Practicing Medicine in Rural Eastern Carolina

In April 1991, three rural healthcare physicians spent a day at the ECU School of Medicine talking with medical students and residents about providing primary health care in rural districts. The Legislature had defined primary health education as one of the purposes of the ECU medical school when it was funded, and having the rural practitioners share their experiences supported that goal.

Dr. Marshall Quinn, who practiced in Magnolia, population 747, pointed out some differences between urban and rural medical practice. In a rural area, he said, the physician was not only a family doctor but also a friend and neighbor. He was diagnostician, dispenser, healer, and a shoulder to lean on when needed. “A lot of people will see us as opposed to going to see a specialist,” Quinn said. “I’m in the front line, and this might not happen if I was in an urban area. I get to see an aspect of medicine that I don’t think I’d have seen in an urban area.” Quinn added that the questions for a young physician were simple. What makes you happy? Is it a good place to raise a family? Will your spouse be happy there? “I think a lot of doctors get out of medical school or residencies, and they are looking at the short-term financial concerns. You should look at the lifestyle and what you enjoy.”

Dr. Danny Pate, who practiced in Beulaville, population 933, remarked, “Everybody can’t be in Greenville. There is a need for more primary care physicians. They can take care of all the problems people have. Who is going to take care of them if we’re not here? You have to look more at whether you are happy for the next 15 to 20 years rather than the first five after you start.” The financial problem added to the difficulty of considering a rural or small town practice. Lifestyles in the urban areas were attractive to many young doctors, and to their families, and there were definite benefits to joining a large established practice in a city.

Dr. Mott Blair, who graduated from the ECU medical school in 1990, practiced in Wallace, which had a population of 2,939. He said that communities in eastern North Carolina were very supportive of family practitioners opening up practices there. He noted that these doctors gave up nearness to other members of their profession, but he did not believe that this influenced the quality of care they gave their patients.

Establishing a new practice was expensive, and many new doctors found themselves deep in debt after having gone through medical school and a residency. Blair said of them, “Their concern mainly is financing. Most rural health communities will help you with some of the finances. The big problem with young doctors is debt. It would be real tough to start a new medical practice now.”

Each of these rural physicians grew up in eastern North Carolina, and knew he wanted to return to practice medicine where his roots were. But they agreed that it was not necessary to have grown up in the country to appreciate the lifestyle. It was also good to be able to practice in their own way, while enjoying a good life. Although the financial rewards might not be as much as they would be in an urban practice, other factors balanced that out.

Drs. Quinn, Pate and Blair were examples of the sort of young practitioners PCMH and ECU wanted to train. They all chose to practice in areas of eastern North Carolina with inadequate healthcare, fulfilling the medical center’s long-standing mission.

Changes in Medical Practice

Young doctors new to practice were not the only physicians whose way of practicing medicine was transformed by the various interventions of the government in healthcare financing and the growth in health maintenance organizations. Virtually all practitioners were and still are challenged. Each year brings changes in the way the federal government—and as a result the states and other third party payers—carries out its role as insurer of healthcare delivery. The practice of medicine is not only a technical and human challenge.

The Health Care Financing Administration announced on May 31, 1991, that it proposed to change its fee structure on January 1. The fees to virtually all medical specialists would be cut, making surgical operations and other special procedures often provided only in tertiary care facilities less lucrative, while fees to family doctors would be increased 13 percent. The cuts in surgical procedures would range from up to 5 percent for general surgeons, through 6 percent for plastic surgeons, and 8 percent for anesthesiologists.

Doctors complained that the proposed fee cuts broke a congressional promise. Congress had pledged that the 1989 overhaul of Medicare’s reimbursement schedules would create fairer payment levels and higher fees to rural doctors. The AMA said the changes took money away from specialists without giving enough to primary care physicians such as internists. Medicare Administrator Gail Wilensky said that the government expected physicians to perform more procedures on Medicare patients in order to recover lost income. While the new fee schedule was not designed as a cost-cutting procedure, it was expected to lower Medicare payments by $3 billion in 1996 compared with the current system.

