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Hospitals file suit, say rule change will cost them paying customers

POSTED: January 20, 2008 5:04 a.m.

Northeast Georgia Medical Center is among a group of 59 nonprofit hospitals that filed suit last week against the Georgia Department of Community Health, claiming that the agency illegally changed its certificate-of-need policy.

On Dec. 13, the department reclassified general surgeons from "multispecialty" to "single specialty" status. This would allow general surgeons to set up their own free-standing surgery centers without having to go through the certificate-of-need process, which determines whether there is a local need for particular medical services.

Some specialties, such as plastic surgery, already have free-standing centers in Georgia. But general surgery, which can include procedures on just about any part of the body, has always been a core business for hospitals.

"General surgery — appendixes and gallbladders — is the heart of what every community hospital does," said Jim Gardner, president and chief executive officer of Northeast Georgia Medical Center.

"We don’t oppose general surgery being designated as a single specialty, but it needs to be done through the legislative process."

At the center of the lawsuit is who gets to make the decision: the Georgia General Assembly or the Department of Community Health. During the 2007 session, legislators chose not to approve a bill reclassifying general surgery.

Since then, Gardner said the Tifton-based Georgia Alliance of Community Hospitals has been negotiating with the Medical Association of Georgia for a solution both sides can live with.

"The alliance has been working in good faith with (the medical association) to find a meaningful compromise," he said. "We want protections in place so it would not undermine the safety-net hospitals."

If surgery centers don’t go through the certificate-of-need process, they may be exempt from any obligation to treat indigent or Medicaid patients. Patients with good insurance, who provide most of the revenue for hospitals, could migrate to the surgery centers, leaving hospitals to care mostly for the patients who can’t pay.

"The heart of the matter is maintaining some balance, having surgery centers provide some level of Medicaid and indigent care," Gardner said.

Dr. Jack Chapman, a Gainesville ophthalmologist who currently serves as president of the medical association, said the state medical association is open to that possibility.

"We don’t have a problem with surgeons providing indigent care," Chapman said. "They have always done so and will continue to do so."

However, the association is pushing for general surgeons’ right to establish their own surgery centers.

"Georgia is the only state that doesn’t recognize general surgery as a single specialty," Chapman said. "We’re interested in being able to provide patients with choice. The cost of surgery at an ambulatory center is about one-third of what a hospital usually charges."

But that’s not what the lawsuit is about. Leo Reichert, an Atlanta attorney who is representing the Georgia Alliance of Community Hospitals in the case, said the suit deals only with who had the authority to make a rule change.

Reichert said until last summer, state officials agreed that the certificate-of-need policy could only be changed through legislation, not through rule-making. "That position has been upheld by the state attorney general," he said.

Gardner said there seemed to be a shift in tone after the current Department of Community Health commissioner, Rhonda Medows, was appointed by Gov. Sonny Perdue.

"The governor encouraged the ... commissioner to ignore the negotiations and issued an executive order to change the rule," Gardner said.

This, the lawsuit contends, was illegal. "The (Department of Community Health’s) job is to administer the law, not make it," Gardner said.

But the state’s position is that agencies do not need the legislature’s approval to make changes in "administrative rules."

Department spokeswoman Dena Brummer said she could not comment on the hospital alliance’s lawsuit.

"We are unable to provide any statements around pending litigation," she said. "The Board of Community Health has the legal authority to make or change rules as outlined in (Official Code of Georgia) 31-6-21.1."

In addition to suing the department, the alliance’s lawsuit also names Albany Surgical, a general-surgery practice in Albany that has been trying since 1999 to get the "single specialty" designation. The Georgia Supreme Court and Court of Appeals have repeatedly struck down Albany Surgical’s arguments.

The current lawsuit is filed with the Superior Court of Dougherty County, where Albany is located. Reichert said because previous court cases have upheld the certificate-of-need law, he expects the judge to rule in the alliance’s favor.

"We are very confident of our legal position," he said. "We think the issue is clear."

Besides Northeast Georgia Medical Center, other area plaintiffs in the suit include Emory University Hospital, Piedmont Healthcare, Northside Forsyth, Gwinnett Medical Center, DeKalb Medical Center, Wellstar Kennestone, Athens Regional Medical Center and Stephens County Hospital.



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