Hospital Sale Debate Creates Ill Will in Tennessee Town

The 25,000 or so folks who call Cookeville home are not preternaturally opposed to big corporations. To the contrary, none of the seven banks in town are locally owned anymore and they haven’t suffered for business as a result. Similarly, you wouldn’t know there were any family-owned eateries from the solid wall of fast-food joints that lines the stretch of road between town square and the interstate.

But the residents draw the line at franchised health care. A proposal to sell the municipally owned hospital has everybody up in arms; locals seem especially concerned about the possibility the facility would go to a for-profit chain.

“There is quality here and service second to none,” said Cookeville resident Henry Malliet, explaining why he’s opposed to the sale of the facility. “We don’t feel that the hospital’s in such bad shape that it needs to be sold.”

If the 227-bed hospital is sold, the town treasury could profit enormously. The likely selling price would be $100 million for a facility valued at $18 million eight years ago. Nearby towns have built arts centers and sports complexes, and improved educational facilities with similar windfalls from the sale of their hospitals.

But in what some say may be a sign of the public’s growing apprehensiveness about corporate influence in medicine and the fear of service cuts and loss of local control, Cookeville appears set to join a number of small towns that have rebuffed giant suitors, despite the potential riches.

There is pervasive fear that a new owner--most likely one of the giant medical concerns in Nashville--would damage the quality of local care by sending the best doctors, and referring private and insured patients, to flagship hospitals in the capital city, 80 miles away.

Minority View

Sam Barnes, for one, thinks the fears are overblown. “If they’re going to come in and pay ‘holy smokes’ bucks for the hospital, they are certainly not going to dismantle it and pack it off,” he said. “They’re going to market it to attract patients from the whole . . . area. “

But Barnes’ view is in the minority. An orthopedist who was born at the hospital and now works there, Barnes found himself standing alone when he spoke out at a staff meeting about the potential sale. He said he soon found members of the hospital staff turning a cold shoulder toward him.

“Some of the nurses that I’ve been working with for years, they kind of frown at me and some of them have made small comments,” he said. “Everybody feels threatened by the change. Since I seem to be the only one who is in favor of change, everybody seems to be taking it out on me.”

One of 15 firms that has taken an interest in Cookeville General Hospital is Nashville-based Columbia/HCA Healthcare Corp., the world’s largest for-profit hospital chain.

Although big nonprofit hospitals have also been eyeing the Cookeville facility--and they have adopted many of the efficiency methods pioneered by the for-profits--it is Columbia/HCA that strikes the most fear in the hearts of the locals. The company has remained mum on possible plans for the facility--and on the debate raging in Cookeville.

Prevented by state laws from freely building facilities, Columbia/HCA, which has 340 hospitals in 36 states, has expanded largely by aggressively acquiring existing ones. But since the start of the year, two other Tennessee communities have refused to sell.

Hospital sales have been emotional issues in other states. In a hard-fought referendum in Tarpon Springs, Fla., 40% of the town’s registered voters turned out in November to vote overwhelmingly (72%) against selling its hospital to Columbia/HCA, which already owns a fifth of all hospitals in the state.

In Cookeville, when the City Council voted in December to accept bids for the hospital, more than 1,000 outraged local residents held a rally and mass “hospital hug” to show their opposition. Some of them chanted, “Let’s sell Bettye,” referring to Vice Mayor Bettye Vaden, who supports selling the hospital. She retorts: “I told them nobody could afford me.”

City Councilman John S. Copeland is one of those most opposed to selling Cookeville General. He acknowledges that $100 million would fill a lot of potholes and fix a lot of sewers, but he calls the potential financial windfall from a hospital sale an improper “tax on sick people.”

Further, he said he fears a sale would put an end to planned expansion at Cookeville General and would lead to layoffs and a cutback in services.

Expanding Services

The hospital, which ended last year with a $6.4-million surplus, has been adding doctors and services for the past several years. Thirty-four physicians have been added to the staff, bringing the total number to 80. It has also added units for vascular surgery, angioplasty and cardiology, and there are plans to soon begin an $18-million project that will add a new cancer unit and a larger emergency and trauma center.

Not long ago, Cookeville residents who could pay for hospital visits traveled to Nashville for medical care. Administrator Michael Mayes said that still goes on, but as perceptions change, more patients are opting to seek care in Cookeville. His goal is to turn the facility into a regional hospital serving a 14-county area between Nashville and Knoxville, Tenn.

