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Orangeburg doctors want to build surgery center; RMC has competing plan
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Orangeburg doctors want to build surgery center; RMC has competing plan

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Ambulatory Surgery Center

Orangeburg general surgeon Dr. Dion Franga and Orangeburg radiologist Dr. Amit Sanghi are seeking a certificate of need from the South Carolina Department of Health and Human Services to construct an ambulatory surgery center behind the existing South Carolina Surgical facility on St. Matthews Road.

The proposed 16,600-square-feet ASC would cost about $12.5 million. Construction would begin in April 2021 with the center opening in December 2022.

Two physicians are planning to build a multispecialty ambulatory surgery facility with an imaging center in Orangeburg.

The doctors -- Orangeburg general surgeon and Regional Medical Center board member Dr. Dion Franga and Orangeburg radiologist Dr. Amit Sanghi -- submitted a 139-page certificate-of-need application to the South Carolina Department of Health and Environmental Control outlining their plans to build a one-story, $12.5 million, 16,640-square-foot, two-operating-room ambulatory surgery facility.

The doctors, who have formed Ambulatory Partners (AP) LLC, submitted the application to DHEC on April 7, citing the demand and need for such a facility in the Orangeburg area. 

DHEC must issue a certificate of need before certain types of health care acquisitions, expansions and new facilities are allowed. The process is intended to reduce the duplication of services.

A little over a week later -- on April 15 -- DHEC received the Regional Medical Center's application to build a surgery center, according to DHEC documents.

Franga did not want to speculate on the hospital's motivation for submitting shortly after AP submitted theirs, but said construction of the surgery center has been a plan of his going back two years.

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"The hospital's strategic plan did not call for an ASC," he said. The CON notes the hospital had not submitted an application prior to the one submitted last month since 2006.

In early March, Franga said he met with hospital board members to discuss a potential joint venture between the hospital and AP.

"Those discussions stalled and we have not heard anything from the hospital," he said May 1.

"I am firmly committed to making the hospital better," Franga said. "I am also committed to making sure the community has the health care resources that it needs and deserves. That is our primary focus here. No patient should travel out of this area."

In a letter submitted to RMC board Chairman the Rev. Dr. Caesar Richburg on April 30, Franga said his offer to partner with the hospital remains open.

Hospital officials declined comment on their CON submission and Franga's.

In the interim, Franga says he is moving forward with his plan.

"The premise of the ambulatory surgery center and the outpatient imaging center is to attract care back into the community," Franga said. "That care is leaving the community now and we have to establish a plan to bring that back in."

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Franga said he is optimistic the center will provide an attractive and affordable option for local residents to receive care.

"It will also offer up a grand opportunity to show growth in the health care field in this area and ultimately augment Orangeburg County development and make it appealing to large business and corporations bringing their business into Orangeburg County," Franga said.

Franga said he has the direct commitment of about eight other physicians from the Columbia and Charleston areas to provide their services at the facility, which would be located behind the existing South Carolina Surgical facility at 3045 St. Matthews Road. South Carolina Surgical is owned by Franga.

The new center, which would be owned by Ambulatory Holdings LLC, would cost about $12,537,535, with construction being about $6.8 million and equipment another $2.5 million. The rest of the cost would be in financing, engineering fees and land.

The facility would have two operating rooms, procedure rooms and customary patient staff and support areas.

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The entirely privately funded surgery center would occupy about 1.25 acres of the existing seven-acre site.

Construction is set to begin April 2021 with the project expected to be complete in November 2022. The center's target opening date would be in December 2022. Should the CON move forward, public hearings will also be held.

The center would include ophthalmology, retinal surgery, gastroenterology medicine, orthopedics, urology, ear nose and throat, radiology and general surgery.

The surgery center also is to include in-house diagnostics imaging testing such as MRI, CT Scan and general diagnostic imaging.

Franga said the out-migration of Orangeburg residents seeking care elsewhere is 67%, with many people traveling to Charleston, Lexington and Richland for services.

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"Unfortunately, Regional Medical Center has not been able to turn the tide of out-migration for several years," the CON application states. "Since 2014, their own utilization has steadily declined in both bed admission and outpatient surgery, averaging a 1% decline and 5.5% decline, respectively. Whereas, the out-migration for both inpatient beds and outpatient surgery to facilities outside the market area have grown at an annual rate of 2.4% and 1.2%, respectively."

Franga expects some losses the first year, but by the third year, the project is to be about $794,000 in the black based on performance projections.

The center will employ about 15.

Franga said the new surgery center is needed in Orangeburg not only because of out-migration. It will provide lower-cost options compared to hospitals and hospital-based outpatient surgery programs.

He also said there are no ambulatory surgery centers in the Orangeburg area.

