Suburban med centers rise as hospitals slide into red
December 18, 2006
By DIANE WEAVER DUNNE, Hartford Business Journal Writer
With an eye toward their bottom lines, local hospitals are opening an increasing number of affiliated medical centers in the suburbs.
These centers aren’t glorified doctor’s offices. They offer one-stop medical shopping for the patient, where blood tests, X-rays, chemotherapy, physical therapy and even a tummy tuck might be provided.
The growth of these suburban affiliates is a result of market competition among the hospitals, each vying for a certain patient demographic — those who can pay their bills.
With half of the state’s nonprofit hospitals expected to end the year in the red, unable to cover their operating budgets, the necessity to increase patient counts, particularly those who can pay, has become a necessity.
Hospital officials understand that if they are going to stay in the game as underpayment from federal and state programs and uncompensated care plagues their bottom lines, they most appeal to paying patients who often reside in the suburbs.
“The [suburban] patients are demanding it,” said Kevin Kinsella, vice president and chief financial officer of Hartford Hospital. Patients “want services closer to home and we do listen to them.”
With that in mind, just six miles from Hartford Hospital, a new Hartford Hospital Wellness Center is under construction in Blue Back Square’s 199,000-square-foot office building in West Hartford to offer more convenience to patients, Kinsella said. The center will include doctors’ offices, physical therapy services, a day-surgery center, radiology services and a Healthtrax facility.
Hartford Hospital, like Saint Francis Care, is not a stranger to satellite and specialty medical centers. Hartford operates four suburban medical centers and is planning to open a cancer center in Avon.
It’s not just urban hospitals – which typically treat the largest number of uninsured and indigent patients – hoping to tap into a more affluent suburban demographic.
Johnson Memorial Hospital, a small acute care hospital in Stafford Springs, also offers a variety of ancillary medical services, including athletic training for high schools as well as a satellite surgery and radiology center in nearby Enfield.
In May, it began offering a unique service to the area, investing in a medical spa adjacent to its medical center in Enfield. Called the Northern Connecticut Plastic Surgery and Inspire Medical Spa, the hospital will not make money directly from the medical spa, but considers it as a way to funnel in more paying patients to Johnson Memorial’s system.
Eric Person, vice president of development and community relations at Johnson Memorial, said that when recruiting physicians to the hospital, it has financially backed their private practices. It did the same with the spa, and struck a deal to jump start plastic surgeon Dr. Colleen Jambor’s private practice.
“This is a specialty [plastic surgery] that we identified and wanted to bring to our patients. We set up this office – [the medical spa] – which we have done with Ob-Gyns and primary care doctors,” he explained.
Specifically, Johnson Memorial wanted to offer its mastectomy patients breast reconstruction plastic surgery, he said.
“Johnson Memorial hopes the spa will open doors for a whole new demographic, the walking well,” Jambor said.
“These centers enable the hospitals to retain market share and in some cases, to increase it,” Hartford Hospital’s Kinsella said. “We have to provide services where people live and work.”
Its facility on Day Hill Road in Windsor, smack in the middle of a booming industrial park, does exactly that.
Hospital officials located the facility on Day Hill Road during the 1990s with the promise that one day it would be in close proximity to a large number of workers. Those who do the hospital’s number crunching knew that attracting employees with health care insurance was essential to offset losses at its acute care hospital in Hartford.
Dr. Jambor’s spa, meanwhile, will familiarize patients with the variety of services offered by Johnson Memorial, she said.
The goal of such medical satellite centers is to offer patients one-stop shopping of both non-medical and medical services. For Jambor’s spa, that spans facials to Botox injections and plastic surgery. Patients, she said, want and demand convenience and results.
Steven Rosenberg, senior vice president and chief financial officer of Saint Francis Care, said that stemming a hospital’s financial bleeding isn’t that easy.
Although Saint Francis Care reported a nearly $15 million surplus this year, its hospital was not paid for $45 million in health care services provided to the uninsured and those receiving Medicaid benefits.
However, Saint Francis doesn’t plan to get into any new businesses. “We are trying to make sure — in our volume and market share in the suburban locations around Hartford — that we have enough of a commercial payer base to subsidize the Medicaid and uncompensated patients,” Rosenberg said.
“There are no cash cows in anything that we do,” he explained. “We maintain a low cost structure, make sure we enhance our volume, especially the commercial business, to offset losses on Medicaid.”
Rosenberg said the organization would continue to urge lawmakers to boost its hospital reimbursement for Medicaid and uncompensated patients, and focus on lowering its costs.
“But at some point, it will be impossible for us to get enough to cover the $45 million free care that we provided in the last fiscal year,” he said.