A recent godanriver.com article by Tara Bozick covers an impact study performed by Chmura Economics & Analytics:

Danville Regional Medical Center released a report Tuesday that concluded a competitor’s proposed ambulatory surgery center in Danville would hurt the hospital — and the Dan River Region’s economy.

CEO Eric Deaton of Danville Regional hired Chmura Economics & Analytics to complete an economic impact study to assess the role DRMC plays in the local and state economy.

Deaton said he wanted to better understand the hospital’s economic impact as he will serve as a member of the state’s seven-member Hospital and Healthcare advisory group to the Jobs Creation Commission established by Gov. Bob McDonnell.

“I think it’s important to give a perspective of what’s important to Southside Virginia and the role health care plays in that,” Deaton said.

The study also evaluated how the introduction of an outpatient surgical center to Danville would affect the hospital.

The report did not name the competitor, yet Lynchburg-based Centra proposes to build a medical complex with two outpatient operating rooms, a freestanding emergency department and diagnostic imaging in Danville. Centra awaits a decision from the state health commissioner on whether it will receive a Certificate of Public Need for the outpatient operating rooms.

Centra says its center would help the economy by bringing patients back to Danville and that the report rehashes Danville Regional’s recurring argument, but doesn’t take into account how the hospital negatively impacted itself in the past five years.

Danville Regional employs a quarter of the region’s health care work force and contributed an estimated $189 million in spending and employment to the Danville metro statistical area in 2009, the report stated. Those direct impacts and “ripple effects” contributed $228.3 million total to the state.

“With the potential entrance of a competitor to the outpatient surgical area, the possible financial impact on Danville Regional could negatively affect the local economy,” said President and Chief Economist Christine Chmura of Chmura Economics & Analytics.

In 2008, 44 percent of Danville Regional’s gross patient revenue came from gross outpatient revenues, the report stated. The number of outpatient procedures performed at DRMC totaled 4,859 in 2008.

The ambulatory surgery center’s proposed capacity is more than 80 percent of current outpatient surgeries performed at DRMC, the report stated. Even if the competitor brings back people seeking care elsewhere, nothing restricts the center from taking patients from the hospital, which would mean less revenue and possible reductions in services, the report continued.

Centra Executive Vice President Tom Jividen said via e-mail that DRMC is ignoring the damage it’s done to the hospital over the past five years, which resulted in a dramatic decline in surgery volumes.

“During that period, without any competition from Centra, or any other provider, they effectively lost their patient base, their patient loyalty and consequently their surgical volumes,” Jividen said. “Based on our estimates, if we simply returned the community to its 2007 levels we would have a successful surgery program and there would be no impact to DRMC.”

Danville Regional leaders also presented the economic impact report’s findings to community leaders on Tuesday.

“I thought the economic impact was really an eye opener in what it added to the economy and how many jobs were involved,” said Coy Harville, Pittsylvania County supervisor and board chairman of Danville Pittsylvania Regional Industrial Facility Authority.

Harville knows that when industries look to locate somewhere, they want to check out schools and medical facilities. A healthy work force also tops the list, he said.

Harville would need more information to see how competition or Centra’s project would affect the local economy.

“They are a major economic engine in this market,” local businessman Ben Davenport said about DRMC.

As an employer, Davenport wants quality health care at an affordable price for his employees. The quality of the community’s health care provider would significantly impact the success rate of attracting industry and people to the Danville area, he added.

Davenport said he’s confident the state’s Certificate of Public Need program would determine what’s best for the area in regards to Centra’s proposed project.

“All I know is our area needs to have quality health care provided if we are going to be successful going forward in rebuilding this economy,” Davenport said.

Deaton said improving quality of care and outcomes is his primary focus.

Danville Regional’s economic impact (2009 unless noted):

• Total direct, indirect and induced impact of DRMC spending and employment is estimated at $189 million, contributing to 2,081 jobs in the Danville metro area. Its direct, indirect and induced impact on the state is estimated at $228.3 million, contributing to 2,287 jobs.

• DRMC employed 1,475 employees, making it the second largest private employer providing 4 percent of the total work force in the Danville Metropolitan Statistical Area. It provides 5.6 percent of the total work force in Danville.

• DRMC employs more than one quarter of the region’s health care work force, which had 5,291 employees in third quarter 2009.

• Annual revenue for DRMC is estimated at $139.5 million.

• Since 2005, DRMC spent $32.7 million in capital expenditures, which contributed to 246 jobs in the Danville metro area and 358 jobs total for the state.

• DRMC contributed $1.5 million in local tax revenues and $3.4 million in state tax revenues.

• DRMC provided about $3.3 million in charity care.

• In 2008, DRMC provided $1.7 million in charity care and wrote off $18.9 million in bad debt or unpaid health care services. In 2008, DRMC had $136.7 million in total operating revenues and $159 million in total expenditures.

• In 2008, 15.4 percent of all patient days at DRMC were Medicaid patients, compared with an average of 14.1 percent for the southwest region and state average of 12.1 percent.

Source: Chmura Economics & Analytics, prepared for DRMC

Read the original article.