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Alaska's largest hospitals compete to build more emergency facilities

It's a little-known fact that an oversupply of emergency room beds tends to push up health care costs.

That's because any unused beds are still costing hospitals money, despite not being occupied. Hospitals, in theory, would pass the cost of those unused beds on to their patients.

To prevent hospitals from facing such a dilemma, Alaska and most other states have laws limiting the capacity of emergency rooms, as well as other medical services and facilities. Alaska's hospitals can't add new emergency beds until state health officials determine, through a mathematical formula, how many are actually necessary.

And when that number grows, the question becomes: Which hospital will get to add them?

The debate is playing out right now in Anchorage between the state's two largest hospitals.

Providence Alaska Medical Center and Alaska Regional Medical Center are vying for the right to build the latest batch of emergency beds allowed by the state. Until the year 2022, no more than 13 can be added anywhere in the municipality, according to the state Department of Health and Human Services.

Providence, Alaska's largest hospital, presented state health officials last year with a plan to add 14 beds to its existing facility in the U-Med District. The $12.8 million proposal would raise the number of its ER treatment rooms to 51. It includes a 10-room pediatric emergency treatment area.

During the last four years, on average, Providence's emergency department served nearly 67,000 patients annually. The hospital, operated by nonprofit Providence Health and Services, based in Renton, Washington, has about 400 licensed beds in comparison to the 250 at Alaska Regional.

Alaska Regional's plan calls for emergency facilities of a type that have caused some controversy in other parts of the country because of their high costs and strategy of targeting more affluent neighborhoods whose residents are more likely to carry good health insurance.

The facilities are not equipped to handle acute illnesses or injuries, like gunshot wounds or the more critical stages of a stroke or a heart attack. Instead they are staffed and equipped to handle the less serious cases that make up the bulk of emergency room visits -- fevers, broken bones and the like -- that can often be addressed more cheaply but as effectively in an urgent care facility or a doctor's office.

Alaska Regional, located next to the Merrill Field airport, wants to build two of the facilities. One would be in South Anchorage and the other in Eagle River, where incomes tend to be higher and insurance coverage more comprehensive than in other parts of the city.

The proposed facilities, costing a total of $25.3 million -- about double the Providence project -- would be able to handle "about two-thirds of emergency room-type visits," according to Alaska Regional's application to the state.

Alaska Regional's parent company, the for-profit and publicly traded Hospital Corporation of America based in Nashville, Tennessee, is part of the recent boom in these facilities, known as "freestanding emergency departments" because they are typically located about 15-20 miles from the parent hospital. Of the roughly 400 in existence today, HCA owns and operates 45 of them. None are in Alaska.

Convenience is a major upside to the facilities and a key reason for their rapid proliferation in several states, including Florida and Texas.

Alaska Regional's emergency departments would be open 24 hours a day, seven days a week. They would offer some services that urgent care centers typically do not, including intravenous infusions. And unlike many urgent care and doctor's offices, the facilities in Alaska will accept Medicare and Medicaid, said Kjerstin Lastufka, a spokeswoman for Alaska Regional.

Alaska Regional CEO Julie Taylor stressed that the facilities "will be open to all patients, regardless of their ability to pay."

But uninsured individuals or those with high deductibles would do well to check costs first. In the Lower 48, the remote facilities can charge emergency-room prices for procedures like stitches or treating sprains -- four or five times what a similar visit to an urgent care facility or doctor's clinic would cost, according to an article from the Journal of Emergency Medical Services, a trade publication.

"They can charge the professional fee and facility fee on top of what you'd charge for urgent care or doctor's visit," said David White, director of analytics at health care consulting and architectural firm Freeman White in Charlotte, North Carolina. "Insurance foots the bill for those who are insured, but if you're not insured, you pay that cost out of pocket."

Lastufka said Alaska Regional has not done a cost comparison between what it would charge versus what the multiple urgent care centers and doctors in Eagle River and South Anchorage charge for similar services.

Patients from Eagle River and South Anchorage together make up about 17 percent of Alaska Regional's emergency room visits. Part of the hospital's rationale for addressing less serious types of emergency room visits in those neighborhoods is to relieve pressure on its existing emergency rooms. But there's no guarantee that goal would be met. In the Lower 48, freestanding emergency departments tend to attract droves of new patients -- another reason why hospital systems find them so lucrative -- and in doing so, generally do little to relieve pressure on emergency rooms at main hospitals, White said.

"I think most hospitals or systems, when they put in an FSED, think that's going to decompress volume, which will allow the hospital itself to have more capacity, but that's not typically what we've seen," White said. "Typically, it's pent-up demand that is opened up instead."

Providence, for its part, argued that its trauma center certification, which along with Alaska Native Medical Center is the highest-ranked in the state, is one reason it needs more emergency room space. Alaska Regional is not designated as a trauma center, according to the state Department of Health and Social Services.

"We need to always be able to receive trauma patients into two rooms, but our second room is often used for routine care," said Dr. Richard Mandsager, chief executive at Providence.

Mandsager said he thinks an emergency room needs access to all critical care specialties -- operating rooms, blood transfusions, treatment for strokes and heart attacks.

"That serves the community better than the FSED model where the sickest patients will still have to go to a hospital emergency department," he said.

But Taylor disagreed with Providence's approach of putting all the emergency rooms on its main hospital campus, noting that the state's three biggest hospitals are within two miles of each other.

"The community would be best served by spreading out access to care," Taylor said. "Having emergency care closer to home is better for many reasons."

A public meeting on the issue will be held Monday at the Loussac Library as part of what's called a "certificate of need" process. Jared Kosin, executive director of the office of rate review, said the state Department of Health and Social Services will likely issue its decision in July.