Proposed changes in the Medicare fee structure tended to penalize the hospital and benefit the school of medicine. They came at a time when the medical center as a whole was beginning to brace for changes brought on by managed care. Family medicine, general medicine, other primary care—services with a high proportion of outpatients—would benefit from the change in Medicare reimbursement. So would the clinics operated in rural communities by the medical school, private practitioners in these locales and smaller hospitals in the region that mainly furnished primary care. The compensation would be less for patients referred to PCMH for specialized procedures, surgery, and some complex laboratory tests.

PCMH’s Collision with AIDS

The acquired immune deficiency syndrome, or AIDS, epidemic had a major impact on PCMH, as it did on every other healthcare establishment in the country. The hospital and medical school responded by training their medical and support staff (and also other health professionals from the region) in procedures for dealing with patients who tested positive for the human immunodeficiency virus, which causes AIDS. As the disease, originally expressed among homosexuals, expanded to affect more and more heterosexuals and children, the medical center began to see an increase in HIV and AIDS patients. Many urban victims of the ailment moved to eastern North Carolina to take advantage of the social services, community life, and medical treatment less available in large cities. A secondary result, since the incomers tended to bring problematic behaviors with them, was an increase in “home-grown” HIV infections, especially among drug users and the indigent population, but not limited to them.

The problem came closer to home in 1991. In July of that year, the hospital administration felt compelled to make a statement to the newspapers, saying that a medical school student had treated patients at the hospital for more than a year after he or she had tested positive for the HIV virus. Hospital President McRae said that a decision on whether the patients should be notified individually would not be made until an investigation by outside consultants had been finished. He said that the hospital had issued its statement because of widespread concern about healthcare workers who contracted AIDS.

The ECU student, whose identity was withheld because of privacy considerations, had rigorously followed the guidelines prescribed by the federal Centers for Disease Control, which were designed to protect both healthcare workers and their patients from the virus. The policy stated, “The concept of universal precautions stresses that all patients should be assumed to be infectious for bloodborne pathogens.” The mandatory procedures called for using gloves, masks, goggles or other protective devices to avoid contact with blood or other body fluids. Workers were instructed to exercise special care in handling contaminated needles, scalpels, or other sharp objects.

The student had voluntarily reported the condition to his or her academic supervisor 18 months before when the positive HIV test turned up shortly after starting in the program, which had been completed upon graduation in May. The test results had also been reported to the Pitt County Health Department, whose director, Dr. Tim Monroe, determined that the universal precautions against spreading the infection had been followed. Hospital policy encouraged but did not require HIV-positive employees to report their illness to the employee health physician.

“Obviously the student was involved in some delivery of patient care, but we’re not in a position yet to identify the specific type of care,” McRae said. “We’re concluding the investigation, and we’re not prepared to disclose that at this time. We have contacted experts in the field to provide additional confirmation of our assessments. Our impression to date is that there will be no need of individual notification, but on that we’re waiting for a final conclusion.” He also said that further details would be available in 10 days to 2 weeks.

The findings of the specialists in AIDS prevention were presented to the hospital’s board of trustees on July 16. The board decided that the student’s patients should not be individually notified, since the precautions taken and the modifications made in the curriculum to restrict contact had made the risk negligible.

The hospital and medical school continued to rely on universal precaution guidelines required by the Centers for Disease Control. However, McRae said that he had instituted a study of the hospital’s policies to ensure that they were in compliance with new federal guidelines for healthcare workers infected with the HIV virus. He indicated that it might be desirable to try to improve exchange of information between the hospital and the medical school, which were independently administered, but under their affiliation agreement shared staff members and functions. He observed, “It will not change the fundamental relationship between the two institutions. We will look at the term ‘need to know’ and make an assessment to determine whether the interpretation of the term should be different than it has been in the past.”

PCMH’s openness in handling of the matter, which had been closely followed by local news media, was largely applauded by the Daily Reflector in an editorial that praised the hospital’s forthrightness.

