To ease a growing space crunch and hang on to more of its patients, Kaiser Permanente will shell out $90 million in the next three years to expand the number of medical offices in its booming Sacramento, Calif., service area.
The nation's largest not-for-profit health plan announced last week it will construct three new medical office buildings and hire 200 new physicians and 800 support workers in the Sacramento area. It now operates three hospitals and six medical office buildings in the four-county area (See chart).
Sacramento membership for the Oakland, Calif.-based healthcare provider has jumped 17% since 1997 to 540,000 enrollees. It now commands 35% of the local market.
But these enrollment gains have outpaced patient capacity, often forcing Kaiser to divert patients to competitors' facilities. And that's cut deeply into its profit margin, contributing to heavy companywide losses in 1997 and 1998.
Buoyed recently by higher premiums and ongoing cost-cutting, the company has stopped talking about closing facilities and has moved into expansion mode.
"Treating more of our members in our own facilities has become a big part of our efforts to stay financially healthy," said Cinde Breedlove, a Kaiser spokeswoman.
Opening its 116-bed Roseville Hospital in late 1998 helped Kaiser reduce by 30% the number of its members cared for by competing hospitals. Kaiser's Roseville-area membership has climbed 31% to 171,746 in the past three years. Now Kaiser plans to open a second, 110,000-square-foot medical office building in 2003 in Roseville. Kaiser plans to open a medical office building in neighboring Folsom in 2002 and in Elk Grove in 2003.
Kaiser isn't the only provider building in the area. In March, Sutter General Hospital in Sacramento began an $8.1 million expansion project. A year ago Mercy San Juan Hospital in nearby Carmichael completed a $40 million, 69,000-square-foot project.