Hospitals across Georgia are pumping hundreds of millions of dollars into new patient towers, major renovation projects and state-of-the-art technologies — even as rising numbers of uninsured patients and falling reimbursements continue to pose financial pressures.
In the wake of the Great Recession, hospitals put off major capital investments as people postponed elective surgeries, more uninsured patients besieged emergency departments and an uncertain future loomed with the roll out of the new health care law.
The focus instead shifted to slashing costs. Hospitals cut hundreds of jobs, trimmed overtime hours and renegotiated contracts with suppliers.
But pressure to meet growing demand as populations swell and America’s 78 million baby boomers get older is spurring hospitals to push forward, experts say.
It’s the biggest balancing act hospitals have — dealing with current financial strains while positioning themselves for the future, said Kevin Bloye of the Georgia Hospital Association. Metro Atlanta is expected to add nearly 3 million new residents in the coming decades with the population hitting 8.3 million by 2040, according to the Atlanta Regional Commission.
“There’s a lot of preparation that’s going to have to take place in our health care delivery system to prepare for this surge in the senior population because it’s coming and it’s coming fast,” Bloye said.
WellStar Health System is planning to build a new $125 million replacement hospital in Paulding County. Piedmont Healthcare is slated to open a $162 million replacement hospital in Newnan in the spring after postponing the project in 2009. Gwinnett Medical Center will soon open a new heart and vascular center.
Emory Healthcare is also embarking on a new patient tower project at its main campus — the first phase of a $1.5 billion expansion that was put on hold in fall 2008. The facility will include roughly 200 beds, as well as a new ER, operating rooms and intensive care beds.
“We were in economic free-fall,” CEO John Fox said. “We didn’t know how deep the recession would get.”
While the threat of a double-dip recession still looms, the need for more space and to keep pace with new cutting-edge technologies spurred the project forward, Fox said.
Having modern facilities with the most up-to-date medical equipment is crucial for hospitals that are positioning themselves in the highly competitive metro Atlanta market, said Ken Thorpe, a health care expert at Emory University.
“There’s a very vigorous competition for patients,” Thorpe said. “The last thing you want to have is a hospital that’s 70 years old.”
In northwest metro Atlanta, WellStar is replacing its 50-year-old hospital in Paulding County, as well as building a 131,000-square-foot, $25 million patient tower at WellStar Kennestone Hospital.
Community expectations for a health system don’t diminish just because the economy is rocky, said Chris Kane, WellStar’s senior vice president of strategic business development. The five-county area WellStar serves, including Cobb County, is expected to swell to 1.4 million residents by 2016, Kane said.
“More and more, your credibility in the market is correlated with patient satisfaction,” he said.
Patient satisfaction is becoming an increasingly key factor in the way hospitals are paid, as reimbursement shifts from a fee-for-service model to being based on outcomes and overall quality of care.
WellStar has also done extensive market research to match its investments with what consumers are looking for, Kane said.
Demand for imaging services and the fact that women make most health care decisions in a family led to the building of an 18,000-square-foot imaging center for women with a spa-like atmosphere and robes.
Things like cleanliness, privacy and room size all improve patient satisfaction, said Randy Sauls, CEO of South Georgia Medical Center in Valdosta. The 380-bed hospital is converting semi-private rooms into private rooms as part of a $67 million patient tower project.
Health systems are also investing in new infrastructure because large, aging hospitals are costly to keep up, said Alex Hunter, managing director in Navigant Consulting’s Atlanta office. Shorter inpatient stays are prompting some hospitals to reduce the number of beds when building replacement facilities, which require fewer nurses and other staff, he said.
“They are banking on being able to do more with less,” Hunter said.
He added that while it can be a good time to invest in infrastructure, health systems must be careful that it doesn’t negatively impact their balance sheets, which can hurt credit ratings and raise their cost of borrowing.
The investments haven’t stopped at brick and mortar.
Medical providers throughout the country are spending tens of millions of dollars on electronic health record systems that allow doctors and hospitals to seamlessly share patient information.
The technology helps to lower overall health care costs by improving efficiency, reducing duplicate procedures and preventing medication errors, among other benefits, experts say.
Over the next three years, Piedmont plans to invest $180 million in new health care information technology, said Ed Lovern, the health system’s chief administrative officer.
It not only ties together physician offices and hospitals but patients can look at their own medical records, Lovern said. When patients and families are more proactive in their care, the result is better outcomes and reduced costs, he said.
The costs are being partially offset by tens of millions of dollars of federal incentives aimed at encouraging the increased use of electronic health records.
Smaller Georgia hospitals are also going high-tech.
The switch to electronic records is about a two-year process for Cartersville Medical Center, CEO Keith Sandlin said. The 112-bed hospital is also planning a $22 million renovation and expansion of its emergency department.
The improvements will give the hospital a competitive edge — bringing more options closer to home for residents who don’t want to travel into metro Atlanta, Sandlin said.
Hospitals face a delicate balance between being prepared for the future but not getting too far ahead, said Mark Mullin, director of planning for Gwinnett Medical Center. Though Gwinnett County is growing more slowly, it is still poised for growth with the population projected to reach 1 million, Mullin said.
It is undergoing a major renovation of the south tower at its Lawrenceville campus. It will also open a 40,000-square-foot, $33 million heart and vascular center in January.
“We have to be thinking five years out, not 12 months out,” he said. “We’re going to make sure we’re ready and prepared.”
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MAJOR HOSPITAL PROJECTS
Piedmont Healthcare
-- Piedmont Newnan Hospital replacement
-- $162 million
-- 136 beds
WellStar Health System
-- WellStar Paulding Hospital
-- $125 million
-- 112 beds
Emory Healthcare
-- Emory University Hospital new patient tower
-- $200 million
-- About 200 beds
-- New ER, operating rooms and ICU beds
Gwinnett Medical Center
-- Heart & Vascular Center
-- $33 million
-- 40,000 square feet
South Georgia Medical Center
-- New patient tower
-- $67 million
-- 96 rooms
Cartersville Medical Center
-- Emergency department renovation/expansion
-- $22 million
-- Increase from 18 to 32 ER beds
-- Additional surgical floor with 20 beds