A Crisis in Emergency Services

At hospitals all over the country, emergency rooms were so inundated with patients that they were having to keep less critical patients waiting up to 10 hours for regular beds and up to 7 hours for intensive care beds. The emergency service at PCMH suffered like the others from overcrowding and a bed shortage. These problems had been with it from its early years, as the first Director of Emergency Services, Dr. Howard Gradis, had attested in 1977. The situation was less grave in Pitt County than in many other places. Dr. Jack Allison, head of the Emergency Medicine Department, said, “We definitely have an emergency department overcrowding problem at Pitt County Memorial Hospital. We do know that people at times have had to wait for a long time, but we feel the sickest patients have received appropriate care. The way it has impacted the system most is that patients that are less sick have to wait longer. We don’t feel it’s impacted the critically ill or injured patients.”

His answer as to how to meet the problem was expansion of facilities. PCMH was in the process of adding new beds. Also, more critical care nurses had been added. There was little the hospital could do about another source of the problem, the shortage of nursing home beds in eastern North Carolina. This had been a particular problem for the hospital, because it had not been designed to provide extended care for elderly and chronically ill patients, yet there were at the time about 60 elderly patients who could not be discharged because there were no places to send them.

The North Bed Tower project, first step in the expansion of the hospital, was launched by a groundbreaking ceremony held on September 13, 1991. Medical staff members, hospital administrators, and county commissioner Charles Gaskins participated in the ceremony. Interviewed after the formal opening of the $52 million expansion project that would bring the hospital’s total number of beds to 725, Gaskins said, “That’s some mound of dirt,” pointing to the heap of earth that had been brought in to stabilize the ground for the building’s foundation. “I know for a fact that they had four 10-year plans in five years. Now that’s a bit of an exaggeration. But there has been something going on since this hospital opened. We’ve been very fortunate that the architects built a building that you could add on to.”

Elsewhere in the east, several small rural hospitals had the opposite problem: they were unable to support the beds they already had. During September, the administrators of Bertie County Memorial Hospital in Windsor and Chowan Hospital in Edenton made the decision to consolidate inpatient facilities, shift their emphasis to outpatient service, and establish a link with PCMH to provide for their more acute cases. The two small hospitals serving a mainly rural population were threatened with the possibility of having to close because of increased operating costs and decreased Medicare reimbursements. They and four other mainly rural North Carolina hospitals were to receive $178,000 grants for making the changes in their operations.

Barbara Cale, administrator of Chowan Hospital, said, the changes “would help us generate more admissions and help them to maintain healthcare service in the community.” She felt that the program offered a good solution for the financial problems of both institutions. Chowan’s 40 long-term care beds, 25 psychiatric beds, and 60 inpatient beds would be put to much more effective use by taking in patients no longer housed at Bertie Memorial.

Ms. Cale said that rural hospitals could not offer the high-tech services that a large hospital could provide. The best way to meet financial difficulties seemed to be to set up functional networks to utilize existing facilities more efficiently, and give the smaller hospitals access to resources too expensive for them to provide themselves. Forming such links was becoming a main option for rural and small-town hospitals. “A lot of small hospitals are seeking alliances with other larger hospitals,” Cale said. “In fact, we are seeking help from other hospitals for resources that we don’t have. It’s a matter of networking and working together in order to survive.” Her hospital had been financially healthy for a number of years, but she believed this sort of program might become a major trend. “We do have to plan for the future. We have to look at anything that might continue to help us to maintain that solid bottom line.”

Bertie Memorial would close most of its 49 inpatient beds, concentrate on outpatient care, long-term care for the elderly, and emergency room services. Administrator Charles Davis observed, “It’s been a struggle for some time. All rural hospitals or the vast majority are having financial difficulties and are struggling, not only in North Carolina but across the nation. It’s one option the government is looking at. You check, hospitals have been closing up about 500 a year and no one seems to notice except for those in the community. It’s an option that will allow us to provide hospital services to the community that we might not be able to otherwise.”

State officials had already started the $6.2 million Essential Access Community Hospital Program, and planned to have it in full operation within a year. In addition to the direct grants, participating hospitals would receive higher payment rates from Medicare. According to Davis, the program for struggling rural hospitals was an experiment, but he thought it was a viable option. “It’s an alternative to the operation we have now,” he said. “All hospitals are having difficulty. It’s the nature of the beast these days.”
The strength of PCMH as a regional center depended on having the smaller hospitals in the communities of eastern North Carolina shift their emphasis further to outpatient services, and refer their more serious cases to Greenville. Only if this happened could a tertiary-care research and teaching center be supported. The partnership with the two smaller hospitals was mutually beneficial, and would enable them to continue to operate.

