Inova Follows the Money

Our good friends at Inova Health System are at it again.

Not content to have the lion's share of the hospital market in Northern Virginia, with profit margins that would make any for-profit hospital proud, nonprofit Inova has been aggressive in extending its near-monopoly to outpatient services. Not surprisingly, that is where the money is these days.

Radiation therapy, a common treatment for cancer patients, is one such area. This treatment often involves more than 25 visits to a facility where patients are put in a lead vault and zapped with radiation from a machine called a linear accelerator.

Under the state's medical facilities planning law, Northern Virginia has 14 such accelerators at eight locations. Nine are either at Inova hospitals, hospitals it has proposed to acquire or sites jointly operated by Inova. Only one is free-standing and independent -- Associates in Radiation Oncology in Fairfax City, owned by Dr. Anu Gupta.

Gupta grew up in Chantilly, attended George Mason University, graduated from Eastern Virginia Medical School and did her residency at Georgetown Hospital, where she eventually joined the medical school faculty. In 1993, Georgetown, looking for a more convenient place to radiate its Virginia patients, purchased the Fairfax City facility and license from a private company that had closed its doors and put Gupta in charge.

When it decided to get out of the hospital business several years ago, Georgetown sold the facility to Gupta, who has been building up the business ever since. Last year, she installed the latest-model accelerator. And although the facility has a capacity of roughly 9,000 procedures a year, Gupta performed about 4,800 last year, which she says is just barely above the break-even point. About a third of her referrals come from doctors who, like her, are members of the staff at Inova's Fair Oaks Hospital six miles away.

Two years ago, an Inova executive knocked on Gupta's door and offered to buy the business, with the idea of closing the facility and moving the equipment and the license to Fair Oaks. After she refused, Inova decided to move ahead with its plans anyway. This month, the health planning agency for Northern Virginia, while acknowledging that the region had more linear accelerators than it needed, recommended that the state's health commissioner approve a $14 million radiation oncology center for Fair Oaks Hospital.

This is a familiar story in Northern Virginia, where Inova's ambitions know no bounds and the regional health planning agency is almost always ready and willing to help out. According to a study done for the Virginia legislature, 90 percent of Inova's applications won approval from the agency between 2004 and 2006. The figure was 50 percent for HCA, the for-profit hospital giant that is Inova's only real rival in the region, and 71 percent for everyone else.

Dean Montgomery, the agency's longtime director, makes no bones about his preference for locating services at major hospitals, where he says higher volumes of patients generate higher quality and lower costs. Montgomery has also acknowledged a preference for non-profit over profit-making health-care providers. In Northern Virginia, that combination pretty much tilts the regulatory field in Inova's favor.

You can imagine what is likely to happen next for poor Dr. Gupta. Once the new Fair Oaks facility is up and running, in about two years, the oncologists who practice at Fair Oaks or any of the Inova hospitals will come under not-too-subtle pressure to send their patients to the Inova radiation facility.

Doctors who decide not to be "team players" may suddenly find themselves at a disadvantage when hospital beds or operating rooms are in short supply. You can also bet Inova will use its considerable clout with insurers to make sure that Fair Oaks is on the in-network preferred list for radiation oncology services -- and that Gupta's facility is not.

Although it may be too late for Gupta, there are indications that forces are gathering to break Inova's stranglehold on the Northern Virginia market.

It has been nearly two years since Inova announced its intention to take over Prince William Hospital, because of questions being raised by the Federal Trade Commission and Virginia's attorney general. Regulators are seriously considering whether to ask a federal court to block the merger on anti-competitive grounds.

And in Loudoun County, where Inova recently added Loudoun Hospital to its empire, some real competition may be on the way. In August 2005, following a spirited opposition campaign by Inova, the county Board of Supervisors rejected a zoning proposal from HCA for a new hospital near Dulles Airport. But last fall, four of HCA opponents were voted out of office, while three who voted for the project won reelection. It's unclear where the new supervisors stand on the issue. But with a court date approaching for HCA's appeal of the decision, some sort of settlement seems possible.

HCA has also decided to challenge Inova on Route 50 in Loudoun County. Late last year, it quietly bought a parcel right next door to land that Inova had purchased long ago with the expectation of building a hospital some day. Although zoning applications have been submitted for both projects, only one is likely to win authorization from the state health commissioner. Given the lack of real hospital competition in the region, she'll have a hard time explaining why she gave the nod to Inova.

Steven Pearlstein can be reached atpearlsteins@washpost.com.