Does too much hospital growth hurt consumers?
As hospitals across Central Florida spring up, expand and get renovated, consumers watching health-care costs skyrocket wonder whether the money could be better spent.
“It’s a legitimate question and warrants community discussion,” said Shannon Elswick, president of Orlando Health‘s adult-hospital group.
Elswick is overseeing Orlando Regional Medical Center’s most extensive renovation in its 95-year history: a $300 million project that kicked off late last month. The project, scheduled to be completed in late 2015, will add a 10-story patient tower, increase the size of the emergency department and enhance cardiovascular, surgical, critical care, pharmacy and laboratory areas.
Meanwhile, in Lake Nona’s Medical City, two or possibly three new hospitals are under way, with a total price tag exceeding $1 billion: Nemours Children’s Hospital will open in October at a cost of $380 million. The Orlando VA Medical Center is set to open at the end of 2014 and carries a $656 million tab, which is likely to climb.
Next door, the University of Central Florida has paid $15 million for a parcel of land on which it hopes to build an adult acute-care teaching hospital alongside its college of medicine.
“Part of the urge to renovate and modernize is based on the rapid pace of technological change in acute health care,” Jeff Gregg said. As part of the state’s Agency for Health Care Administration, Gregg heads Florida’s Certificate of Need program, which oversees how much hospitals can expand.
“It might be nice if a hospital could get the next generation of scanners without a major renovation,” Gregg said, “but that’s often not possible.”
Not everyone thinks spending more money on hospitals is a good use of health dollars.
“What patients want even more than a hospital that is like a hotel is never to have to be hospitalized in the first place,” said Dr. David Goodman, director of the Center for Health Policy Research at Dartmouth, in Hanover, N.H. “That does not occur through investing more money in hospitals but by investing in good primary care.”
Frank Sloan, a health-economics professor at Duke University in Durham, N.C., takes issue with what he considers the fancy-hospital trend that adds fountains, flat screens and concierge services. “Nobody’s lived a day longer because the lobby was nicer or their patient room bigger.”
Those arguments are not new, Gregg said. “Saying that we should invest less in hospitals and more in public health is a very broad criticism.
“In general, it’s pretty well-known that patients are more comfortable in hospitals that have pleasant hotel functions,” Gregg said, although he could not point to any published studies to quantify that. “Consumers notice physical plants, so that motivates hospitals to improve.”
Medical arms race
A lot of Florida’s hospital expansion has to do with easy access to capital and deregulation, Gregg said.
Since hospital deregulation began in earnest in the 1990s, hospitals have taken more control over their decisions to expand and how much to spend on it, Gregg said.
A recent study showed that the Orlando area was below the national average for its ratio of residents to hospital beds. UCF commissioned the study to help assess the need to build another hospital, this one next to its medical school.
All combined, Central Florida’s 26 hospitals offer one bed for every 317 residents. That’s below the national average of one bed for every 299 residents, according to a feasibility study by Buxton, a Texas-based consulting company. To reach the national average, Orlando would need to add 400 beds, the study concluded.
However, every dollar spent on hospital construction is money consumers will ultimately pay back, either through tax dollars or increased premiums, Goodman said.
“The planners think this is what patients want, and that it will bring higher market share, but the investments are reflected in insurance premiums in ways not apparent to consumers,” Sloan said.
“As the cost of providing medical care increases, premiums rise accordingly, and hospital spending is part of that,” said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, a national trade association for the industry.
“While I can’t speak to whether these hospitals should get built or renovated,” Zirkelbach said, “I can say that at a time when medical costs are rising at rates that aren’t sustainable, all drivers matter and need to be assessed very carefully.”
Some industry analysts say these capital improvements are a must.
“A lot of spending goes into supporting medical technology, and a lot of that technology can improve the patient experience and safety,” said Beth Feldpush, an analyst for the National Association of Public Hospitals and Health Systems in Washington.
“Regardless of how the Supreme Court rules on the health-reform law, the health-delivery system will be changing substantially moving forward. Hospitals have to adapt, and they are. Often that adaptation requires new construction.”
That drive to adapt can lead to an expensive medical arms race, critics say.
“Competition among hospitals is unlike competition in other industries,” Goodman said. “It’s not a win for patients. They lose, because it adds duplicate services, unnecessary costs, and only serves the interest of the hospitals themselves as they try to grow bigger.”
Although Goodman agrees that hospitals need to continue to invest to deliver good patient care, “over-investing in hospitals makes hospitals stronger and communities poorer,” he said. “It doesn’t necessarily serve the interest of the broader community. Orlando surely has a lot of other needs.”
Behind the marble fountain
Hospital construction costs pale in comparison to the real drivers of health-care costs, which include labor, new technology and over treatment, said Elswick of ORMC.
Its renovation will “ultimately save costs, increase efficiencies and improve patient care,” he said. “It will be nice but not over the top. We’re not doing marble.”
“I would not be concerned with the development of physical plants and their financing,” Gregg said. “These are large private organizations trying to position themselves for the future. Let the people at the top stick their necks out and make big decisions about whether we need a new tower. They have to live with the risk.”
“Marble fountains aside, many structural changes do improve care and patient outcomes,” said Dr. Albert Wu, director of the Center for Health Services and Outcomes Research at Johns Hopkins Bloomberg School of Public Health, in Baltimore.
“The question for every community to keep in mind is at what point are we overbuilding the infrastructure and underserving the public,” he said.
How to judge a hospital
Although fancy fountains, sky-high atriums, marble floors and valet parking are nice hospital amenities, don’t confuse them with quality care, say those who really know how to judge a hospital.
“Patients see the fancy lobby and private, hotel-style room and don’t see what goes on behind the scenes, which is what matters,” said Frank Sloan, a health-economics professor at Duke University in Durham, N.C. How well records are kept, how sterile equipment is and how well health-care providers communicate and work as a team have a much bigger impact on patient outcomes.
Rather than judging a hospital by its cover, prospective patients can check them out on the Web, based on how they compare with other hospitals on a variety of procedures. Here are two independent sites that can help:
Source: By Marni Jameson, Orlando Sentinel – Copyright © 2012, Orlando Sentinel