HomeMy WebLinkAbout~Master - Special Meeting of the Ames City Council 09/07/1994MINUTES OF THE SPECIAL MEETING
OF THE AMES CITY COUNCIL
AMES, IOWA SEPTEMBER 7, 1994
The Ames City Council met in a special joint session with the Mary Greeley Medical Center Board
of Trustees at 6:00 p.m., September 7, 1994, in the Mary Greeley Medical Center Board Room, 117
11th Street, pursuant to law with Mayor Pro Tem John Parks presiding and the following Council
Members present: Brown, Campbell, Hoffman, Parks, Tedesco, and Wirth. Mayor Curtis was
absent. Present from the Mary Greeley Medical Center Board of Trustees were Sara Buck, Linda
Dasher, Karl Friederich, Betty Jo Harker, and Mark Power.
COUNCILORS' TOUR: Prior to meeting, the Council Members toured the Operating Room,
ICCU, and the Dialysis Unit.
CALL TO ORDER: The meeting was called to order at 6:50 p.m.
WEST ADDITION: MGMC Vice President Jerry Sloan described the proposed West Addition to
the Hospital, which he said will focus on outpatient services, featuring a new short stay unit, new
dialysis unit, purchasing/storage area, pharmacy, and education/library area. He said the later North
Addition will provide a new central sterile supply and a new ICU area. He said costs for the West
Addition were estimated at $7.4 million, and the North Addition's project cost was $7.5 million. He
said the third phase of the renovation project would include remodeling of the current auditorium,
at a projected cost of $700,000. He discussed the project schedule, with estimated completion dates
as follows: Ramp - May 1995; West Addition - mid-1996; North Addition - 1998; auditorium, late
1998.
LEADERSHIP DISCUSSION: Board of Trustees Chair Linda Dasher said she will make a
recommendation to the Board to engage a search firm to hire a new CEO once the Hospital
ownership issue is solved, and it was hoped the new structure and new Board would be able to hire
that person. She thanked Interim Administrator Doug Kell for doing a fine job during this time.
CURRENT EVENTS IN HEALTH CARE: Interim Administrator Doug Kell discussed
transitions in healthcare, saying that although MGMC has been historically an inpatient facility, it
is currently a mixture of inpatient and outpatient services. He said the trend will be toward more
outpatient services or even home health care. He discussed Hospital/physician relationships, saying
what has historically been a competitive relationship is currently a mixture of competition and
cooperation, with a trend toward integration where both entities share the same goal. He discussed
the migration of payment systems, saying what was historically a fee for service basis has migrated
to what will ultimately become a capitated system.
Mr. Kell discussed how almost all capital expenditures for 1994 were for outpatient services,
whereas in the past they were mostly for inpatient beds. He said the future trend would be toward
network development, i.e., computer systems to share information.
Mr. Kell discussed the difference between vertical and horizontal integration, giving examples of
each. He said one goal of horizontal integration, where physician groups align to create a larger
entity, was to eliminate duplication; another goal was to increase technical capability. He said this
philosophy was consistent with the MGMC Strategic Plan of April 1990, to grow from a local
facility to a regional/statewide organization, and to keep the quality healthcare in Ames by tying into
a regional base.
PUBLIC DECISION-MAKING: Mr. Kell said there has been much misunderstanding about the
issue of "secrecy" vs. the ability of the organization being hampered by the public decision-making
process. He cited three recent instances where transactions have not gone forward because the
parties involved have withdrawn due to the public process. He said a dilemma occurs not because
of secrecy, but because the competitive business world has the option of going elsewhere where
public process is not an issue.
PENETRATION OF MANAGED CARE: Dr. Dale Anderson, McFarland Clinic, provided
information on the penetration of managed care in Iowa, describing how overcapacity leads to a
consolidation of services. He said the process is industry-driven due to its impact on healthcare
costs. He said to reduce overcapacity, physicians join networks, hospitals merge, physicians and
hospitals merge, and insurance companies merge. He said when consolidation occurs, the losers are
inpatient services, fee for services payment structures, highly technical services, and specialist
services. He predicted the individual group practitioner will disappear in the next two to three years.
