With CON games gone,
Frankford Hospital prepares
to open cardiac care unit

by David J. Foster

Staff Writer

Throughout the night, Mary Jester's lungs ached. By Morning, the 82-year-old couldn't breathe.

Panicked, she phoned her son, John Jaszczak, who called for a rescue team, which rushed her to Frankford Hospital's Torresdale Campus a few blocks away.

"They feared congestive heart failure," said Jaszczak. "It turned out to be pneumonia." But they discovered irregular heart rhythms. That meant a trip to Allegheny University Hospital-Hahnemann in Center City.

"She's a widow and I'm her only son," said Jaszczak. "Frankford Torresdale caters to people her age. It's our local hospital. Unfortunately, they couldn't do the cardiac testing my mother needed."

Why not?

The state said no.

Why should "the state inject itself in a decision that could affect my mother's life?" Jaszczak asked.

On November 27, 1996, state legislators answered that question by "unintentionally" failing to renew the state's Certificate of Need (CON) law. They effectively killed a regulatory system that, CON opponents argue, benefitted Center City hospitals at the expense of Mary Jester's freedom to choose.

Next year, Frankford Hospital will open the Northeast's first state-of-the-art cardiac care unit, then expand into cardiac catheterizations. No more long rides on I-95, no more Center City traffic snarls for visiting relatives, no more limits on choice.

But organizations like the Hospital Association of Pennsylvania warn unless new regulations are adopted, medical costs in Pennsylvania will skyrocket as for-profit enterprises roll into this barrier-free state.

One hospital official with a CON-approved cardiac unit warned that Center City's medical facilities would lose $26 million if a rival facility, like Montgomery County's Abington Memorial Hospital, began offering open-heart surgery.

Welfare secretary Feather Houstoun vowed to fight unapproved nursing home expansions by withholding Medicaid reimbursements to those institutions.

For now, Northeast Philadelphians have been freed of a regulation that, medical economists argue, was unfairly limiting their choices.

The wrath of CON

Certificates of Need were born in the 1974 National Health Planning and Resources Development Act, which forced hospitals to seek state approval before adding new services or capital improvements.

If state regulators decided Philadelphia had enough hospital beds or intensive care neonatal units for its population, there could be no more. A patient's affinity for a local hospital carried little weight.

The theory: Keep hospitals from extending themselves financially and inflating prices. In fact, in 1974, medical costs did surge, largely due to two other government programs.

Medicare and Medicaid reimbursements were based on a "cost-plus" calculation, explained Darcy Olsen, a Cato Institute policy analyst. "Providers were reimbursed for whatever their costs were," no matter how high.

That encouraged a buying spree. "Even if nobody used the services or equipment, they passed the costs onto the patient, and the hospital was reimbursed," Olsen said. "There was no market-based price competition."

Under CON, "existing providers are granted a monopoly," argued Michael Tanner, Cato's director of Health and Welfare Studies. "Entry-barriers (fail) because the new provider seeking to enter the market is often more innovative and cost-efficient."

Since the CON law's inception, federal and state governments have spent over $1 billion administering the program. Notes Tanner: Fighting a CON ruling eats money and manpower, "all, of course, passed on to consumers."

Health care economists believe that preserving the status quo "raises hospital costs as much as five percent," said Olsen. The Federal Trade Commission's estimate: $1.3 billion annually.

In 1982, Congress acknowledged their regulatory misjudgment, shifted Medicare and Medicaid to a fixed-price basis, and allowed states to kill their CON laws. Twenty- nine states did.

But not Pennsylvania.

What the "state doesn't consider is most people, especially the elderly, like to be in their neighborhoods," said Jaszczak. "Do you know difficult it is to move someone downtown? To visit them? How can we work? When my mother was in Frankford, I could literally walk to visit her.

"This is no knock at Hahnemann. It is an excellent hospital. The problem is logistics."

Jester was scheduled for transfer at 7 AM. She had to be ready at 5 AM. "Try that when you're 82," Jaszczak said.

The plan: Arrive at Hahnemann at 9 AM for the two-hour preparation, then test at 11 AM. The snag: An icy December rain jammed traffic on I-95, the primary artery from Frankford to Center City. While Jaszczak fretted at Hahnemann, Jester sat on the interstate. "I had no idea where she was or what had happened," he said.

