Big shakeup coming for Chch hospitals
New Zealand's private healthcare system is set to be shaken up by the imminent arrival of a new hospital in Christchurch.
Forte Health, the multimillion-dollar specialist, short-stay hospital owned entirely by surgeons, is two months from opening and is already causing controversy.
The newcomer's 25 shareholders are all specialist surgeons – absorbing every urologist in Christchurch, half of the city's orthopaedic surgeons and most of its ear, nose and throat specialists, The Press understands.
Concerns have been raised about Forte's shareholder-surgeons having a vested interest in shepherding patients towards their hospital for personal gain and health economists have criticised Forte's short-stay model as "cherry-picking" the private market.
Christchurch's two existing private hospitals are feeling the squeeze from Forte and will inevitably lose millions of dollars in revenue once it opens.
St George's and Southern Cross hospitals both have 10 operating theatres in Christchurch and Forte will be adding another four into the mix, while gunning for the biggest volume of surgery in the market.
Forte is targeting the less-complex day surgeries from four key specialties: Ear, nose and throat; urology; gynaecology; and orthopaedics.
St George's Hospital chief executive Greg Brooks said Forte's arrival raised some difficult questions about the future.
Brooks was already investigating other potential revenue streams to help ease the loss of day surgeries.
"The challenge from our perspective is that as surgeons they can direct patients to their hospital and so it is a real risk for us," he said.
Auckland University health economist Professor Toni Ashton said if a patient goes to a Forte surgeon for a consultation "of course they are going to direct them into their business, they are the shareholders for goodness sake".
This new surgeon-shareholder business model will force Christchurch's existing private hospitals out of the competition for day surgery, Brooks said.
And, if this model gains momentum, surgeons across the country could view it as a "vehicle for income opportunities" and this could lead to an upheaval of private healthcare in New Zealand, he said.
"We are all waiting to see what will happen."
Forte Health chairman David Barker said the hospital had grown out of the earthquake-damaged Oxford Clinic and that it would be "replacing and enhancing competition" in the private market that was lost as a result of the quake.
Forte surgeons would continue to operate in the public sector and at the city's other two private hospitals, he said.
The shareholder-surgeons were aware of their ethical responsibilities and would only direct patients toward Forte "if their surgery is suited to that environment", Barker said.
Ian Powell, a senior doctors' spokesman speaking in a personal capacity, said Forte was defining a niche within the market by targeting less complex surgeries, but "if I was in St George's chair, I would see that as cherry-picking".
The cost of running short-stay facilities was considerably less to other hospitals and New Zealand Medical Association chairman Dr Mark Peterson said Forte's costs must reflect "that they are a lower-risk facility".
"If they are charging the same rates for a lower acuity facility, I might have some concerns about that," he said.
Southern Cross Hospitals chief operating officer Tau-Loon Ho said there had been recent increases in specialist owned short-stay clinics aimed at providing less complex care, but "what is concerning is the increasingly high cost of simple procedures being undertaken by many of these facilities".
Academic Dr Michael Gousmett, who is an expert on charitable hospitals, said Forte would also put pressure on the public sector by "spreading our surgeons too thinly on the ground".
Yet, CDHB chief executive David Meates said the establishment of Forte Health would not have any significant impact on the public sector.
The new hospital is expected to open on January 20.
QUALITY CARE OR PRIME CUT?
It is the lull before the storm for Christchurch's private-health sector.
Come January next year, a new multimillion-dollar, glass-encased surgical hospital in Kilmore St will open its doors and cause a huge upheaval in the region's health arena.
Forte Health is poised to enter the private-hospital realm with a small army of 25 specialist surgeons as its shareholders.
It will be targeting the biggest volume of surgery in the market - the short-stay, less-complex procedures - from four key specialties: ear, nose and throat, urology, orthopaedics and gynaecology.
It is understood all of the city's urologists, at least half of its orthopaedic surgeons and all but one ear, nose and throat surgeon are shareholders in the venture.
The three-storey hospital will have 14 patient beds, four operating theatres and in excess of 100 staff and clinicians.
It is the most competitive beast to enter Christchurch's private-health sector and, with the countdown on for open day, the city's two existing private hospitals, St George's and Southern Cross, are starting to sweat.
The newcomer will soak up hundreds of surgeries and million of dollars of revenue from their books.
Forte is less than two months off opening and questions have started to circle on the ethics of a private hospital owned entirely by surgeons who will have a vested interest in directing patients toward their hospital for financial gain.
Health economists and experts also query the way the new enterprise appears to be "cherry-picking the private sector" by targeting the easiest operations.
"This is a significant issue for us," St George's Hospital chief executive Greg Brooks said.
"The challenge from our perspective is that as surgeons they can direct their patients to their hospital and so it is a real risk for us." Brooks said.
"What we need to be able to do is counter that by being able to provide good quality facilities so that the surgeons are encouraged to deliver their care here."
Both St George's and Southern Cross would struggle to compete for day surgeries against Forte because "our ability to influence the patients' choice of selection is very small because the surgeon always meets the patient", Brooks said.
This would leave St George's and Southern Cross with the day-surgery leftovers and the more complex patients that Forte did not have the ability to care for.
St George's was already actively looking at "diversification of revenue streams" to mitigate the birth of Forte, he said.
"You have to accept that competition comes and you have to adapt the business the best you can."
If Forte's shareholder-surgeon model gained momentum "and surgeons view this as a vehicle for income opportunities for the future", it might be replicated all over New Zealand which would have a massive impact on our country's health sector, Brooks said.
"We are all waiting to see what will happen."
Southern Cross Hospitals chief operating officer Tau-Loon Ho said there had been a recent increase in the number of specialist-owned, short-stay facilities that were "geared toward the lower-cost, less-complex end of the spectrum".
The cost of running such facilities was considerably less than more comprehensive hospitals, but "what is concerning is the increasingly high cost of simple procedures being undertaken by many of these facilities", he said.
Forte Health was born out of the closure of the Oxford Clinic after it was damaged in the earthquakes.
The private clinic was run off the shareholder-surgeon model and, when it needed to relocate, other specialists in the city saw this as an opportunity to join forces and build a multimillion-dollar "larger and more comprehensive short-stay facility", Forte Health chairman David Barker said.
The new hospital would be "restoring some competition in the private-hospital market which was lost as a result of the earthquakes", he said.
The hospital's surgeon-shareholder model was not an ethical issue as surgeons were aware of their responsibilities.
Patients would be directed to the most appropriate facility for their care, Barker said.
Surgical costs were still unknown for Forte but, Barker said, "we want to be efficient in all aspects, not just clinical but also financial".
Senior doctors' spokesman Ian Powell said Forte was smart to focus on the less complex procedures, but this could also be deemed as "cherry-picking the market".
Powell, who is the executive director of the Association of Salaried Medical Specialists but was speaking in a personal capacity, said the private sector entered the market only when it could see a demand and "like a corner dairy, they will only put products on shelves that they know will sell".
If the facility was set up only for easy, low-risk procedures, its prices should reflect this, Powell said.
Other hospitals around the country were run off the shareholder-surgeon model and there were strong ethical guidelines around this, he said.
"If they are deliberately directing people to use private services because of their personal advantage than that's a no-no and, if people behave naughty, or in a way that's unprofessional, they can put their employment with the DHB at risk."
Professor Tony Blakely, of Otago University's department of public health in Wellington, said there was a best- and worst-case scenario with the arrival of Forte.
The best-case scenario was that the new venture would provide cost-effective services in the most efficient manner possible.
The worst-case scenario was that it "merely serves to boost specialist incomes, divert specialists away from public delivery of services and cream skims off easier patients".