The continuum of care

In March 2006, a new health care facility opened in Cape Girardeau called Landmark Hospital, a 30-bed medical center providing long-term acute care.

Last week, Dr. William Kapp of Cape Girardeau and Michael Norman of Jacksonville, Fla., the partners who started Landmark, won regulatory approval to build their fourth facility, and third in Missouri. The rapidly expanding business is targeting smaller communities to establish the hospitals for people who must move from larger facilities but are too sick to go to nursing homes.

"What we are is an addition to the continuum of care," said Norman, a native of Sparta, Ill., who brought more than 25 years' experience in health care management to the partnership. "When patients in the big hospitals are ready to move and they are way too sick to go to the nursing home, they come to us."

The Missouri Health Facilities Review Committee issued a certificate of need Oct. 1 for a 42-bed long-term acute care hospital in Columbia, Mo. Landmark Hospital in Cape Girardeau has 30 beds, with approval to expand to 42 if needed. Landmark also operates a similar facility in Joplin, Mo., and has one under construction in Athens, Ga.

"I am looking for our fifth location right now," Norman said. "We have some locations on the board, so to speak, but right now we have to get Athens open by summer."

Landmark in Columbia will require zoning changes for the chosen property, and Norman wasn't able to estimate an opening date.

"We are pretty deliberate about it," he said. "We like to serve rural areas wherever possible, go in and consume the bed need so we don't invite more competition."

They aren't trying to compete in the larger markets that are dominated by companies like Kindred Healthcare, he said.

In each city, Landmark establishes a partnership with an existing hospital that gives the local hospital a minority stake in the facility. In Cape Girardeau, Landmark is owned 70 percent by Landmark Holdings LLC and 30 percent by Saint Francis Healthcare System. That gives Saint Francis a stake in the hospital's success, but Landmark accepts patients from any hospital or nursing home.

The creation of Landmark was sparked by rapidly changing Medicare regulations, said Deborah Taylor, chief executive officer of Landmark in Cape Girardeau. When Norman and Kapp began planning their hospital about five years ago, they considered the "hospital in a hospital" concept, in which the facility would lease a portion of an existing hospital and set up a separate operation.

But Medicare imposed limits on such arrangements -- only 25 percent of the patients could come from the host hospital, she said.

Medicare has strict rules about how it pays for care. Each patient is assigned to a DRG, or diagnosis-related group, and Medicare bases its payments on those diagnoses. Because the payments are limited, hospitals can't provide an unlimited number of days for patients to recover.

"If they are at Saint Francis or Southeast Missouri Hospital on a ventilator, and won't get off for a week or two, Medicare says send them somewhere else and free up the bed," Taylor said.

So patients are sent home, moved to nursing homes or directed to long-term acute care hospitals like Landmark. Patients stay at Landmark for an average of at least 25 days, and some DRGs allow for much longer stays, Taylor said.

"We take a lot of pulmonary patients," she said. "We specialize in ventilator weaning."

Most of the patients use Medicare to pay for their stay, but some are supported by private insurance plans and a few are on Medicaid, the state-federal program that covers health care for low-income people.

About half the patients at Landmark arrive from the two Cape Girardeau hospitals, Norman said. Others arrive from St. Louis, Carbondale, Ill., and Sikeston, Mo.

A mutual friend introduced Norman man and Kapp, Norman said. Over the course of a year, they discussed Norman's concept and business plan. "Finally, we said let's do this, and it has worked out really well for us," he said. "He's a great business partner and a very smart man."

The partnerships with hospitals in the cities where Landmark establishes new facilities gives each new long-term hospital a connection to the community as well as financial strength, Norman said. Landmark Hospital of Joplin, for example, is a joint venture with Freeman Health System and St. Johns Regional Medical Center.

Details of the partnerships in Athens, Ga., and Columbia, Mo., have yet to be worked out, Norman said.

Those local connections add more than financial strength, Norman said. By adding the CEO of the largest existing hospital to the management board, "we can get input into what everybody thinks of us."

rkeller@semissourian.com

335-6611, extension 126