Dr. Anderson said McFarland Clinic is currently a unique multi-specialty group with a mixture of
65% specialty and 35% primary care physicians which he said was too heavy on specialty care for
the managed health care systems. He said rather than down-sizing, McFarland Clinic would reach
out to primary care physicians in the area in order to expand its primary care base to reach a 50/50
mix. He said with the population base in 17 counties, a strong hospital that is cost effective, and a
multi-specialty clinic, they have the capacity of being a third force in the area, on par with Mercy
or Methodist Hospitals in Des Moines. He said the question will be funding, i.e., will the City and
MGMC want this same goal or will they wish to become an appendage to another system?
Coun. Brown asked whether funds would be available to accomplish these goals. Dr. Anderson said
the Clinic has had concerns that the MGMC expansion project and any internal buy-out that may
occur would leave MGMC with such a heavy debt load that it cannot provide a competitive charge
for services. He said how the value of MGMC will be determined is also of concern, and said
without this network, the value would be lower. He said there was also concern that at present, the
organization was not flexible enough to be able to respond to RFPs in the short time frame often
required. He said the current approval process could take 2-3 months. He said another concern for
the medical staff was the time involved in the ownership decision-making process.
TIMELINE FOR DECISION ON HOSPITAL OWNERSHIP: City Manager Steve Schainker
distributed a tentative schedule for the Decision on Hospital Ownership, saying it was important to
speed the process as much as possible. He said work with Dorsey & Whitney on developing
transaction documents for the ownership options and with Arthur Anderson on appraisal services
would begin September 15, with final reports hoped for by November 15. He stressed that this was
a tentative schedule.
Mr. Schainker suggested public input regarding the reports be solicited in mid-December, either in
a public hearing in the City Auditorium, or in a series of smaller meetings, and that the Council
select one preferred option on February 1, 1995. He said after February 1, if a new governing
structure is contemplated, work can begin on creating the new structure along with other details to
accomplish a change.
Coun. Tedesco said the valuation report would answer many questions. Coun. Campbell agreed and
said once that report is available, the decision-making process should move ahead.
Coun. Parks questioned the amount of time between the public input process and Council's final
decision. He said once the medical community and the public had time to digest the report and
provide input, the process should continue.
Mr. Schainker stressed that this schedule was tentative. He asked the Council to consider what type
of public process they would like to see implemented.
There was discussion regarding the valuation process and the development of the prototype
transaction documents. Dr. Larry Otteman, McFarland Clinic, expressed concern regarding at what
point the medical community would have input into the process.
Coun. Tedesco said he felt both firms should present their reports in person, so questions could be
answered and input provided.
Mr. Schainker suggested a small focus group of representatives from the medical community might
be brought in as the prototype documents are being prepared. He said it was important to remember
that policies would not be included in these prototype documents, but would be filled in at a later
date.
Coun. Parks said it was important to have a concrete starting point, and said he was very confident
starting with this timetable. Coun. Hoffman agreed, given that this schedule was tentative. She said
it would be hard to proceed too quickly with public input over the holidays when people are often
out of town.
Coun. Tedesco reiterated that he saw a need to meet with the consultants after the reports are
available.
Trustee Friederich expressed concern that there were two ways to look at the MGMC valuation --
one without a network, and one with a fully integrated facility.
Mr. Schainker described how the Council had directed Staff to develop the RFP for legal and
appraisal services.
Coun. Tedesco said the consultants' reports would provide some basics to begin working on. Trustee
Power agreed and said he felt it was a cooperative first step.
ADJOURNMENT: The meeting adjourned at 8:40 p.m.
Sandra L. Ryan, City Clerk Larry R. Curtis, Mayor