IBA board opposes Aurora’s proposed hospital

The Independent Business Association of Wisconsin’s board of directors is taking a stand against Aurora Health Care’s proposed hospital in the Town of Summit near Oconomowoc.
In a recent meeting with the Small Business Times editorial staff, IBA board members say they unanimously oppose the proposed hospital because they fear it will lead to increased health care costs in the region.
"(The proposed hospital) could easily increase costs in western Waukesha County by 20 percent," said Richard Blomquist, president of Blomquist Benefits LLC and president-elect of the IBA board. Blomquist has 20 years of experience in managing health benefit plans.
"(Another hospital’s) services are not needed in this market. The market doesn’t need it, and prices will suffer," Blomquist said. "The 88-bed Aurora proposal would more than double the number of beds in the immediate area. Redundant emergency rooms, cardiac programs and other services would also need to be supported. Growth in the area does not justify an additional hospital and the spectrum of (existing) services is appropriate for the area. I think we all have a respect for Aurora’s ability to provide services, but in this particular incident, it’s a redundant facility."
The Waukesha County Chamber of Commerce’s board of directors also has taken a stand against Aurora’s proposal for an 88-bed hospital southeast of I-94 and Highway 67, in the Pabst Farms development.
Like the IBA board, the chamber’s board also expressed concern that another hospital will increase health care costs.
IBA board members say they plan to lobby against the hospital proposal before the Waukesha County Board and the Summit Town Board. Aurora needs approval from the town and county boards to proceed with construction of the hospital.
IBA board members said they invited Aurora officials to talk to them about the hospital plans, but the company wanted to wait until after the July 28 public hearing on the project.
Jeff Squire, Aurora communications director, said Aurora officials wanted to meet with the IBA board about the proposed hospital, but were not given enough time to do so.
Squire also said he doubted Blomquist, a critic of the proposed hospital since plans were first announced, would have an open mind about Aurora’s presentation.
"After emerging as a leading critic of our project and aligning himself with ProHealth Care, he led an IBA committee that purported to wish to take an objective look at this issue," he said.
The only other hospital in western Waukesha County is ProHealth Care Inc.’s 74-bed Oconomowoc Memorial Hospital. ProHealth Care officials also have spoken out publicly against Aurora’s proposed new hospital.
Neither Aurora nor ProHealth Care are members of the IBA, which represents more than 400 business owners in Wisconsin.
IBA board members acknowledge their opposition to the Aurora proposal is unusual, as the business association typically supports free enterprise and expansion by private businesses.
However, they say the health care industry does not operate like the rest of the free market, where competition drives down prices. In health care, the opposite occurs, IBA board members said.
"We as consumers have to understand there is a cost associated with putting a hospital on every corner," said Karin Gale, past president of the IBA and a partner of Brookfield-based Vrakas/Blum S.C. "Unlike other competitive environments, when you add another facility, you don’t see costs go down."
Additional hospitals cut the marketshares of other hospitals, forcing them to raise their prices to cover the costs of providing the service, Blomquist said. Additional hospitals also increase competition for health care workers, driving up labor costs, he said.
"In this particular area, the free market doesn’t work because consumers don’t have price information or quality information," Blomquist said. "This is not a normal industry."
Increasingly, other health care systems in Wisconsin are raising their fees to "shadow" Aurora’s prices, Blomquist said.
The proposed Aurora hospital will add excess hospital capacity, critics say. Oconomowoc Memorial Hospital is at just over 50 percent capacity now, Blomquist said.
Health Care costs in the Milwaukee area have been rising dramatically for businesses in recent years. More businesses are passing along those costs to their employees by making them pay higher deductibles or have more money taken out of their paychecks.
High health care costs are making it difficult for Milwaukee-area businesses to compete and are hurting the region’s economy, IBA board members said.
"Hospital rates in Wisconsin have gone up 18 percent in the last year," said Steven Sobiek, IBA executive director. "We don’t want to make this Aurora vs. ProHealth Care. This is a big-picture issue."
"Health care costs are in the top two or three things that businesses are concerned about," said Lisa Mauer, president of Milwaukee-based Tool Service Corp. She is also a past president of the IBA board. "It’s a concern to all of us. It impacts our employees. The cost is passed on to them, plus they have to pay higher property taxes to cover rising health care costs for public employees."
Aurora responds
In response to a request from Small Business Times, Aurora Health Care issued the following statements regarding the Independent Business Association (IBA) of Wisconsin board members’ opposition to a new hospital in the Town of Summit.
"The association’s opposition to this major project seems inconsistent with the organization’s general purpose, which, as we understand it, is to promote business. In addition, we feel strongly that decisions about the proposed Aurora Medical Center appropriately lie with officials of the Town of Summit, not with outside interest groups.
"We share the association’s concerns about rising health care costs, and Aurora would be eager to work with the association on meaningful ways to address costs. Opposing needed improvements in the health care system will not promote the cause of cost control.
"Aurora has addressed cost concerns in western Waukesha County in a very direct way: We have pledged to establish prices at the new hospital at a level consistent with prices at other hospitals in the county, and thereafter to hold the line on price increases.
"Finally, we would note that the association has taken a position on this issue without even talking with us, which we find to be both disappointing and regrettable."
What’s next?
More than 1,000 people attended a public hearing for Aurora Health Care’s proposed $85 million hospital in western Waukesha County July 28 in one of many hearings and meetings that will be needed before the project can proceed.
The Town of Summit Plan Commission conducted the meeting, but took no action on the controversial property rezoning that would be needed for the project.
Henry Elling, town planner, asked the commission to submit a report on the proposal by Sept. 2.
To proceed, the project would need to be approved by the commission, the full Summit Town Board, the Waukesha County Land Use, Parks & Environmental Committee the Waukesha County Park and Planning Commission and the full Waukesha County Board.
August 6, 2004, Small Business Times, Milwaukee, WI

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