The long-simmering disagreement over a proposed hospital in West Des Moines between Iowa Health-Des Moines and Wellmark Blue Cross and Blue Shield of Iowa, two of the largest companies in the state’s health-care industry, flared into the public spotlight last week.

The tensions were fueled by tens of thousands of letters that Wellmark sent out in early December to health-care plan administrators and policyholders who pay their own premiums. The letters, dated Dec. 4, stated that Iowa Health’s proposed $82 million, 83-bed Michael R. Myers hospital would “only fuel rising health-care costs, which in turn, will cause health insurance premiums to also increase.”

On Dec. 8, the phones began ringing at Iowa Health’s executive offices, and calls continued to pour in throughout the early part of the week as worried policyholders voiced concerns about the facility.

To counter Wellmark’s move, top executives at Iowa Health and their public relations experts scrambled to put together a full-page advertisement in The Des Moines Register, spending thousands of dollars to purchase the space on Dec. 10 – the same day an opinion piece authored by John Forsyth, Wellmark’s chairman and chief executive, ran in the paper.

Iowa Health’s chief executive, Eric Crowell, and Sid Ramsey, the health-care provider’s vice president of business development and the executive spearheading the new hospital, worked on a response. An article by Crowell ran in the paper the following day.

“We felt assaulted,” said Crowell, who added that his mother, who lives in Urbandale, was one of the recipients of Wellmark’s letter campaign. “We did not want to buy that ad. We felt it was exorbitant. We had no other choice, with that short of notice.”

The volley between the two companies was the latest and the most visible in a series of moves both parties have made as time creeps toward a hearing Jan. 6 at which state regulators will determine whether to grant Iowa Health the right to build its facility. The deadline for the public to file comments regarding the Myers hospital expired Friday.

Wellmark, along with the Iowa Federation of Insurers and some business leaders, has long opposed efforts to build any hospital in the western suburbs on the grounds that it would lead to duplication of services and result in higher health-care costs.   At a time when Iowa ranks last in Medicare reimbursements from the federal government and health-care costs are rising at double-digit rates annually, Forsyth said he remains unconvinced, despite several meetings with top officials from Iowa Health, that a new hospital would lead to improved care.

“There’s nothing that guarantees that quality is going to increase,” he said, adding that the money spent for the advertisement “wasn’t a good use of scarce resources.”

To make its case, Wellmark sent out 35,000 packets of information to policyholders in Central Iowa earlier this month, asking for help in opposing Iowa Health’s proposal. The packets were sent to corporate customers and so-called direct-pay policyholders, who are typically older or self-employed and thus pay for their own insurance.

Included in the envelope was one letter signed by Forsyth and another form letter policyholders were encouraged to sign and return to Barb Nervig, the administrator in charge of Iowa’s Certificate of Need program.

WHEN ONE EQUALS TWO

“I am writing to ask for your help in opposing a proposal to build a new, expensive hospital in West Des Moines,” Forsyth wrote. “This letter will explain why Wellmark Blue Cross and Blue Shield opposes the building of a new hospital in West Des Moines and gives you some facts to help you express your opposition by December 12.”

The letter claimed Iowa Health’s Certificate of Need application “has not sufficiently demonstrated the need for a new hospital” and any moves by Iowa Health to build a facility would be matched by Mercy Medical Center, Wellmark’s literature said.

In a separate letter to Nervig, Mercy Chief Executive David Vellinga said his hospital group “supports the development of two hospitals in the western suburbs of Des Moines.” Mercy’s plans call for a smaller, 40-bed facility.

Wellmark believes Greater Des Moines has enough hospital beds to handle demand, that area’s population hasn’t shifted enough to the west to justify a new facility and that the projected costs to operate a new hospital, including staffing and maintenance expenses, haven’t been fully revealed by Iowa Health.

Other issues include a desire on the part of Wellmark for Mercy to also go through the Certificate of Need process before it builds its proposed hospital across the street from Iowa Health’s desired facility, a position Crowell said he supports. Forsyth said he would consider a legal challenge of the state’s Certificate of Need law.