City Council members who support the sale acknowledge that Cookeville General is profitable and provides quality care. But, they ask, will it still make money in the tough new environment of managed care and Medicare reform? They insist that steps need to be taken now to protect the facility.

“I truly believe managed care is right around the corner, and we have to be positioned for that,” Vaden said. She and a majority of the five-member council believe the best way to be prepared is by becoming a part of a much larger hospital system that will have more clout with insurers and suppliers.

But critics question how much a Nashville-based conglomerate will care about tiny Cookeville. For James Smith, a local dentist and opponent of the sale who sits on the hospital board, the issue is local control, medical quality and the spreading influence of big business.

He says he helped form a bank in the town in 1977, a time when all but one of Cookeville’s local institutions were locally owned. Now all the banks are owned by big corporations. While he grouses about the lack of personal attention customers receive and says employees complain of being overworked, he acknowledges that the banks “do a better job now with a smaller number of employees.”

But hospitals, he said, are different. “I don’t think you should sacrifice health care or take a chance on [outsiders] who are going to skim off the money and send it to Nashville.”

A local newspaper poll showed that only 19% of respondents support the sale. In a referendum on March 12, upset voters wrested the decision about whether to sell out of the hands of the City Council, voting 3 to 1 to require a public vote on the issue before the hospital changes hands.

That does not keep the council from leasing the facility or signing a management agreement with a large medical concern, however--and both options are now being considered.

Voter Opposition

Whatever is done will probably be decided soon. The city will open bids for the hospital Thursday. After that, the city will decide whether to put the issue up to public vote or pursue other options.

Josh Nemzoff, a Nashville-based hospital consultant, said that in virtually every case where the decision of whether to sell a hospital is put into the public’s hands, the issue is voted down, even though the financial rewards of a sale would be tremendous.

“From an economic point of view, the idea of having a for-profit come in and buy your hospital is really extremely positive,” he said. Not only does private ownership of a once-public facility add to the tax base, but proceeds of the sale may fund undreamed of public improvements.

One town that benefited from the sale of a hospital to Columbia/HCA is Dickson, Tenn., 40 miles west of Nashville. The nonprofit group that sold the hospital for $80 million set up a foundation with the money to finance public works projects. Now the town’s leaders are considering establishing an Olympic-quality sports-training facility, a computer-training center and a foreign language program in the schools that would send graduates overseas--all this in a town that doesn’t even have a year-round movie theater.

You’d think other small towns would jump at similar opportunities, but Nemzoff said that is not the case. “You hear the same comments over and over again in every market that is dealing with this: For-profit hospitals are running a business; the only thing they care about is making a profit and pleasing the stockholders, and they’re not going to treat the indigent population.”

The consultant, who works only for nonprofit hospitals, said the negative perceptions are not accurate. For-profit hospitals operate very efficiently, he said, but at the same time “they are going to treat patients that need to be treated.”

Nemzoff does warn, however, that towns should not be too quick to pursue a sale. If the publicly owned hospital is profitable, well-managed and providing good care, there may be no reason to sell it. Public hospitals can make themselves more efficient and increase their bargaining power with insurers by forming networks with other health care providers.

Copeland argues that Cookeville General, which is part of a 12-hospital network in middle Tennessee, is already doing this. He contends that Cookeville is better able to survive and prosper than smaller rural hospitals or large urban facilities with lots of indigent patients and large overhead.

Urban hospitals such as those operated by Columbia/HCA and several other large hospital companies that are aggressively expanding into rural Tennessee need Cookeville more than Cookeville needs them, Copeland contends.

Concern at Hospital

Proponents of the sale accuse hospital administrators and doctors of fueling the public furor over the sale by spreading baseless rumors, a charge that hospital officials deny. Still, it is true that nowhere has concern over the sale been greater than in the corridors of Cookeville General itself.

Barnes said that he wasn’t necessarily arguing to sell the hospital at the staff meeting that put him on the outs with some of his colleagues. “My vote was to see who wants to buy the hospital; let’s see if it’s the right thing; let’s see what they offer. We can make a more informed decision if we know all the facts.”

He thought the issue should be explored, he said, because Cookeville General cannot become a true regional facility with its current management structure: The Cookeville City Council controls the facility and only city residents may serve on its board.

Keeping morale up during all of the hubbub has been difficult, Mayes said. “We’re working very hard, taking care of patients. That’s our job, trying to keep our heads about us with all this going on.”

But he added: “When people’s jobs are threatened, that’s always a concern.”