“Granny Dumping”

The aging of the population, coupled with changes in healthcare reimbursement, posed further difficulties for hospitals. There were problems, particularly in rural areas such as eastern North Carolina, where so many of the elderly depended on Social Security for their only income. Dr. Jack Allison, director of the emergency department, told a story about an elderly woman who had alienated all her relatives and because of an alcohol problem, was “drinking away” the family’s possessions. It was finally too much. “So the housekeeper drove her from Ahoskie, drove under the overhang at the emergency department, eased her out the door onto the concrete and drove away,” he said. The practice had become common enough that emergency room physicians had coined a name for it: “Granny dumping.”

Allison said that abandonment of elderly people at the emergency service was not rare. “We get our share of abandoned people, but it takes many forms. There are a lot of times when people come with what we call ‘packed suitcase syndrome.’ People for whatever reason can’t deal with the elderly person any more—either emotionally or financially or both—and a lot of times they’ll bring them to the emergency department and say, ‘You’ve got do to something with Grandpa. He’s changed, and we can’t deal with it any more.’ But if we do a history and a physical and have no reason to admit him, they can’t deal with it and get really upset.”

Elderly patients who could not care for themselves, but whose condition did not call for hospitalization, posed a bigger problem for hospitals. Allison said that the situation was made worse by the shortage of nursing- home beds. Many patients were ready to leave the hospital, but had nowhere else to go. They filled hospital beds, creating a problem for those whose more serious condition required a hospital stay. “I have one person in the hallway now, and it’s just noon,” Allison said. “This guy is on a cardiac monitor in the hallway.”
Through the 90s PCMH explored numerous ways of dealing with this problem. It considered venturing into the long-term care arena, sought state approval for a “sub-acute” area, created a home health agency, and supported several community-based initiatives to provide care for the elderly.

A new $1.9 million building with 22 beds, funded entirely from hospital operating reserves, was completed in January 1992, to be used for patient observation or admissions for short-term care. It was located adjacent to the recently expanded Leo Jenkins Cancer Center and the medical school’s Family Practice Center. The hospital had already hired additional staff for the new building, which opened 10 of its beds in the first-floor observation unit in February. A 12-bed ambulatory medical unit was already in operation. The addition brought PCMH’s bed count to 582, and would relieve to a small extent the pressure of the bed shortage. The construction had been carried out while the four-story bed tower was still being built. Completion of that $52 million project would bring the bed count to 725.

The hospital had again rented a building from the nearby Holiday Inn for patients who did not need full care. PCMH was becoming a referral hospital for patients from 29 neighboring counties, a role that was putting considerable pressure on the medical center’s resources.

A Surgical Shortcut

At the same time, the medical center forged ahead with a new means of dealing with eastern North Carolina’s continuing excess of heart diseases. Two days before Christmas in 1991, the hospital issued a news release announcing that an arterial stent insertion for narrowing of an iliac artery, without bypass surgery, had been successfully performed for the first time in eastern North Carolina. Radiologists Irwin Johnsrude and Michael Tripp had performed the 30-minute procedure. Only local anesthesia was used, and the patient, a man in his mid-50s, was released after an eight-hour recovery period. In the operation, a thin cylinder, or stent, of stainless steel mesh less than an inch long was placed in the narrowed artery through a catheter inserted into the groin.

Dr. Tripp commented, “This procedure can be routinely performed in lieu of bypass surgery. For some patients it will be a permanent alternative. For others, it can at least be used to alleviate symptoms for a time prior to bypass surgery.”

Planning for New Demands

In May 1992, the board of trustees approved a plan outlining the hospital’s goals for the next several years. The strategic study had been developed by a 23-member strategic planning task force made up of representatives from the hospital’s administration, medical school faculty, and private physicians, assisted by consulting firms from Raleigh and Minneapolis.

