For industry-hungry Fairfax County, it seems a perfect offer: a big, national company wants to build a $38 million facility near Reston. The company would employ 500 to 600 people and pour $300,000 a year into county tax coffers.
Yet, Fairfax officials are wary. The reasons: the new facility would be a hospital designed to make money, would place 200 more hospital beds in an area Virginia officials say already has 526 too many beds, and would, according to one estimate, add about $12.5 million a year in health care costs to the Washington area.
What's more, the new hospital would bring competition to the giant nonprofit Fairfax Hospital Association, which currently operates all the county's hospitals and is itself eyeing a site for a new hospital in Reston.
The chilly reception has not deterred Humana, Inc. -- a Louisville-based chain whose agressive management, elaborate meals and patient services have helped make it the nation's second largest firm in the for-profit hospital business. Humana, which owns 90 hospitals and grossed $1.4 billion last year, today will make public its plans for a 200-bed hospital, named Cameron Woods, near the Dulles Airport Access Road.
"Population studies we've done show there is a real need for a hospital in the Reston area," said Walter J. Ornsteen, Humana's local project director. "Average travel time for some of those residents is 45 minutes to one hour to get to the nearest hospital."
Association officials agree with that assessment -- but say it is their organization that should be picked to meet the county's medical needs. A money-making hospital would refuse to serve the poor, critics say, and drain off the more lucrative medical services that can help cover the costs of charitable services.
Before it can break ground, Humana must win approval of the Health Services Agency of Northern Virginia, a regional agency that is supposed to eliminate unneeded health care services, and state health officials in Richmond. "It's going to be an uphill fight; we expect a lot of politics," acknowledges Kenneth Newcomb, a hospital consultant working for Humana.
Thus far the odds seem to be against Humana. "They asked me to support them and I told them no," said Fairfax Supervisor Martha V. Pennino, who represents the Reston area. She said she opposes Humana because she believes the firm's first obligation will be to its stockholders -- not patients.
Humana suffered another setback last week when Virginia State Del. John S. Buckley, a conservative Fairfax Republican who had championed its proposal, was defeated in House elections. Humana acknowledges the local oposition stems mainly from the political connections of the county's powerful hospital association, which has announced plans to close one of its four facilities so it can errect a 225-bed hospital near Reston.
The association is arguing that Fairfax has an oversupply of beds, citing its own five-year-old Mount Vernon Hospital in eastern Fairfax where up to 50 percent of the facility's 235 beds often are empty. Association officials say their new Reston hospital will not add significantly to the number of beds because it is coupled with a plan to close their 125-bed Commonwealth Doctors Hospital on Chain Bridge Road in Fairfax City.
The arithmetic of that move, Humana says, raises questions about whether additional hospital beds actually would increase prices. Some of the health insurance carriers are not so sure prices would increase if Humana comes to Fairfax and some politicians are arguing that the government should not interfere with a private venture.
"I've seen recent studies which show that overbedding by itself doesn't necessarily lead to higher costs," said James Stroker, a spokesman for Blue Cross in Washington. "The studies say the percentage of occupancy (of the available beds) is a much more important factor."
Although Virginia officials were unable to provide statistics on hospital bed costs, a 1980 study by the Maryland Cost Review Commission found that each unneeded hospital bed in the state costs $63,000 a year to maintain.
Dean Montgomery, director of the Health Systems Agency of Northern Virginia said "that figure is probably in line with costs here." If so, Humana's 200 beds could add about $12.5 million annually to the health care costs of the estimated 500,000 people who use Fairfax hospitals each year.
"Humana won't hurt," said Montgomery who sees both pro and con arguments to the Humana proposal. "Many of those extra beds would be used by draining patients away from existing facilities. I think it's fair to say that 200 beds would be excessive. People in Fairfax Couny already have ample resources."
An eight-page draft report prepared last month the Health Systems Agency echoes the concerns about excessive beds in the Virginia suburbs. "Unless the numbers of beds licensed and operated are reduced," the report said, "there will continue to be more than adequate capacity in Northern Virginia through at least 1986."
"Competition in the health care industry is not like the restaurant business," said Michael Ratcliff, a consultant with the Virginia Department of Health, the second state agency that will have a say on Humana's application. "It's sort of like an arms race -- if your competitor has a new piece of equipment, then you need it." He said that with 4.4 beds per 1,000 people, Virginia is slightly over the federal limitation of four hospital beds per 1,000 people. He said the Northern Virginia area as a whole has 526 excess beds.
What has made the Reston area a battleground for both hospital groups is that many of its young, well-to-do residents carry private health insurance plans that health planners say provide more lucrative reimbursements for medical services than the government-run Medicaid and Medicare programs.
Low Medicaid and Medicare payments produced a $6.4 million loss at the Fairfax association's four facilities last year, according to John P. O'Brien, the group's vice-president for finance.
Humana claims it will be able to provide lower cost medical services, in part, because it will not suffer losses of such magnitude. "Their hospitals (the associations) were built with public funds so they have an obligation to take charity cases; we don't," said Humana's Newcomb. "We just won't have those kinds of losses," he said.
In meetings with county politicians, community leaders and doctors from Fairfax and Loudoun counties, Humana has not been arguing economics. Instead, the firm has argued that the hospital beds in Fairfax are poorly located and that northwest county residents must travel too far for hospital care.
"Plus, there is the competition factor," said Ornsteen. "We don't necessarily think competition would be a bad thing for the county."
The influential Fairfax Medical Society has not taken a position on the issue but many new doctors in Loudoun and western Fairfax are receptive to the prospects of increased compitition since Fairfax Hospital, located off the Capital Beltway and their closest facility, is overloaded and has stopped admitting doctors to its staff.
Great Falls physician Daniel E. Jiminez, who has been practicing in Fairfax for only 18 months, typifies the doctors who support Humana. "It's very difficult to get beds at Fairfax Hospital," said Jiminez who has been unable to get privileges there because of the moratorium. ". "It's not for me; it's just better for the patients."
"All for-profit hospitals are stereotyped as the bad-guy," said George Saucier, Humana's director of development. "We've certainly evaluated this proposal to know that, if there is not now a need, there will be a critical need just a few years from now. Why should politics rule the health care needs of the Reston community?" he asked. "We're not going to be scared off."