As not-for-profit hospital systems in Houston tighten their ranks, for-profit Columbia/HCA Healthcare Corp. is planning to confront the enemy with a new facility of its own.
Columbia executives confirmed that the company is considering building a children's hospital in Houston following failed efforts to partner with any of the not-for-profit institutions that call the Texas Medical Center home.
A 675-acre complex located south of downtown Houston, the Texas Medical Center is landlord to 42 not-for-profit medical institutions that include two children's hospitals.
"The children's hospital is actively under consideration," said Sarah Peterson, a spokeswoman for the Columbia Greater Houston Division. "There will be an announcement soon."
Although Houston is Nashville-based Columbia's largest division with $1.3 billion in annual revenues, it is beginning to feel some competition from long-anticipated consolidation among not-for-profits there.
Earlier this month, Memorial Healthcare System and Hermann Hospital, a resident of the Texas Medical Center, said they plan to form the largest not-for-profit system in the Houston area (July 7, p. 23). If the merger is finalized, it would be the first major link between the Texas Medical Center and a healthcare system from outside the complex.
"The interest in having access to the Texas Medical Center is very clear because it brings strength to any system," said David Page, Hermann president and chief executive officer. "Clearly, the investor-owned (companies) have an interest."
Before hooking up with Memorial, Page said Hermann had talks with Columbia; Tenet Healthcare Corp. of Santa Barbara, Calif., another investor-owned company; and not-for-profit Sisters of Charity of the Incarnate Word Health System, based in Houston.
Columbia's attempts to link with the Texas Medical Center failed last year after a deal with St. Luke's Episcopal Hospital was thwarted. St. Luke's began talking to Columbia after its merger talks with Houston-based Methodist Health Care System broke down.
The Texas Medical Center filed a lawsuit against St. Luke's last year, saying any deal with Columbia would violate 50-year-old deed restrictions banning for-profits from medical-center property. The suit was settled with Columbia and St. Luke's calling off their plans (Aug. 26, 1996, p. 2).
With two children's hospitals already in Houston, Columbia competitors wonder if another one is necessary.
"It doesn't make any sense for anyone to be building pediatric beds or adult (acute-care) beds, for that matter," said Mark Wallace, president and CEO at Texas Children's Hospital.
Texas Children's, just two blocks away from Hermann, is the nation's largest children's hospital with 370 staffed beds. Its occupancy is nearly 90%, Wallace said.
Two blocks away from Texas Children's, Hermann Children's Hospital, which is a 150-bed facility within Hermann, has an occupancy rate above 70%, said hospital spokeswoman Patricia Riddlebarger.