The new hospital wing, a 194-bed tower that would increase the number of beds to 725 when it opened in late 1992, would be the first step in the plan. Other additions would emphasize outpatient services.
The broad goal of the program was to construct an integrated regional healthcare system converging in the consolidated University Medical Center of Eastern Carolina-Pitt County. With PCMH as the pivot, physicians and rural hospitals would direct their patients to the nearest location where they could obtain the level of care they needed. Providing proper care without long hospital stays was central, the planners said. Only critically ill patients or those undergoing complex surgery would occupy full-service hospital rooms.

The plan was in line with the national trend in healthcare, in which there was a shift in emphasis from hospitals to smaller, specialized clinics in response to demands for lower medical bills.

Planning Vice President Kathy Barger described two building projects that could relieve some of the pressure to provide more services. An urgent care center for serious but not life-threatening illness would be built inside the Family Practice Center at a cost of about $1 million. A second outpatient center was planned, to cost as much as $16 million. The goal would be to increase the number of day patients, who had surgery in the morning and went home a few hours later. The plan estimated that within four years the hospital should be earning 20 percent of its income from day patients, Ms. Barger said.

Patients needing more recovery time could be moved from full-care beds to the hospital’s nearby Holiday Inn facility, where they could stay overnight and have the nursing care they needed without having to pay for the full line of care they would be given in the hospital. The last barrier to setting up hospital-hotels seemed to be to get insurers to accept the idea and pay the bills for overnight stays. “The issues there relate to reimbursement. We think that’s probably going to happen during the next four years,” Ms. Barger said.

In mid-1992, Ms. Barger and Diane Poole, vice president for community-based services, proposed a plan to provide home healthcare in order to reduce costs by shortening hospital stays. Ms. Barger said that the plan, Home Infusion Therapy, could be approved by hospital board members before the summer was over, and could start operation in 1993. HIT would provide intravenous food and nutrition, such as glucose and vitamins, at home. It could also provide chemotherapy drugs or pain-controlling drugs that a nurse could administer, or the patient could administer personally using a pump.

The home infusion proposal generated some controversy among competing providers. Ronald H. McFarlane, eastern North Carolina general manager of Caremark Home Care, the nation’s largest home intravenous support company, said, “Some will argue: How free is the market if the hospital is the one providing patients? I don’t mind competition. I only ask that it be fair. Hospitals can get into this business as long as they’re fair and ethical.” He also said that new demands on hospitals, including AIDS patients, had increased the need for home care. Hospitals could either encourage healthy competition or suffocate it through unfair practices.

Ms. Barger said that the hospital would attempt to avoid any unfair competition by creating a non-profit organization to run its home infusion support program, with the patient and physician deciding which intravenous company to use. Patients who had no preference would be referred to a service on a rotation basis in which PCMH and private agencies would have equal access.

Home Health and Hospice

In December 1994, the county commissioners and the hospital board of trustees held a joint meeting, after which the commissioners went into executive session and approved the purchase of a home health agency already operating in Greenville. The hospital offered to purchase 51 percent of Home Health & Hospice. Once the purchase agreement was signed, Mrs. Poole made a public announcement of the formation of University Home Health & Hospice Inc., to be effective March 31. The hospital paid $460,528 to become sole owner of the Greenville branch of the Goldsboro company, which had six other branches in the east, including one in Kinston and one in Wilson. The commissioners had approved an additional $450,000 for start-up costs and working capital.

Merging its subsidiary corporation with the already existing agency circumvented a court challenge that was being made against the hospital’s setting up a separate home health service in Greenville, where two such agencies were already in operation. Since Home Health & Hospice had already been granted a certificate of need, PCMH’s appeal against restrictions that the Department of Human Resources had placed on its certificate became moot. The hospital had been limited to serving patients 55 years and older, with other restrictions, including verification in each case that the other agencies were not eligible or able to provide the required services.

Home Health & Hospice employed 87 people—registered nurses, social workers, physical therapists, occupational therapists, and speech therapists. The hospital might also need to employ others to be responsible for the training of students from the medical school.

