Not slumbering

Philadelphia Business Journal - by John George, Staff Writer

http://www.bizjournals.com/philadelphia/stories/2005/01/10/focus1.html

1/07/05

After spending the past decade getting smaller, a growing number of Philadelphia-area hospitals once again are finding bigger is better.

To cope with such factors as aging or, in some cases, growing communities, hospital closings and former competitors shifting away from traditional inpatient care, a cross-section of medical centers is spending millions on expansion and renovation projects to add beds.

Methodist Hospital, for example, experienced a greater-than-expected surge in new patients following neighboring St. Agnes Medical Center's conversion to long-term, acute-care services. Methodist is racing to complete a $12 million renovation project.

James E. Robinson, chief administrative officer for the South Philadelphia hospital, said Methodist's bed count will hit 203 -- up from 150 -- when the last piece of the project, a new 24-bed medical/surgical unit, opens next month.

"It's been a challenge for us," Robinson said. "We've seen a major increase in our volume. We expected a 40 percent capture rate (of patients from St. Agnes). "Right now, we're sitting at 50 percent. It's been beyond our expectations. With that comes growing pains."

The changes came as a result of Methodist and its parent, Jefferson Health System, forming a partnership with St. Agnes and its parent, Mercy Health System, to better coordinate health-care services in South Philadelphia.

Robinson said creating space for a larger emergency department, a new 12-bed critical-care unit and the 24-bed unit under construction required shifting things around in the landlocked hospital. An occupational medicine program, department chair offices and residents' quarters were moved to an adjacent medical office building, while a sleep lab and some laboratory space was moved up Broad Street to St. Agnes.

Methodist is just one of a growing list of medical centers who have embarked on, or recently completed, expansion projects to create more beds.

Last month, Frankford Hospitals cut the ribbon opening a $15 million, three-story addition creating 51 more beds at its Torresdale campus.

"We started planning for this two years ago because we were consistently running into difficulties with long waits in our emergency department," said Roy Powell, president and CEO of Frankford Health System. "The primary reason was we couldn't move patients out of the ER because we didn't have available beds. We had some success moving patients to our other campuses (in Frankford and Langhorne), but it wasn't enough."

Powell said the growth of managed care in the region during the 1990s pushed hospitals to find ways to deliver costs more efficiently.

One result was hospitals staffing fewer beds and converting underused space for other services.

According to the Delaware Valley Healthcare Council, the number of staffed inpatient beds at medical centers in the five-county Philadelphia region declined 28 percent to 37,613 from 51,895 during the past 10 years.

Advancements in technology allowed hospitals to shift more care to outpatient settings and reduce lengths of stays for those admitted.

"I think we are at the point now where lengths of stay are the lowest they are going to be," Powell said. "Now, you have the region's aging population forcing hospitals to add beds. It's demographics producing this trend."

In Camden, Our Lady of Lourdes Medical Center recently provided a sneak preview of its new 121,000-square-foot tower, the main piece of a $54 million expansion project, that will house an additional 75 critical-care beds when the building opens in March.

The new building will be among the city's first completed projects funded, in part, through New Jersey's Camden Recovery Act.

Alex Hatala, president and CEO of Lourdes Health System, said Lourdes -- like many hospitals throughout the region -- has not invested heavily in capital improvements during the past two decades for two primary reasons. Declining reimbursement rates from the government and private insurers has forced hospitals to curtail major expenditures, while improvements in technology have shifted more procedures to outpatient settings.

"The new building is going to reflect what we need most, critical-care beds to meet the needs of our aging population," he said.

Alan Zuckerman, a health-care consultant and principal with Health Strategy Group in Center City, said while the number of area hospitals adding beds is growing, the trend is not permeating the entire region.

"What we are seeing reflects a growing gap between the haves and have-nots," he said. "The well-to-do hospitals are getting bigger and the have-nots are just trying to survive. This could be the prelude to another round of industry consolidation."

The effort to boost bed counts is not limited to any type of hospital or any location.

Children's Hospital of Philadelphia is in the middle of a $650 million project that will expand its bed count to about 450 from 381 when the project is completed in 2008.

Fox Chase Cancer Center recently unveiled a proposed 20-year, $1 billion expansion project that would include a new 200-bed hospital to replace its existing 100-bed medical center.

To embark on the project, Fox Chase will need the approval of the Fairmount Park Commission to build on 25 acres in neighboring Burholme Park, a proposal that has sparked community opposition.

Fox Chase officials said the ambitious project is needed to accommodate the growing need for patient care with cutting-edge treatments, while continuing to conduct the best scientific research in an environment of rapidly advancing technologies.

"We considered expanding by acquiring property in various parts of the region, but splintering our patient care operations and research is not consistent with what a 'comprehensive cancer center' is," said Dr. Robert C. Young, the president of Fox Chase Cancer Center. "The interaction between scientists and physicians is key to the rapid translation of laboratory discoveries for patient care."

In the Philadelphia suburbs, St. Mary Medical Center opened a 40-bed medical/surgical unit last year and recently began construction of a new 49-bed unit scheduled to open during the first quarter of 2006.

The new construction project is part of a $50 million to $60 million expansion plan that includes expanding the Langhorne hospital's emergency department and surgical suites and an already completed expansion of its oncology department. The project, a response to admissions that have soared nearly 60 percent over the past five years, is being funded primarily by the sale of tax-exempt bonds.

"The population we serve is growing and within that there is a shift in demographics," said hospital spokesman Patrick Nash, who noted people 45 and older represent the fastest growing segment of the service area. The group is more likely to require inpatient hospital care.

"We are feeling the full brunt of that," he said.

Nash said admissions are also up because the hospital has expanded the types of services it provides, most notably open heart surgery and interventional cardiology.