Covenant Health's Chief Executive on Health Reform

CEO Tony Spezia explains Covenant's recent ad campaign

A recent Covenant Health television spot accompanies a picture of a big oak tree with the message, "Deeply rooted against the winds of change in health care."

With the nation fixated on health-care reform legislation, I took it to mean that Covenant is dug in against the provisions for transformative extensions of health-care coverage that the legislation mandates. And given the fact that the American Hospital Association and the American Medical Association are supporting most of these provisions, I was mightily surprised. So I sought out Covenant's CEO, Tony Spezia, for an explanation of just what the Knoxville area's biggest health-care system is against.

Spezia's initial response was that the TV spots aren't opposing anything and "have nothing to do with national health-care reform." Rather, he insists, their message is meant to be locally focused on Covenant's strength and stability in difficult economic times and amid signs of shakiness on the part of other local hospitals.

"We're trying to send a message that we're unmoving in our commitment to the community and our mission, that we're not being forced to back away from the commitments that we've made," Spezia says. As a prime example, he cites the $70 million expansion of Fort Sanders Regional Medical Center that is now underway, capping a $750 million investment over the past decade in facilities, technology, programs, and services. "No other health system in East Tennessee has come close to matching Covenant Health's investment in advanced clinical and medical information technology and new, renovated, and expanded hospitals and specialized facilities," he boasts.

While the TV spots make no mention of Covenant's principal rival, Mercy Health Partners, Spezia isn't hesitant to do so. After ailing Baptist Hospital was closed following its merger with St. Mary's Health System into Mercy two years ago, the merged entity announced plans for building a new hospital on the Baptist site that would supplant St. Mary's Medical Center in North Knoxville. But these plans have since been shelved, and Spezia pushes it further with a prediction that the St. Mary's facility may also close. "The doctors over there will probably tell you that they believe that St. Mary's isn't going to stay open as a hospital and that Mercy's game plan is centered on [its two suburban hospitals] St. Mary's North and Baptist West. So they will have gone from two downtown hospitals to none," Spezia asserts. Predictably, Mercy officials deny any plans for a St. Mary's closing.

When it comes to the health-care reform legislation now pending in Congress, Spezia is also outspokenly concerned. "The number-one problem with our health-care system is its cost, but everything in this legislation is about extending coverage," he says. "The cuts in Medicare and other things would pay for extending coverage, not reducing costs or rescuing programs like Medicare that are going broke."

But won't extending coverage, especially to the poor, bring payment for treatment that hospitals are now obligated to provide without reimbursement, I say. To which Spezia responds, "All this increased coverage doesn't kick in until 2013 whereas the cuts happen immediately. They're going to eliminate all the essential access payments to hospitals—$150 million in the first year in Tennessee alone, and that's going to have a huge impact on hospitals.

"It drives me crazy when someone says, ‘This is deficit neutral' when in subsequent years we're raising costs by $1 trillion, and future administrations and legislators are going to say the deficit is out of control and we're going to have to cut back."

Spezia's dire forebodings are derived in large part from his experience with TennCare. "The promise of TennCare was extending coverage and all those good things, and what happened was that the state couldn't afford it, and we cut down the coverage, and you can look at our books and see how much charity care has exploded," he says. And his grim prognostication is that Medicare may be the next to suffer. "If we put a lot of pressure on provider payment rates, doctors are increasingly going to say, ‘I don't need to be in the Medicare program; I'm going to have a boutique practice; I'm going to locate in the suburbs.' You might still have Medicare; you just don't have any doctors in Medicare, and the people who are going to suffer are the most disadvantaged part of our society."

So does that mean Congress should just say no to coverage extension legislation? Spezia won't go for that. He supports insurance reform to prevent exclusion of pre-existing conditions and preserve coverage for people who lose or change jobs. He'd even go further than most of the pending bills in requiring all but very small employers to offer health insurance with subsidies to make it affordable to low-income workers and their families. But he doesn't believe that mandating individuals to buy insurance with penalties stiff enough to get them to comply will prove workable. And without that, "You're going to have an actuarial nightmare, like people coming in to get fire insurance after the fire."

Given all of his forbodings, is Covenant really deeply rooted enough to withstand all the changes he foresees?

"We're going to get health-care reform, and Covenant is going to do its best to take care of people and fulfill our mission," Spezia says. "But when we get our TennCare and our Medicare payments cut next year, those dollars are going to have to come from somewhere. And while we're probably in a better position to sustain our services than many, we can't afford not to make whatever changes we have to make to remain viable."