Published: October 03. 2010 12:01AMPITTSBURGH -- Phil Pollice, M.D., understands what Hamot Health Foundation's soon-to-be-former neurosurgeons are going through.
The five physicians with Tri State Neurological Surgeons are leaving Hamot later this year to work at Saint Vincent Health Center.
They are switching hospitals for several reasons, Tri State President Brian Dalton, M.D., said. One of their concerns is the effect of Hamot's ongoing affiliation talks with the University of Pittsburgh Medical Center.
Pollice, an ear, nose and throat specialist, had just started treating patients at Passavant Hospital in suburban Pittsburgh when it affiliated with UPMC in 1997.
He had no idea what to expect. Some of his fellow Passavant physicians left the hospital before the affiliation took effect.
"There was a lot of fear among the physicians," Pollice said. "The fear was that we were going to be phased out and replaced with UPMC-employed physicians."
Thirteen years later, Pollice is still treating patients as a private physician at UPMC Passavant and UPMC Mercy. He estimated that about half of UPMC Passavant's doctors remain in private practice.
He recently visited Erie to talk with Hamot doctors about what they could expect if Hamot affiliates with UPMC.
"Like I tell people, some doctors did better when UPMC came in," Pollice said. "Others did worse and moved on."
Doctors aren't the only people concerned about Hamot's possible affiliation with UPMC.
Patients are worried they will be sent to Pittsburgh for procedures and surgeries they now undergo at Hamot.
Erie County Executive Barry Grossman has said he fears that Hamot -- Erie County's second-largest employer -- will slash jobs after affiliating with UPMC.
Neither of those scenarios are going to happen, said Liz Concordia, UPMC executive vice president and president of the health system's hospital and community-services division.
"We're looking to invest $300 million in Erie," Concordia said, referring to the amount of money UPMC will give Hamot over the next 10 years if the two health systems affiliate. "So we want Hamot to be successful. We want to bring patients to Erie."
Sending large numbers of patients to Pittsburgh isn't an option simply because there isn't room for them, Concordia said. Most of the UPMC hospitals in Pittsburgh have occupancy rates of more than 90 percent, she said.
"Our hospitals in Pittsburgh are full," Concordia said. "It's to our advantage to have patients stay in Erie, instead of coming down here where there aren't enough beds already."
UPMC plans to do that by sending physician specialists to Erie who will treat patients and perform surgeries currently not done at Hamot.
For example, Hamot cardiologists told Concordia during her visit to Erie that they would like to see a heart surgeon at Hamot who could perform minimally invasive heart-valve surgeries.
"Those surgeries are currently sent to the Cleveland Clinic," Concordia said. "Our goal would be to help Hamot recruit someone to do that surgery in Erie."
As for jobs, UPMC officials are adamant that an affiliation will not result in significant job losses at Hamot, either immediately after an agreement is reached or several years afterward.
"Overall, our history has been net growth in full-time jobs for the hospitals who have affiliated with us," Concordia said. "We tend to see less growth in low-paid back-office jobs and more growth in high-paid clinical jobs."
Concordia pointed to UPMC Passavant and UPMC Shadyside as affiliation success stories.
Both hospitals joined UPMC in 1997. Passavant, located just north of Pittsburgh in McCandless Township, was a 240-bed community hospital that had just begun performing heart surgeries when it joined UPMC.
Shadyside, located in eastern Pittsburgh and one of the city's oldest hospitals, was a 300-bed facility that opened in 1866.
Since affiliating with UPMC, both hospitals have increased by more than 100 beds and hired additional staff, Concordia said. The number of full-time workers has risen by 38 percent at Shadyside and by 79 percent at Passavant.
"Being affiliated with UPMC has really helped us recruit new physicians," said Joel Weinberg, M.D., a UPMC Shadyside pulmonary critical-care physician. "For whatever reason, being part of UPMC is the biggest aphrodisiac to physicians."
One reason could be UPMC's willingness to pump money into each hospital.