Though hospitals have been expanded and moved in the state in the decades since the Certificate of Need law went into effect, no completely new facility has been build. Consequently, the laws have not yet been tested and there appears to be plenty of gray areas concerning its interpretation.

Currently, state officials appear to be interpreting the law in a way that would require Iowa Health, which owns land just west of 60th Street in Dallas County, to obtain permission from the state’s Health Facilities Council, while Mercy, whose land is on the east side of 60th Street in Polk County, wouldn’t need to. As a result, Iowa Health has filed formal documentation with the state, while Mercy has not. Mercy has, however, kept state officials informed of its plans.

“We don’t think it (the Certificate of Need law) has been interpreted correctly,” Forsyth said. “Our position is that Mercy needs a Certificate of Need as well.”

Forsyth said he’d like to see the licensing process delayed until a study of the region’s health-care capabilities, including those of Iowa Health, Mercy and Broadlawns Medical Center, and its projected needs can be completed. Wellmark would help pay for such a study, Forsyth said.

A formal community-wide study might suggest that Greater Des Moines’ three main health-care providers cooperate more closely, including referring patients to one another. That scenario would conflict with the state’s health-care system, which is designed to be competitive, Crowell said.

Indeed, the U.S. Department of Justice scuttled cooperative talks between Iowa Health and Mercy to build a jointly operated West Des Moines hospital due to antitrust concerns in May.

‘TAKING CHOICES AWAY’

“That’s like saying to Methodist patients that if we can’t meet your needs, you need to go to Des Moines General,” Crowell said. “It’s taking choice away from the community.”

Crowell argues his hospitals, Iowa Methodist Medical Center, Iowa Lutheran Hospital and Blank Children’s Hospital, are reaching the limits of their capacity and that more beds will be needed as the percentage of elderly residents in Central Iowa grows. West Des Moines, which for more than a decade has been one of the fastest-growing communities in the state, is the logical spot for a new hospital, Crowell and Ramsey said.

Iowa Health explored ways to renovate and expand Methodist, but concluded it would ultimately be more expensive than building a new facility because the hospital’s east and south wings, which currently aren’t used because of old age, are too small and that other infrastructure costs, including parking, would be prohibitively expensive.

Crowell said he and Vellinga, who together tried earlier this year to find a way to jointly build a hospital but were unsuccessful, looked at Greater Des Moines and concluded that Des Moines’ western suburbs need a hospital.

“Dave and I have done that study, and it shows there’s a need for 120 beds in West Des Moines,” Crowell said.

Iowa Health has received a $15 million pledge from the Michael R. Myers family that can be used only to pay for construction of a hospital. The Iowa Health Foundation is working to raise another $13 million from donors and other sources. Crowell has also promised that a new facility would lead to enough efficiencies that Iowa Health would return $3.2 million in savings over two years to insurers and people who pay their own medical bills through discounts and rebates.

“Some managed-care companies continue to fight this, and I am not sure what the fight is,” Crowell said. “Philanthropy is supplying money, we’re promising not to raise our costs, and we’re offering to give money back.”

The rising rancor between Iowa Health and Wellmark has had at least one immediate effect. As of Wednesday afternoon, Nervig had received e-mails from more than 250 people and over 300 letters – the most ever generated for a health care project requiring state approval. The flood of correspondence has created a series of challenges for Nervig, and indicates that more difficulties could lie ahead.

She has requested help from two additional staffers from a neighboring office in the Public Health Department to sort the letters into piles of those supporting the hospital and those opposing it.

Over the next few weeks, Nervig must find a way to organize and make copies of the letters, some of which have been handwritten on small cards and others on letter-sized paper, for each of the five members of the Health Facilities Council. Those members, appointed by the governor, must read all of them, as well as the 200-plus page application submitted by Iowa Health, by the time the hearing begins.   Nervig is also growing more concerned that a meeting room she reserved for the hearing which is capable of holding 100 people, won’t be big enough. She looked into using the auditorium at the State Historical Society of Iowa building, but members of the national media have that room booked for the entire month of January to cover the Iowa caucuses.

“How do I get all of this to the five members of the council for review?” she said. “Neither party told me they were doing this until I started getting mail.”