should the public go and pay for the cost of replacing that facility when in the general market there's clearly more than enough capacity to absorb what's going on," Peter Fine, CEO of Banner Health, told the Republic's editorial board meeting this week. "To us, it's an open checkbook without accountability."

Fine was joined by Reginald M. Ballantyne III, senior strategic advisor for the for-profit chain Tenet Health, which owns and operates Abrazo Health, and Tom Sadvary, CEO of Scottsdale Lincoln Health Network. Linda Hunt, CEO of Dignity Health Arizona, was absent from the editorial board meeting but said she also questions the need for the bond issue.

Those four private health-care systems combined control more than 80 percent of the hospital market in metro Phoenix.

Supporters of the bond issue say it's a necessary investment for the community because it will bolster critical services such as Level 1 trauma care for adults and children, behavioral health and safety-net medical care. Officials tout the hospital's highly ranked Arizona Burn Center as well as its role as a teaching hospital for medical-school graduates.

If approved, the bonds would fund $571 million to replace Maricopa Medical Center, $226 million for a behavioral health center and $138 million to renovate, expand or replace existing health clinics, said Juanita Francis, co-chair, of Yes on 480 Committee.

MIHS President and CEO Steve Purves said the bond proposal takes into account the shifting tides of health care that stress the overall health of the population, not just the sickest patients who need inpatient care. For one, the rebuilt Maricopa Medical Center, now authorized for 315 beds, will likely have about 250 beds in a modern facility outfitted with upgraded technology.

"We're focused as a health-care system on population health to keep people out of the hospital," Purves said.

Although private-sector hospitals may have available beds, those beds are not always a perfect match for the types of patients MIHS serves, including HIV patients and burn victims, Francis said.

The private-sector hospitals executives also questioned how transparent MIHS is being with how it will spend the money if voters approve the measure. Sadvary cited the ballot language as an example.

"If we were presenting a $1 billion proposal to our boards, we would have a very detailed business plan," Sadvary said. "I think that MIHS will hopefully be coming forth with very specific details because $1 billion is a lot of money."

But MIHS officials said that planning for the bond issue has been an open process spanning nearly two years with numerous public meetings. The private-sector health executives could have offered input at those meeting, but they did not, MIHS officials said.

"The process was totally open and everyone in the health-care community knew about it," said Rich Dozer, a former Diamondbacks and Phoenix Suns executive who also co-chairs the Yes on 480 Committee.

The bond proposal has received widespread community support from dignitaries, government officials and health-care workers.

Arizona State University President Michael Crow, Maricopa County Sheriff Joe Arpaio and U.S. Rep. Ed Pastor support the bond issue. The Professional Fire Fighters of Arizona and Arizona Police Association also back the measure, and so does the Arizona Hospital and Healthcare Association.

Abrazo, Banner Health and Dignity Health split from the Arizona hospital association in 2012 and informally joined together to hash out common issues such as the state's Medicaid expansion. Scottsdale Lincoln Health Network has left the hospital association, too.

The Arizona Chamber of Commerce and Industry will meet next month to decide whether to support Prop. 480 and other ballot measures, said Garrick Taylor, the chamber's senior vice president of government relations and communications.

"We anticipate hearing both sides of the argument at our next board meeting, but we're aware of the concerns that the bond measure could have some negative property-tax implications as well as concerns about its impact on private hospitals," Taylor said in an e-mail.

Groups voicing opposition to the bond measure include the Goldwater Institute and the Arizona Tax Research Association, which argues the measure could cost Maricopa County residents $1.4 billion, including principle and interest, in property-tax increases.