The joint venture turned out to be ill-fated, however. Hospital officials were shocked to learn in January that the FBI was investigating Home Health & Hospice for possible Medicare fraud. The investigation put in jeopardy PCMH’s purchase of the Greenville branch of that company. Six years before, in 1989, Home Health & Hospice had been the subject of an inquiry by the State Bureau of Investigation into possible Medicaid fraud. At that time, the company had been cleared of the charges. During their negotiations, PCMH officials had been familiar with the earlier investigation but did not consider it a serious matter, since the company had been exonerated.

McRae reported to the county commissioners that the hospital was seeking more information about the FBI probe. “Our lawyers are trying to find out exactly what the investigation is about. ...An investigation like this, it could take a year or two to make clear. We need to be in (home) healthcare before then. We need to move as quickly as we can… but we haven’t had time and have not met with trustees or lawyers. It’s just too early to tell.”

At a special meeting on January 26, the hospital board of trustees received an update from their attorney, Nancy Aycock, on the probe of Home Health & Hospice Care Inc. The hospital had not been able to obtain any official information about the reasons for the investigation. The warrants had been sealed for 90 days, until April. When they were eventually available it was found that they had been issued because there was probable cause to believe that Home Health & Hospice had engaged in a “regular and continuous pattern” of Medicare fraud, Medicaid fraud, mail fraud, and wire fraud. The allegations were similar to those that had been investigated in 1989.

Home Health & Hospice officials had denied knowing of any intentional violations by the company.

Subsidiary Growth and Competition

On January 19, Mrs. Poole announced that PCMH and Bertie Memorial Hospital were jointly filing a Certificate of Need application for cooperative operation of a second home health agency, Bertie Home Care Inc., currently operated by the Bertie hospital. It was possible that other agencies might also file to open a home health service in Bertie County.

The Bertie agency did not at the time offer skilled nursing care, but would be able to after the merger. Bertie Home Health Chairman Tony Mullen, said “A small rural hospital nowadays can’t make it on their own. Pitt is a quality institution, and we want to be a part of them.”

On January 23, the hospital asked the commissioners to transfer more than $1 million from the hospital reserves to three subsidiaries, $550,000 for purchase of the Ferguson and Barry Moore buildings in the Doctors’ Office Park, $250,000 for start-up funds for the University Home Infusion Therapy program, and $250,000 to a new venture called HealthEast, that would fund start-up costs and pay for the purchase of primary care practices. McRae said that the move was to get into position for healthcare programs that would use primary care physicians as “gatekeepers” for specialty services. In Charlotte, one or two key companies had bought out all such practices.

The purchase of the practices was very important, because of the shift in focus to cost control. Patients could end up with lower quality healthcare if the channels for referral to specialists were not controlled in the right way.

The proposed subsidiary, HealthEast, Inc., would purchase the practices of family practitioners, pediatricians, internal medicine and general medicine physicians, who would serve as gatekeepers to refer patients to specialists.

The board met with hospital officers January 30 to review additional strategies to keep the institution competitive through the next decade. One strategy amounted to setting up a health maintenance organization, essentially an insurance company that permitted subscribers to pay a fixed, predetermined fee for healthcare coverage. This would put the hospital in competition with such companies as Blue Cross/Blue Shield and Prudential Insurance.

The hospital was also asking the commissioners to approve a loan of $15 million from a pooled loan fund set up by the N.C. Medical Care Commission and the NC Hospital Association in 1985. The hospital could borrow $15,000 to $20,000 at a time, and repay the loan when it was ready. Interest on such loans had averaged 5.8 percent over the past decade. The hospital had borrowed about $10 million from the loan fund and had an outstanding loan of about $4.9 million.

Commissioner Eugene James had raised questions about the loan proposal. He asked, “If you’ve got plenty of funds, why borrow more? I learned a long time ago, when you borrow money you’ve got to pay it back and interest. If you don’t need it, don’t bother with it.” Hospital Finance Officer Jack Holsten, explained that it was just good money management. The interest rate on the loans was less than could be obtained anywhere else, and there was no penalty for early repayment. The hospital could reinvest the money at a higher interest rate than that charged on the loan, without paying any fee or penalty on the arbitrage.

The commissioners voted to approve Holsten’s proposal.