State board green lights new Watauga Orthopaedics surgery center

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NASHVILLE, Tenn. (WJHL_ – Over opposition from a Kingsport-based surgery center, Tennessee Health Services and Development Agency (HSDA) Wednesday approved Watauga Orthopaedics’ request to build a $17 million outpatient surgery center.

The HSDA’s board voted 6-2 in favor of the certificate of need (CON) request — rejecting arguments that the area had overcapacity and that the plan wasn’t economically sound.

Watauga surgeon Dr. Richard Duncan said the 20-doctor practice will soon get to work building the four-operating room, orthopedic only center near the Tri-Cities Regional Airport. He said it should be operational within 18-24 months.

Attorney Kim Looney argued on behalf of United Surgical Partners Inc., which owns the biggest stake in Holston Valley Surgery Center.

Looney said construction of additional outpatient surgery capacity would violate one the HSDA’s criteria for approval, which says unless utilization will remain at or above 70 percent of capacity, a CON should be denied.

Looney said her calculations showed less than 60 percent utilization.

“Just because these doctors want it, just because it might be nice to have it, that does not mean that it’s needed,” she said. “That’s why you have the CON process, that’s why we have the criteria we do and it does not meet those criteria.”

Arguing for Watauga, attorney Jerry Taylor said Looney’s data was flawed. He said the two most viable current outpatient centers — Holston Valley and Mountain Empire in Johnson City, also part-owned by USPI, are running at 90 percent and over 100 percent of capacity.

“And so I think all of those numbers that purport to show all this existing capacity are just wrong,” Taylor said. “I think what you really need to keep in mind is the undisputed, undeniable, uncontroverted fact that there is no orthopedic surgery center in this service area, there are a lot of reasons why it’s needed and we certainly urge you to approve this CON.”

Indeed, Duncan said much of the impetus for Watauga’s proposal and investment stems from the recent allowance by Medicare for total hip and total knee replacements to occur in an outpatient setting.

Duncan said USPI’s national contracts allow it to get higher payments from insurors than Watauga will, and that in that way the new center will benefit patients financially.

He also said there are capacity issues and that a number of joint replacement surgeries that would be more cost-effective in an outpatient setting continue to be performed at Ballad Health hospitals. Ballad owns 33 percent of Holston Valley.

“We can do about two a day (outpatient) right now,” Duncan said. “It’s better than doing none but it’s not enough to keep up with the amount of volume of eligible patients that can be done in an (outpatient surgery center).”

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