The dam has broken in Denver. After more than a decade of halted hospital construction in the Colorado capital, suddenly at least four new projects are flooding the region.
The plans, which call for more than 200 new inpatient beds and additional outpatient capacity in the metropolitan area, come as hospitals nationwide complain about tightened purse strings because of lower Medicare reimbursement.
The boom suggests that at least in some markets hospitals are doing fine (Dec. 6, 1999, p. 48).
HealthOne, a five-hospital joint venture between HCA-The Healthcare Co. and the former HealthOne Foundation, announced plans on July 13 to build a 125-bed hospital south of Denver in the tony suburb of Lone Tree. A dollar value for the project isn't yet available, a spokeswoman said.
About two weeks later, Centura Health's 106-bed Littleton (Colo.) Adventist Hospital said it will add 36 beds and double its emergency-room capacity in a two-year, $38 million project.
The building doesn't stop there. Earlier this year, Denver-based Castle Rock (Colo.) Medical Group said it will build a 50-bed facility in that community, about 25 miles south of Denver, for $20 million to $30 million (July 3, p. 20).
As part of its relocation to the suburbs, downtown Denver's 327-bed University of Colorado Hospital plans a December opening for a $160 million outpatient facility in Aurora. That will be followed in four years by groundbreaking on the new hospital. The cost and size of the final project is still under consideration.
A 25% jump in the population of five-county metropolitan Denver helped open the floodgates to new building. About 2.1 million people now call Denver home, up from 1.6 million in 1990, according to government figures. The area's fastest growth has been in the southern suburbs.
The Colorado Health and Hospital Association puts the number of available beds in the Denver area at 4,400. Overall occupancy is at about 60%. Hospitals are feeling the strain in keeping up with the need for emergency services.
"Up until a year ago, it was extremely rare for a hospital to go on emergency- room divert, but now we have several hospitals that are doing it several times a week," said Vince Markovchick, M.D., director of emergency medical services at Denver Health Medical Center, which tracks traffic at the 12 most central of the area's 18 emergency rooms.
The planned construction would boost the number of beds in the area by 5%.
"This will lower costs by adding capacity in a system that's strained," said Scott Keim, vice president of network management at PacifiCare of Colorado. With 440,000 members, PacifiCare is the state's largest health insurer. With more beds, PacifiCare can be more selective in its contracting.
Others aren't as keen on the building.
"One of the things I worry about is from the clinical side," said Ralph Pollock, chairman of the Business Council on Healthcare Competition, an employers' lobbying group.
"There is a lot of pressure (for every hospital) to become full service. I worry about the quality of care. There are some services that you want centralized."
Pollock warned that duplicating services can drive up employers' costs. More beds will mean lower costs only if employers agree to limit access, he said. But in Denver, Pollock said, "employers want choice."
Colorado's certificate-of-need law expired in 1987. Hospitals there posted an 8.8% profit in 1998, well over the 5.7% national average, according to American Hospital Association figures.
Except for the short-lived Precedent Health Center, a physician-owned short-stay hospital that failed in 1999 after 14 months of operation, a new hospital hasn't opened in Denver since Centura's Littleton facility opened in 1989. The last major hospital capital project in the area was the construction of an inpatient tower in 1992 at Presbyterian-St. Luke's Medical Center, operated by HealthOne.
"What we look for always is a competitive environment," said Tom Rockers, chief executive officer of the Alliance, a Denver-based business coalition that purchases healthcare coverage for 86,000 people in the state.
"The only thing we desire is that all these organizations do the proper due diligence . . . so that they do it based on need, not on financial greed," he said.