Mission possible: Asheville medical center concentrates on controlling its costs and care to create one of the state's top hospitals.

• Author: Martin, Edward
• Position: FEATURE - Mission Hospitals

They warned him: We don't like monopolies, and if you create one, we'll hold your feet to the fire. As if to make sure he got the message, the U.S. Department of Justice sent federal agents to search his computer hard drives. Bob Burgin was confident he was right, but he knew what was at stake. "Antitrust violations carry a mandatory prison sentence," he says.

Ten years have passed. Burgin is 64. His gray hair is thinner, and his glasses are thicker. As president and CEO of Mission Hospitals in Asheville, he defied conventional wisdom but not the law. Merging a warmly regarded but struggling Catholic hospital with a coolly efficient community hospital set up a clash of cultures--nuns versus bean counters. And it focused attention on questions with broader implications: How can a large hospital--Mission has about 6,300 employees and its operating revenue this year will exceed $700 million--control costs in an age of escalating health-care expenditures but still deliver good medical care to an aging and changing population?

Many, including regulators and some doctors, expected Mission to fail. Or hoped it would. "Everybody was taking a shot at them, waiting for them to mess up," says Scott Higgins, a professor of health sciences at Western Carolina University in Cullowhee. "Instead, they took it as an opportunity to move in the right direction."

In 1994, Burgin, who had joined Mission 13 years earlier and ushered in sweeping changes, began talks with Belmont-based Sisters of Mercy, which ran St. Joseph's Hospital across the street and a block down Biltmore Avenue. After a partnership faltered, Mission bought out the sisters in 1998 for about $90 million.

The result is a labyrinthine hospital complex, with more than 800 beds and bassinets, that sprawls over 90 acres. Surgeons perform about 40,000 operations a year, more than any other hospital in the state, often on patients whisked to one of 44 operating rooms by Mission's two helicopters from the rugged terrain of the western Carolinas and eastern Tennessee.

To overcome regulators' suspicions that Burgin and the hospital were plotting to strangle competition, the hospital promised it would charge no more than similar ones in competitive markets elsewhere and demonstrate that a merger would save money--a target of $75 million in the five years after the merger. Savings were to be returned to the public, either through lower charges or outreach programs.

Mission met those goals, paring $86.6 million in operating costs by 2001, despite having unusually high numbers of low-paying patients and charity cases. An independent auditor last year calculated that the average charge per patient stay--about $6,310--was 7% less than at comparable Tar Heel hospitals.

Its record has been compiled under the tightest regulations of any hospital in the state. After the Sisters of Mercy and the Vatican approved the sale of St. Joseph's, federal authorities cleared the merger but only if North Carolina regulators agreed to monitor it--the only hospital in the state under such an agreement. "We're almost like a utility rather than a hospital," says Joe Damore, who became president and CEO when Burgin retired in December.

Mission does business in a region where 19% of the population is over 65; the state average is 13%. Charity cases account for 10% of Mission's revenue, compared with about 6% nationwide. Few patients pay full fare. Medicare or Medicaid usually reimburses hospitals at less than cost for older patients and those with low incomes. "About 70% of our patients are sponsored by Medicare, Medicaid or are uninsured," Damore says. At most hospitals, the figure is closer to 50%.

Part of Mission's answer to how well it meets its challenges lies in awards. It has made the top 10 each of the three years BUSINESS NORTH CAROLINA has had Health Grades Inc., a Lakewood, Colo.-based company that examines 35 million Medicare records a year to grade hospitals, to rate the best hospitals in the state. Mission also has appeared in national rankings by U.S. News & World Report, AARP and Money magazines and Solucient, an Evanston, Ill.-based health-care consulting firm. New York-based Commonwealth Fund, a nonprofit that relates hospital costs to outcomes, last year named Mission one of the four best hospitals in the nation on that basis.

But compelling answers also lie elsewhere. Some can be found on a bitter day as wind drives snowflakes against the windows of the hilltop hospital. Behind sealed doors is a sterile world of blinking monitors and machines that replicate hearts and lungs. Here, the way in which questions about quality and cost are answered can spell the difference between life and death.

A naked man lies on his back. He is about 50 and heavyset, his stomach a dome that rises and falls with each breath. Nurses daub him with Betadine, an iodine-based antiseptic that trickles down his shaved chest and sides, drying in copperhued streaks...