In 1992, Union Memorial Hospital fought competitors and a legal challenge to win the right to an open-heart surgery center. This month, as the center opens, it faces another kind of battle -- that for customers in a declining market for cardiovascular services.
The $1.5 million center, expected to serve as many as 500 patients a year at full capacity, is the fifth in the Baltimore area and opens as hospitals are performing fewer and fewer surgeries of all kinds.
But managers at Union Memorial say that despite the changes in the health care marketplace since they applied to state regulators for the high-tech service in 1990, the hospital is well-positioned to compete.
"We will meet our projected volumes. Absolutely," said Edward J. Kelly III, hospital president and chief executive officer. The hospital expects to admit 250 patients in the center's first year, then eventually reach capacity in succeeding years.
The Baltimore hospital is scheduled to dedicate the Harry and Jeanette Weinberg Open Heart Surgery Center today. In its first two weeks, the center has served 12 patients, exceeding its projection. And Union Memorial says it isn't just shifting patients from other hospitals but is filling unmet needs.
Mr. Kelly said up to 150 cases a year will come from out of state -- particularly Philadelphia and Washington -- where commercial insurers without the bargaining power of managed-care companies are paying two and three times the price charged by Union Memorial. The hospital also intends to tap underserved markets, mainly minority populations that have not had access to such services in the past.
Its overall package is one of the lowest-priced in the state, Mr. Kelly said. Open-heart surgery is a profitable business, but to win the right to build the center over other applicants, Union Memorial and its sister hospital, Franklin Square, agreed to lower hospital rates by 1.2 percent for all procedures.
Another attraction, Mr. Kelly said, is the reputation of the doctors at the center.
Union Memorial lured Garcia, Mispireta PC, one of the biggest heart specialist practices in the region, with 2,000 surgeries annually, to head its new cardiac team. The Garcia group works mainly at the Washington Hospital Center in Washington and at Washington Adventist Hospital in Takoma Park, and some of its services are not available in Baltimore.
"There is no evidence they can operate an open-heart surgery as they predicted in their original application and achieve the results they projected," said Gregory Luce, a partner with Jones, Day, Reavis & Pogue in Washington. The law firm is representing the two hospitals in their appeal of a May 23 Circuit Court ruling upholding a decision by the Maryland Health Planning Resources Commission to award the center to Union Memorial.
Much has happened in the four years since state regulators updated the state health plan for cardiac surgery, recommending an additional hospital unit.
The number of open-heart surgeries performed is on the decline, so much so that Washington Adventist has asked state planners to update the plan again to reflect changes in technology and prevent competitors from opening more units.
"We believe the number of open- heart surgeries are plateauing, and current providers in our region have more than adequate capacity to meet the need," said Robert Jepson, spokesman for Washington Adventist, whose heart surgery center is at 80 percent capacity.
In 1993, 4,651 open-heart surgeries were performed in Maryland.
Mr. Kelly, of Union Memorial, says the hospital is confident the center will break even within three years. Union Memorial's overall financial condition improved from a loss in 1992 to an estimated profit for the year that ended June 30 of $5.3 million. He said he expects a similar profit in 1995.