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LISA GREENEChanges in the health care market encourage dramatic expansions, and competition demands it.
Tampa Bay hospitals are doing more than treating patients. They're building empires.
In Pinellas and Hillsborough counties alone, several hospital building projects announced, under way or completed in the past year total more than $800-million.
Tampa Bay is part of a national surge in hospital construction. Outdated hospitals, changing medical technology, aging baby boomers and low interest rates all contribute to the boom.
That means that within a few years, Tampa Bay residents will have a dizzying number of new health care choices.
A woman expecting a baby could decide among new or renovated maternity wards at Bayfront Medical Center, Morton Plant Hospital and Mease Countryside Hospital.
A patient who needs heart treatment could check out new heart centers at Morton Plant, Tampa General, Brandon Regional Hospital, St. Anthony's Hospital and University Community Hospital.
The kid who has fallen off a bike could get his stitches at new or expanded emergency departments at Tampa General, Mease Countryside or Palms of Pasadena Hospital.
Across the nation, it's one of the strongest health care building markets in years, according to a survey published in March by Modern Healthcare magazine. The magazine's survey tallied $53.6-billion worth of inpatient hospital building projects that were completed, had broken ground, or were in the design stages last year.
"There are a couple of things coming together, affecting the entire state of Florida," said Gary Carnes, president and CEO at All Children's Hospital in St. Petersburg. "A lot of hospitals in Florida were built in the '50s, '60s and '70s, when the state was just beginning to grow. After a hospital is about 40 to 50 years old, you really can't remodel it anymore."
That is why Carnes will oversee what's currently the largest hospital project on Tampa Bay drawing boards: a $270-million new hospital for All Children's. The original hospital, which lacks private rooms, was built almost 40 years ago.
Technology has changed, as well. Radiology suites use digital equipment, not film. Operating rooms use videocameras, robots and voice-activated tools.
That's why Bayfront will build new operating rooms, said Sue Brody, Bayfront's president and CEO.
"Our OR upgrade is really dealing with the changing nature of surgical services," she said. "There's just more stuff in our OR these days."
Hospital patients are different, too. More people get outpatient services and a larger portion of those staying in the hospital are critically ill. That means more patients admitted through the emergency room and more space in patient rooms for high-tech equipment.
Patient expectations also change, said health economist Uwe Reinhardt, professor of economics and public affairs at Princeton University.
"Particularly in the South, if the room you're in isn't a little like the Ritz, people just don't want to have their baby there," he said. "Young women having babies now are very fussy."
But it's older people, the aging baby boomers, who are driving the building frenzy.
"The boomers will start retiring," said Rick Wade, senior vice president with the American Hospital Association. "And we'll have a huge elderly population and a huge need for services. . . . The demographics are a big part of this."
A decade or so ago, hospital visits were declining, said Phil Beauchamp, president and CEO at Morton Plant. At one point, half the hospital's beds were empty. But for the past six years, more patients have arrived each year, which is why Morton Plant is planning an $84-million expansion.
"We're just on the initial cusp of the baby boomers," Beauchamp said.
Across the bay, Tampa General, which is planning a $120-million addition, has grown more than 25 percent in the past five years, said Ron Hytoff, hospital president and CEO.
"We're out of critical care beds," Hytoff said. "We need to modernize our ob/gyn. We need to redeploy and expand our vascular work. . . . There's demand pressuring us, and we're out of space internally."
The economy is friendlier. Low interest rates are encouraging many hospitals to expand. Tampa General recently refinanced its old bond issue and borrowed more, all at lower rates. Some hospitals are even moving up plans to expand, figuring that if they wait, they might not be able to afford the project when interest rates rise, Wade said.
It's not just interest rates, said Jay Wolfson, professor of public health and medicine at the University of South Florida and a former member of the Tampa General board. Many hospitals are better off financially than they were just a few years ago.
"They've learned how to deal with managed care and Medicare," Wolfson said. "They've become leaner, meaner and more cost-efficient."
Tampa General, for instance, has turned itself around. It has gone from losing money to ending 2002 with a surplus of more than $56-million. And Bayfront finished 2003 with a $5-million surplus after finishing 2002 $3-million in the red.
"We talked, all 12 years I was on the board, about the kinds of things we needed to do," Wolfson said. "We couldn't afford to do it back then."
But if hospitals are doing better, you'd never know it. Many hospital executives complain regularly to local officials, state legislators and anybody else who will listen about the crushing burden of managed care, costly trauma care and caring for uninsured people. How can they afford multimillion-dollar expansions if those costs are so high?
Easy, said Reinhardt. Although about one-third of hospitals are losing money, many of the others have plenty of cash.
"Whining is one of the essential traits of a hospital executive," he joked. "No board will ever hire an executive who cannot whine on command."
But a hospital expansion is a one-time expense, unlike the ongoing strain of paying to help the uninsured, Brody said. Hospitals can borrow and raise money to build, but they can't for ongoing expenses. Besides, Brody added, hospital improvements help insured and uninsured alike.
Even hospitals that aren't doing well still feel they have no choice but to expand. If they don't offer new technology and services that compete with other hospitals, doctors and patients may go elsewhere.
"If you're a hospital, you're really in a funny place," Wade said. "Everybody that pays you tries to give you less, but all your patients expect more."
The answer is mixed on whether all this building will drive up health care costs. Overall, yes, Reinhardt said, and he thinks it's likely that hospitals will wind up building more than they really need.
"Every decade the hospital industry embarks on a fad that costs society money," he said. "And we've been willing to pay it."
It's not the bricks and mortar that are so expensive, Reinhardt said, but the high-tech imaging equipment, computers and other costly devices that go inside the new buildings. Still, those things aren't having as much effect on health costs as the labor costs caused by shortages of nurses, technologists and other workers, he said.
However, Beauchamp said that Morton Plant's expansion, which features a new heart hospital and women's center, won't cost each patient more. First, he said, over time, the expansion will cost Morton Plant around $3-million per year. That would increase each patient's costs by about 1 percent, Beauchamp said.
But, because of the expansion, the hospital expects to see more patients - so that costs per patient actually would drop.
Despite all the hospital building now, don't get accustomed to seeing construction cranes when you're not feeling well. The current building boom will be completed and new construction will level off, Wade said.
"You can only have so much debt," he said. "Everybody knows what they're going to build, and then they're going to stop."
- Times researcher Kitty Bennett contributed to this report.