The health system has spent $359 million at Shadyside since 2001 and an additional $283 million at Passavant to build cancer centers, expand emergency departments and purchase state-of-the-art diagnostic and surgical equipment.
"Before we affiliated with UPMC, we were a nice, strong community hospital," UPMC Passavant President Terri Petrick said. "Now, we draw patients from a much larger area. We see patients from West Virginia and all along the Interstate 79 corridor."
Not all UPMC hospitals have shared Passavant's and Shadyside's success.
UPMC Braddock closed Jan. 31, almost 14 years after the eastern suburban Pittsburgh hospital merged with UPMC. The hospital had lost more than $27 million over the previous six years.
"There was too much redundancy in terms of service with other hospitals close by," Pollice said. "It's always hard to see a regional community hospital close, but it was the right decision."
UPMC decided in 2008 to convert its financially struggling South Side Hospital into an outpatient center. The urban hospital, which opened in the 1890s, had lost $4 million in operating and total income in fiscal 2008.
In 2005, UPMC sold its Lee Regional Hospital in Johnstown to the rival Conemaugh Health System.
UPMC merged with Lee Memorial in 1998, but couldn't help the 249-bed hospital make money. It sold Lee Memorial to Conemaugh in 2005 for $58 million.
Hamot Chief Executive John Malone said he is aware of how those hospitals have performed but isn't worried that Hamot will suffer their fate.
"Those hospitals had significant problems and issues that Hamot simply doesn't have," Malone said. "Keep in mind that there have also been examples like UPMC Mercy, which was on the verge of bankruptcy and UPMC turned its finances around dramatically."
Mercy Hospital, which opened in 1847 and is Pittsburgh's oldest hospital, merged with UPMC in 2006. It is losing money but has seen its revenue from treating patients increase by 3.2 percent since the merger; operating costs have risen by just 1.17 percent.
Highmark questions affiliation
One of the affiliation's loudest critics has been Highmark Blue Cross Blue Shield, western Pennsylvania's largest commercial health insurer.
Highmark recently placed advertisements in the Erie Times-News and sent letters to local insurance agents questioning the need for the affiliation and what effect it could have on the cost of health care in Erie.
"Our concern is that this affiliation will cause the cost of health care in northwestern Pennsylvania to increase because more people will be sent out of town for treatment," said Dan O'Malley, Highmark's market president of the western region. "We've had a lot of experience with UPMC throughout western Pennsylvania, and the result of these affiliations is often higher costs. Not all the time, but it has happened."
Malone called Highmark's comments "disingenuous."
"One of their claims is that we didn't spend enough time looking at alternatives," Malone said. "One of the alternatives we did look at was partnering with Highmark. We had a meeting and asked them to put some meat on the bones of their proposal, and they came back to us and said they couldn't go through with it for several reasons."
The truth, Malone said, is that Highmark fears an affiliation between Hamot and UPMC will strengthen UPMC Health Plan. Highmark currently has about 63 percent of the commercial health insurance market in Erie County, compared with 4 percent for UPMC Health Plan.
Hamot employees and their families could switch their health insurance from Highmark to UPMC Health Plan if the affiliation is approved. That's about 9,000 covered lives, Malone said.
"That would give UPMC Health Plan a foot in the door," said Martin Gaynor, a professor of economics and public policy at Carnegie Mellon University. "It could enable them to compete with Highmark for folks who are not Hamot employees."
Hamot and UPMC have reached a tentative affiliation agreement and are currently examining each other's finances.
A formal agreement should be finished by December, Malone said. It will then need to be approved by the boards of trustees at both UPMC and Hamot before an affiliation could take effect.
"I believe this affiliation will strengthen Hamot as the area's premier tertiary health-care provider," Concordia said. "For us, it gives UPMC an anchor at the other end of the state, so that patients in your area will go to Hamot instead of going across state lines to hospitals in Ohio and New York state."
DAVID BRUCE can be reached at 870-1736 or by e-mail.
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