A Tale of Two Hospitals.

Competition Brings Big-City Hospital Services to Searcy

THE TWO HOSPITALS IN SEARCY each have expensive MRI machines, catheterization labs and cardiology programs. And in the next few years, they are planning to spend almost $40 million more in their quest for patients.

While the duplication may not be cost-effective in a city of 18,928, the escalating competition between Central Arkansas Hospital and White County Medical Center seems to have worked to the advantage of residents of Searcy and surrounding counties.

"There's excellent health care in Searcy, but some of it is certainly redundant," said Dr. Porter Rodgers Jr., a retired general surgeon in the White County seat. "I don't know of any city in the United States that has the quality of medical care that Searcy has or the fierce competition. I think it will continue."

While both hospitals are pouring money into construction projects, Central Arkansas Hospital has had to work overtime to make up for the patients and doctors it lost when Baptist Health came to town.

For years, doctors in Searcy practiced at both hospitals. In 1994, Baptist Health bought the four-doctor Family Practice Associates. Then in 1995, Baptist acquired Searcy Medical Center, which had 24 doctors in its group -- about a third of the doctors in town. (In January of this year, WCMC bought the assets of Searcy Medical Center, although the doctors will remain a part of Arkansas Health Group, which is affiliated with Baptist.)

When patients of the Searcy Medical Center or Family Practice Associates need to go to a hospital in town, they are sent to WCMC, which has a provider contract with Arkansas Blue Cross and Blue Shield. Baptist Health and Blue Cross and Blue Shield jointly own Health Advantage, a health maintenance organization.

Central Arkansas responded by stepping up its building of clinics in surrounding counties, which helped offset the loss of patients and doctors, said David Laffoon, Central's chief executive officer.

It also has spent millions on construction projects to bring heart and brain surgery to the city.

WCMC has pumped millions into construction projects as well and will continue in the future.

WCMC Mare Profitable

In the last couple of years of head-to-head battle, White County Medical Center, which is owned by the county government, has done better financially than Central Arkansas Hospital, which is owned by Tenet Healthcare Corp. of Santa Barbara, Calif.

In fiscal year 2000, WCMC reported net income of $5.9 million, up from $5.2 million in its 1999 fiscal year.

Meanwhile, Central Arkansas reported net income of $279,075 for fiscal 1999, the most recent year for which information was available, while in 1998 it reported a $1.2 million loss.

It wasn't always thus. In fiscal 1996, Central posted net income of about $4.8 million, up from $3.76 million in fiscal 1995.

Both hospitals draw from several surrounding counties, which creates a 150,000-200,000 population base.

"If we served just this community, we couldn't survive," said Ray Montgomery, president and CEO of WCMC, which employs about 900 workers.

But Montgomery said he doesn't want to see Central Arkansas fail, either.

"There's enough in this community and in this region that both of us can and will survive," he said.

Both hospitals have a long history in the community.

In 1961, residents voted to build White County Memorial Hospital, which opened in 1963 with 50 beds.

Since then it has grown to 245 beds and, in 1994, changed its name to White County Medical Center to reflect a "more diversified health care system," Montgomery said.

It admits 8,000-9,000 patients a year and serves 40,000-50,000 outpatients.

Central Arkansas Hospital, with 205 beds, sits six miles west of WCMC and has seen its patient numbers go up recently. In the fiscal year that ended May 31, it had a 10 percent growth in inpatient admissions over its previous year, from 5,000 to 5,500, Laffoon said.

Central traces its roots back to the early 1920s, when it was Wakenight Sanitarium.

Montgomery said both hospitals are successful because both give high-quality care.

One of the goals of Central Arkansas Hospital is to keep people in their own community and to keep them from going to Little Rock for health care, Laffoon said.

"We're always competing with [WCMC] and with other hospitals in the outlying areas," Laffoon said.

Battle for Doctors

When Baptist acquired Searcy Medical Center, it sent shock waves through the Searcy medical community.

"For years, most doctors in town -- with a few exceptions -- went to both hospitals," said Searcy cardiologist Dr. John Henderson, who was not in one of the doctor groups that Baptist bought. "What this has led to is more of a polarization."

When Baptist bought the practices of a large number of physicians, "I think their goal was to direct the patients to Little Rock when they needed tertiary care," Henderson said.

"Now what's happened since then is now White County has its own heart program ... This did nor play put to Baptist's advantage because Baptist wanted all these heart surgery patients to go to Little Rock."

Only a few heart surgery patients from Searcy are sent to Little Rock, because they can receive the surgery at Central Arkansas or WCMC, he said.

When the doctors in Searcy Medical Center signed on with Baptist, most of them resigned their privileges at Central, Henderson said. Baptist's alliance with both this large group of physicians and the dominant Health Advantage HMO ultimately resulted in more patients going to White County, Henderson said.

"This has been hard for Central Arkansas to lose a number of doctors who no longer admit there," he said. "And what has driven this is the doctors at the Searcy Medical Center can stay busy seeing primary Blue Cross and Blue Shield patients."

Since WCMC has the Blue Cross and Blue Shield contract, it would be difficult for a doctor in Searcy to practice exclusively at Central because too many patients have insurance that is honored only at WCMC, Henderson said.

But Central Arkansas responded by offsetting its losses with the clinics and. offering open heart surgery.

"We recruited a few new doctors, but we're constantly recruiting," Laffoon said. "I can't say we did it in response to [Baptist's move]."

But, Montgomery said, Searcy Medical Center chose Baptist for their strength, stability and potential financial support.

White County saw more patients "[and] as a result of that, those patients also got a better cost from us," Montgomery said.

Arms Race

In recent years, both hospitals have spent millions on expanding their hospitals, and both have multimillion-dollar projects in the works.

In 1998, WCMC finished a $16 million project that expanded the radiology unit, cardiopulmonary unit rehabilitation center and emergency room and added 24 additional patient rooms.

In spring 2002, it is planning to kick off a $34 million expansion project that will give it an additional 100,000 SF and renovate the operating room, outpatient center and add a new life center for women. It also will add 66 beds to the existing 245.

The project could take four or five years and will be completed in three phases. But construction could stop at the completion of the first or second phase if money isn't available, Montgomery said.

Montgomery said the building expansion is not a competitive move but designed "to meet the demands of the technological improvements that are expected by, our patients."

Laffoon sees it differently.

"[Building] is to keep up with the needs of the patients and to keep up with our competition," he said. "[But] we're not out just building buildings to try and keep up with them."

Central Arkansas Hospital just finished a $10 million addition to house the Central Arkansas Heart Center. The hospital has two cardiac catheter labs, a new recovery unit and surgical intensive care unit, said Peter Brown, vice-president of business development for the hospital.

Central has spent $11 million on equipment to offer heart and neurosurgery services, Laffoon said. He said the hospital was the first in a non-urban area of the state to do open-heart and brain surgeries.

Ground will be broken next year on a $4 million-$S million emergency room, which should be completed within three years, Laffoon said.

Over the next year or two, Central Arkansas will decide to rebuild or refurbish its obstetrics and outpatient surgery area, he said. And the hospital intends to open more clinics around the state, including one in Cabot in the upcoming months.

Montgomery said WCMC's future will include more outpatient care. It also will expand its heart program, oncology and obstetrics and offer more services for the aging population.