This Growth Appears Benign

After a century of cutthroat competition, Spokane’s hospitals have laid down their scalpels. United by a common interest in survival, they and a majority of Spokane’s doctors have joined forces to keep our sophisticated health-care industry alive. Last week, they launched a new organization that aims to cooperate, cut costs and eliminate duplication.

The organization is known as the Spokane Physician Hospital Community Organization - PHCO, for short.

To those who’ve watched Sacred Heart and Deaconess medical centers wage an arms race in medical equipment and services, this new entity’s potential is breathtaking. So are the stakes for consumers and the economy.

Gradually, the PHCO could blur the distinction between the hospitals. Organizers hope to save millions with a common record-keeping system. Millions more with a common purchasing system. Hospitals might divvy up, instead of duplicating, certain services. One might treat heart disease, for example; another, cancer.

The PHCO would end the fragmentation that now hinders Spokane hospitals as they respond to requests from outlying communities for contracts to provide advanced services.

Critics, from the insurance industry, call this a cartel and fear it could use its size to preserve excessive fees, profits and treatment capacity. That seems improbable.

PHCO organizers have no choice but to take radical steps toward lower operating costs, and lower fees. The health-care market is becoming national in scope. Major insurance carriers have begun to fly patients to distant hospitals where they’ve negotiated volume discounts on certain specialized procedures. If Spokane lost its competitive edge in such services, they’d disappear. And the level of medicine here would fall. So would the size of this $2 billion a year industry, the community’s largest. It is not in the interest of local residents to rely on strangers in some far-off hospital for heart or hip surgery, for example. We need top, cost-competitive services, here.

Another PHCO objective is to maintain quality of patient care. Insurance company bean counters place arbitrary limits on the number of tests and procedures physicians perform, regardless of patient needs. PHCO backers hope to limit costly procedures with a constructive, educational approach, based on medical rather than statistical considerations.

Eventually, the PHCO could become a health insurance company. For now, organizers say it will offer itself to insurers as a provider group.

Will it succeed? No one can say. But the implications for Spokane’s leading industry, and for public health, are huge.

, DataTimes The following fields overflowed: CREDIT = John Webster/For the editorial board