Wing Wars

by Cara Gardner

The business trend among many hospital administrations leans toward prioritizing expansions. This is fueled by the hope that additional services and expensive technologies will lure physicians, patients -- and dollars.

The "Bricks and Mortar War," as its been referred to, is spread throughout United States' hospitals. In Spokane, both Providence, which runs Sacred Heart Hospital, and Empire Health Services, which operates Deaconess Medical Center and Valley Hospital, have long competed for services.

"The strategy is, if you build it, they will come," says Dr. Richard Beren, former senior partner with the Spokane radiology group Inland Imaging. In today's healthcare and economic climate, the growth-at-all-costs strategy, however, is coming into question.

The Center for Studying Health System Change (CSHSC) is a independent policy research organization that publishes reports about the nation's current health system. A recent CSHSC publication on the rise of specialty services notes that even though hospital competition isn't anything new, the level of competition is a growing concern.

"[Hospitals] are competing fiercely for profitable specialty services, threatening to drive costs even higher... the service mimicking and one-upmanship suggest that a new medical arms race is emerging," the report states.

In order to garner an increased flow of patients, hospitals have been building clinics in increasingly larger geographical areas, hoping to dominate their markets in "a Wendy's or McDonald's mentality."

Many of the most common expansions, such as additions to emergency rooms and "front door" improvements like waiting rooms and entrance hallways, are exactly the kinds of upgrades being completed at Valley Hospital. Some of Empire Health's workers who are angry over pay cuts say it is ironic that there is enough money to build new facilities but not tenough to pay front-line health care delivery.

One of the most popular and fastest-growing specialty services is cardiology. Hospitals around the nation are building cardiac wings and special cardiac hospitals. It's one of the most profitable specialties in medicine because insurance has not capped their reimbursement rates. CSHSC reports that cardiology services account for nearly 25 percent of all hospital stays.

Hospitals competing for dominance in the same service often end up duplicating one another. Advocates for this market competition say the added services meet growing community needs; they cite a larger elderly population and unhealthy lifestyles. But according to CSHSC, market-wide occupancy rates don't support this.

In addition, healthcare experts say hospital administrations are putting pressure on physicians' groups and doctors to choose one company over another. During CSHSC field research, one hospital administrator is recorded saying, "Cement specialists to your hospital or they will become your competitors."

Publication date: 05/29/03