Jester's cardiac catheterization finally began--five hours late.

Frankford's decision

"We never seriously considered opening a cardiac care unit until after the Certificate of Need (law) ceased," said Roy Powell, Frankford Hospital, president and CEO.

Two factors drove the decision: The Northeast's booming elderly population and the number of patients Frankford was sending to the Center City cardiac units. Over seven years, Frankford's cardiac activity increased eight to 10 percent per year.

Why should Frankford lose those patients to competing facilities, reasoned hospital administrators, especially when their aged patients consider distance when making medical decisions?

Over 6,000 patients with cardiac problems come through Frankford's emergency room each year, said Gene Johnson, Frankford senior vice president. Over 500 of those must be transferred to other facilities. "By offering all the cardiac services (here), their physicians will be able to continue overseeing treatment," he said.

Home to more seniors than Vermont, Wyoming, or Alaska, Northeast Philadelphia's U.S. Congressional District (PA-3) ranks 17th in the nation (out of 435) for residents 65 or older. The fastest growing population: Those age 85 or older, expanding 23 percent annually.

With campuses in the lower and far Northeast, Frankford is the area's dominant medical facility.

The CON law, opponents said, was blocking these 125,000 seniors-- a massive market force--from exercising their free will.

"I've never believed Certificate of Need laws ever worked," said Powell, "and I've seen them in several states. It's anti-competitive and whoever has the most political clout gets want they want."

A 1992 state Budget and Finance Committee report agreed: The CON law was ineffective, in part, because of "political intervention on the part of individual institutions," the study said.

In fact, it was a fourth-quarter political punt that killed the state's CON law. Montgomery County State Sen. Stewart Greenleaf held up the CON renewal bill to win exemptions for five medical institutions, including Abington Memorial Hospital. The bill died of inaction at 1:30 AM.

Abington's request to perform open-heart surgeries was turned down twice, in part, because of objections from Center City hospitals, which feared their cardiac units would lose millions to the competition. Abington officials unsuccessfully argued that 75 percent of open-heart surgeries are performed in Philadelphia, while most patients needing the procedure live outside the city.

"CON laws have protected inefficient hospitals from having to deal competitively," Powell said, "while (the other) hospitals spend more money trying to circumvent the process politically."

The only hospital to support Abington's Certificate of Need was Temple University Health System, which, ironically, was to oversee Abington's program.

Better treatment?

CON supporters believe shoehorning patients into a designated hospital keeps physicians sharp. According to one national standard, unless a cardiac surgeon performs several hundred operations a year, his or her technical prowess is suspect.

Powell rejects this notion. The proliferation of mergers and project partnerships is producing the same results. To cut costs, Hospitals are sharing physicians. Frankford's cardiac unit will be staffed by Albert Einstein Healthcare Network surgeons.

"We're partnering with Einstein because their cardiac staff has been performing these procedures for years, and they consistently get great outcomes," said Haren V. Joshi, MD, Frankford's director of surgery. "By working with Einstein's accomplished heart surgical team, we'll be able to offer the benefits and security of an established program from the start."

A full-time heart surgeon will be recruited to oversee the unit.

Last year, Einstein, which argued any heart surgery expansion would hurt its cardiac unit, bemoaned the CON demise. Its union with Frankford, said an Einstein spokesperson, was Einstein simply facing "reality."

If the state initiates any new review process for heart units, said Johnson, Frankford would likely be approved because its cardiac patient-base will be expansive.

That's the "market at work," noted Olsen. Northeast Philadelphians will go where they feel safe and comfortable.

Though in November CON law supporters in the legislature vowed to revisit the issue this year, the economic tide may be turning against their arguments.

According to the Budget and Finance Committee study: "While rising costs remain a concern, managed care and other changes in the nation's health care delivery and financing systems are pushing hospitals and other health care facilities to operate more efficiently."

Managed care enrollment in Pennsylvania increased 112 percent between 1992 and March 1996. Between 1994 and 1995, the rate of growth in acute care hospital operating expenses increased by only one percent, the smallest annual increase since such state data has been recorded. As Greenleaf told reporters on the eve of CON's demise: "The sky is not going to collapse."

So far, it hasn't. And Northeast Philadelphians have a new cardiac unit in their backyard.