"Can a monopoly hospital sue and delay, and potentially eliminate, a 20-bed competitor?" said Greg Hegfors, administrator of the Great Falls Clinic, the new part-owner of the smaller hospital. "Here you have a monopoly hospital that is truly acting monopolistic."

Hegfors is talking about Benefis Healthcare, which earlier this year sued to stop the clinic from becoming a partner in the 20-bed Central Montana Surgery Hospital.

Benefis sees more in-patients and has more beds than any other hospital in Montana, making it the largest single hospital in the state. Benefis says the transaction violates state and federal laws that forbid physician-owned "specialty hospitals," because of the power doctor/owners would have in referring profitable patients to their own hospital.

The hospital claims that the Great Falls Clinic and its partner, Essentia Healthcare of St. Paul, Minn., want to "cherry-pick" profitable customers that otherwise would go to Benefis for surgery, thus undermining the larger hospital's financial position.

"If the bottom line starts to shrivel up on us, how can we continue to offer all the services that we do, knowing some of them are cross-subsidized by other services and benefits?" said Wayne Dunn, chief financial officer for Benefis.

Strip away the legal issues, and the dispute cuts to the heart of a debate over whether certain health care competition offers better deals for consumers - or may actually increase costs and drive up prices.

A smaller surgical center and/or hospital usually doesn't have an emergency room, and specialize in procedures that have fewer complications and require shorter stays. Thus, they tend to be more profitable.

Traditional hospitals worry that if smaller competitors attract patients with more profitable procedures, the big hospitals will be forced to raise prices on other services to cover their substantial fixed costs.

"Any time that volume is reduced in an area that makes money, our costs go up," said John Nordwick, chief executive officer at Bozeman Deaconess Hospital. "Competition in health care doesn't necessarily result in lower costs."

Advocates for broad health care reform in this country make similar arguments, saying cutthroat competition in health care does not reduce costs.

Providing good health care is very expensive, with high fixed costs such as sophisticated equipment, training and research, they say. Having a capitalistic free-for-all simply means more people trying to extract top dollar to cover these costs.

"They're all competing against one another in a permanent war, to get your dollar rather than cooperating to provide health care at a reasonable cost," said Don DeMoro, executive director for the Institute for Health and Socio-Economic Policy in Orinda, Calif. "You have an industry where everybody is trying to cut everybody's throat to make the most money. It just doesn't work."

Hegfors said fundamental changes are needed in a health care financing system that often pays for the most expensive levels of care, regardless of whether they're needed.

More and more, surgical and other procedures can be done in an "outpatient" setting, meaning smaller centers where the patient undergoes treatment and goes home the same day, he said.

"I'm suggesting that the system incentivizes people to keep the status quo, paying fees for services that could be done without that (cost)," Hegfors said.

The clinic, itself a health care business power with more than 800 employees, wants to be a leader in providing preventive care that can reduce health care costs in the long run, he said.

"If there is not competition, there will not be any innovation in the market," Hegfors said. "We're not trying to steal patients, or anything else like that. We're trying to come up with a solution."

Great Falls Clinic officials bristle at the suggestion that their 120-physician staff will guide more business to Central Montana Surgery by referring patients there instead of Benefis - especially those with better insurance and able to pay more.

"It's a patently false statement," said Steve Akre, chief medical officer for the clinic. "I have complete confidence in our doctors, that they would not send (patients) where they don't get the medical care that they need.

Kalispell Regional Medical Center had competed against a physician-owned surgery center and imaging center for nearly two decades, but three years ago, they became partners.

The centers moved into a new building adjoining the hospital, which owns 60 percent of the businesses and handles most of their administrative duties.

In Butte, St. James Healthcare, the local hospital, was faced with potential competition from a physician's group that wanted to build a smaller specialty hospital.

The hospital decided it would build its own outpatient surgery center and invited local doctors to become partners in the venture. While some doctors still chose to compete with their own imaging center and other services, two dozen local physicians agreed to become partners with St. James in its new, $14 million project that is expected to open in January.

"It was better for us to collaborate and come together and stop the possibility of a multispecialty hospital," said Bruce Whitfield, chief financial officer for St. James. "When you go head to head with the (local) physicians, it's pretty tough."

Large hospitals in the two-hospital towns of Billings and Missoula also have chosen to cooperate on some ventures rather than compete, such as an expensive CT scanner in Billings.

"The real issue on duplication is, can the facilities in place meet the needs of the population in place - or are they creating something that is beyond what is needed?" said Tom Reitinger, interim CEO at Community Medical Center in Missoula.

The Billings Clinic, with more than 3,000 employees, is a product of collaboration as well, formed by a merger of Billings Deaconess Hospital and a physician-owned clinic 13 years ago.

"The nonduplication of services was a big (reason) for the merger," said Nick Wolter, CEO of Billings Clinic. "We can get a handle on cost and focus on quality."

Regardless of what happens with the legal battle between Great Falls Clinic and Benefis Healthcare, hospital officials in Montana generally say there should be more collaboration among providers, rather than a constant race to compete.

"I believe there is a place for more coordination of care, more integration of care," Wolter said. "When we have a disparate, fragmented delivery system, it's hard for people to come together and develop strategies and tactics around quality and cost.

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