"Therefore, the options for insurance networks are nil, and these networks would have to seek providers outside the county service area," the CON states. By retaining even half of the 67% out-migration would enable AP to continue to support RMC’s business with additional inpatient and ancillary services with the intent of collaborating the resources to improve access overall."

Projections are the center will see about 4,000 patients its first year, growing to about 4,500 by the third year, according to the CON application.

"The project need ... will demonstrate that the population in the Orangeburg area more than supports the additional OR suite without affecting the existing volumes in the existing Sc facilities," the application states.

According to DHEC documents, Franga's proposal has the approval of at least 11 physicians and several community members.

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RMC plans an ASC

RMC has also received official support for its plans to create an ambulatory surgery center -- to be called the RMC Ambulatory Surgery Center.

Orangeburg and Calhoun county councils have approved letters of support for the hospital’s plans. The counties own the hospital.

In addition, Bamberg County Council approved a resolution supporting the hospital's CON application.

The hospital has cited the need for the center to help offset declining reimbursements, surgical volumes and lack of taxpayer support.

The hospital's board of trustees in February approved exploring the certificate-of-need application, but RMC officials declined comment at the time.

The matter was also addressed in closed session at the hospital's March 25 teleconference meeting, but a vote was not taken on the matter when the board returned to open session.

A hospital must apply for a certificate of need if an expenditure is over $2 million and includes an addition or an expansion of health service, according to state law.

In order to get the certificate of need, the hospital needs the support of all the counties that use the hospital.

According to DHEC records obtained by The T&D, RMC's 276-page CON application proposes the hospital renovate its existing 10,000-square-foot, nine-year old Dialysis Access Institute facility located on its campus on St. Matthews Road, transforming it into a surgery center.

RMC anticipates renovations to begin in September 2020. The hospital says the facility would be open by November 2020.

According to the hospital's CON application, it anticipates the renovation cost to be about $2,406,060.

The hospital's surgery center would include six operating rooms, meaning it would require the conversion of one of the existing procedure rooms into an operating room. According to the CON application, disruption of existing services would be minimal.

Dialysis patients would still be seen at the facility, according to the hospital's application. Other services the hospital envisions at the ASC are gastroenterology, orthopedics, otolaryngology, urology, podiatry and general surgery.

RMC notes that the outpatient surgery center would shift "clinically appropriate surgeries from the inpatient acute setting to the ambulatory and outpatient setting will enhance scheduling and operational efficiencies."

The hospital also notes the surgery center would "achieve cost containment" and outpatient services would be more readily accessible for patients.

RMC anticipates the center will have about 5,100 patients the first year and increase to about 5,200 by year three. The hospital says the facility will house between 50% to 60% of the existing outpatient surgical volumes in the first three years.

In the CON application, the hospital cites its availability of space to be the most cost-effective alternative to building new and at another location.

RMC projects the ASC would be a profit-making venture from year one with estimated profit margin of about $2 million in the first year, increasing to about $2.1 million in its third year. The annual expense budget for the center would be about $10 million.

The hospital's proposed CON has the support of at least 17 doctors as well as government officials such as Congressman James Clyburn, the Orangeburg County Legislative Delegation, university presidents and other community leaders.

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Franga cites concerns

Franga's plans to build a surgery center came to light when the RMC Board of Trustees on April 29 took up the issue of a resignation letter submitted by Franga citing his conflict of interest in remaining on the board in light of his plans to build the ASC and the hospital's plans to build an ASC.

Trustees voted 9-5 not to accept Franga's resignation, though no public discussion was held as to the board's reasons.

Franga said he would remain on the board for the time being and continue to recuse himself from any votes having to do with the hospital's surgery center plan.

But in his April 30 letter to Richburg, Franga said he will continue to weigh his options going forward depending on RMC's response to the CON application submitted by the AP firm.

"I can only assume by the board's decision to not accept my resignation that RMC intends to approach my partnership in good faith," Franga writes. "Further, I presume the RMC will act in the best interest of the Orangeburg community in assessing the offer to partner on the ASF, or in the alternative, in its approach to challenge the CON."

"If this is the case, I will have to reassess the potential conflict and my board position," Franga writes. "I sincerely hope that our interests continue to be aligned in efforts to provide the best medical services for our community."

History repeats

Hospital leaders discussed developing an ambulatory surgery center in 2007, citing the poor reimbursements from the Centers of Medicare and Medicaid Services as well as a stagnant local population. The proposed facility would have housed four operating rooms and two procedure rooms.

At that time, a center was estimated to cost $5-8 million.

The center was put on hold at that time as hospital officials questioned the economic viability of the project, including if it would draw enough patients and if it would drain the main facility of patients.

A little over 20 years ago, several Orangeburg doctors also put forward a CON application to build a same-day surgery center. Those plans were opposed by the hospital at that time, noting an ASC would have taken away $3 million from the hospital.

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