DHEC denies application for new surgery center

February 12, 2017 GMT

Several opponents voiced objections to plans for a new surgical center the Medical University of South Carolina was seeking to open with another local health care provider.

Among them: a physician who’s a longtime business partner and co-worker of the MUSC board chairman.

The state health department recently denied an application to build The Surgery Center at Mount Pleasant, a freestanding facility that would have been staffed by doctors from MUSC’s Medical University Hospital and East Cooper Medical Center. The proposed venture illustrates how health care industry in the Lowcountry can be both competitive and collaborative, sometimes with entangling and overlapping interests.

DHEC denied an application for a new freestanding surgery center in Mount Pleasant. Southeastern Spine Institute, located on Chuck Dawley Boulevard in Mount Pleasant, was a vocal opponent of the project. Leroy Burnell/Staff

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The estimated $12.5 million project was part of a larger strategy by MUSC to expand its footprint throughout the Lowcountry. It wants to build similar freestanding centers for imaging and outpatient procedures in Summerville, West Ashley and North Charleston, reflecting broader industry trends.

But MUSC competitors, including Charleston Surgery Center, Roper St. Francis and at least one physician - Dr. Steven Poletti - spoke out against the Mount Pleasant project.

Poletti’s opposition is of note because he’s a surgeon and partner at Southeastern Spine Institute with Dr. Donald Johnson, chairman of the MUSC board.

Johnson declined to answer questions about the planned surgical center last week. MUSC said he has remained neutral to avoid any potential conflicts of interest between his medical practice and board duties.

The surgical center required a “certificate of need” from the S.C. Department of Health and Environmental Control to proceed. While DHEC reviewers denied the application in a letter dated Jan. 23, developers could still appeal the decision. The process could take years to resolve from start to finish.

Johnson, a surgeon, founded Southeastern Spine Institute in Mount Pleasant in 1990. Poletti was one of the first physicians to join the private practice, according to the Spine Institute’s website. Now, a majority stake in the practice is owned by United Surgical Partners International, which, in turn, is controlled by the parent company of East Cooper Medical Center.

Johnson, a member of the governing board of MUSC since 1994 and its current chairman, sets budgets and policy for the hospital and university with fellow board members. He has not publicly expressed an opinion about The Surgery Center at Mount Pleasant and cast only one vote in April 2015 in favor of the broader strategy to expand MUSC’s network of outpatient facilities.

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In that meeting, the board unanimously approved a staff request to seek certificates of need for four ambulatory surgery centers and four imaging centers in the Charleston area. At the time, the specific locations were not identified.

MUSC spokewoman Heather Woolwine said the board has never specifically discussed the Mount Pleasant surgery center project in a meeting. Board secretary Mark Sweatman said Johnson isn’t taking sides to avoid a conflict of interest.

“Dr. Johnson has remained neutral on this issue given his connections to both MUSC and the Southeastern Spine Institute,” Sweatman said in a statement.

Meanwhile, Poletti, in a December letter to DHEC, called the proposed surgical facility “premature,” “vague,” and he said the project would “adversely affect the fair market value of my shares” in Southeastern Spine.

Poletti also hired Lynn Bailey, an independent health care economist, to review the application for The Surgery Center at Mount Pleasant and to make a case against it. Bailey wrote in a separate letter to DHEC that the applicants failed to demonstrate why Charleston County needs another ambulatory surgery center and why it should specifically be located in Mount Pleasant.

Poletti did not respond to a request for comment about his opposition to the project last week, but his opinion does not necessarily speak for all of Southeastern Spine. In fact, United Surgical Partners International, which owns a majority stake in that practice, formed a separate partnership with MUSC and filed the application to build The Surgery Center at Mount Pleasant.

The other tie-in is Dallas-based Tenet Healthcare, owner of East Cooper Medical Center. It acquired a majority interest in United Surgical Partners International in 2015.

Tenet, which is a publicly traded company, said in its annual shareholder reports from 2012 to 2014 that it owned 55 percent and was “managing member” of Southeastern Spine through a company called East Cooper Community Hospital Inc. Other unidentified “outside members” owned the rest, according to filings with the Securities and Exchange Commission.

As of last week, MUSC and Tenet’s United Surgical Partners International had not decided whether to appeal the denial of their planned Mount Pleasant surgical center.

“We are reviewing the decision to determine how we will proceed,” said Dr. Patrick Cawley, CEO of Medical University Hospital. “We remain committed to bringing MUSC Health to more easily accessible locations for patients and families.”