One recent morning after the Green Bay Packers defeated the Washington Redskins 37-0, a new hospital opened in town that promises to offer a much more competitive game. In Green Bay, Wis., which hasn't seen a new hospital welcome patients since 1908, Aurora BayCare Medical Center has the makings for a market supremacy battle as tough as any fight on a football field.
At first glance, Aurora BayCare is a typical hospital-it has 108 beds, nine operating rooms and an on-site pharmacy. There are CT scanners, emergency trauma rooms and the customary gift shop. But it doesn't take more than walking through the front door to see that Aurora BayCare is unusual.
The lobby, complete with glass elevators, looks like one at an Embassy Suites. Situated near cozy couches, a player piano sends music through vibrantly carpeted, wide-open corridors. People strolling the hallways on higher floors can peer down on the lobby, which is decked out with plants and flowers and brings in sunlight through three-story-high windows. Medical equipment in each room is hidden behind a painting so as not to intimidate patients. In the nautical-themed pediatric unit, the nurses' station is shaped like a boat.
The luxurious month-old hospital is just one example of new marketing strategies being used by physicians across the country to draw economically attractive patients (See Special Report, p. 38).
To control costs, many hospitals have become "barrackslike," said Paul Summerside, M.D., chief medical officer of BayCare Health Systems, the 6-year-old, 73-physician multispecialty practice in Green Bay that owns 40% of Aurora BayCare. Aurora Health Care, a Milwaukee-based system with a 500-physician medical group, owns 60%. Aurora "was willing to do something a lot out of the ordinary" when it built the new, $95 million hospital, Summerside said.
Beyond its plush environment and many amenities-which include all private rooms equipped with their own large, lavish bathrooms-Aurora BayCare is also shaping up to be a tantalizing business tale. It is the first for-profit hospital in Green Bay and the only for-profit in Aurora's 13-hospital network. That has sparked concerns over whether the hospital will provide an adequate level of charitable care and whether its physician owners will disproportionately steer private-pay patients to its own facility.
"Aurora is notorious for coming into the community and acting as a bully," said Joseph Neidenbach, administrator of St. Vincent Hospital, a 265-bed facility that has been part of Green Bay's healthcare landscape for more than 90 years. St. Vincent and 119-bed St. Mary's Hospital Medical Center, also in Green Bay, are part of Hospital Sisters Health System, a 13-hospital chain based in Springfield, Ill. Bellin Hospital, an independent 179-bed facility, is the only other acute-care hospital in Green Bay.
With the addition of Aurora BayCare, four area hospitals will now compete for the same patients previously divided among three. "If Aurora is successful, they're going to challenge us," Neidenbach said. "There are no new patients." Including those who live in suburbs and outlying areas, Green Bay's population is roughly 250,000.
Before the new hospital came to town, many physicians referred their patients to other communities, said Aurora HealthCare's President G. Edwin Howe. Now those referrals will stay in town, he said. Howe said he also believes that Aurora BayCare will draw patients from other areas, such as Michigan's upper peninsula.
"We don't think we're necessarily coming in and dividing the same pie differently," he said. "The pie is getting bigger."
"To put up new hospitals, unless there is a strong market need for them, is risky business," said Richard Hoerl, a Denver-based healthcare consultant whose firm Hoerl & Associates advises physicians and hospitals. "A fourth hospital in a relatively small town like Green Bay just doesn't make any sense to me. In a market that's already saturated and well-served, one would have to ask what's the primary motivation for putting in another hospital. It is clearly not in order to lose money."
Bellin Hospital quickly got to work revamping its marketing plan once it learned Aurora BayCare was coming. "We've changed as a result of the increased competition," said George Kerwin, Bellin's president and chief executive officer. "Is there enough business for each of the four hospitals? That's a question to be answered in the future."
Bellin, which had been pondering but postponing new construction projects, is now engaged in a $40 million effort to replace aging and dilapidated parts of the hospital.
"If (the other hospitals) are putting out a good product, they shouldn't be concerned," said Linda Smith, administrator of Aurora BayCare, who left a top post at Los Angeles County-University of Southern California Medical Center to run the new hospital in Green Bay.
As she switches from harried Los Angeles to the land where football is a religion, Smith, too, is brandishing weapons for battle. "We have a fabulous staff and a beautifully designed hospital. Patients will be pleased," she said. Smith, who expects Aurora BayCare to be profitable within a year, said "time will tell" how Green Bay's market responds to a new hospital.
While officials and observers wait to see how the new hospital transforms Green Bay's healthcare market, the controversy in town heats up. One point provoking argument is whether a for-profit hospital will care for indigent patients.
Aurora BayCare representatives said their rates will not be higher than those of competitors and that the hospital's fancy amenities will not force the facility to turn away those who cannot afford care. But not everyone is certain that will be the case.
With a profit incentive and its extravagant accommodations, "how will (Aurora BayCare) take care of the downtrodden?" asked St. Vincent's Neidenbach. "The flavor of the new hospital doesn't show me they will."
"It is our expectation that (Aurora BayCare) does its share of charity work ... so that people of all walks of life can access the hospital, not just people at the paying end of the spectrum," said Karen Johnston, a spokeswoman for Green Bay-based Catholic Charities, a social services agency for northeastern Wisconsin.
Because Aurora BayCare is a for-profit hospital, she said, "let's wait and see how that works."
Regardless of how charity care is handled, referral patterns in town may change as the competitive landscape shifts. James Coller, CEO of St. Mary's Hospital, does not anticipate much difference for his facility because none of Aurora BayCare's physician owners were previously on his staff. But St. Vincent and Bellin-the two hospitals to which BayCare physicians previously referred their patients-might feel the effects.
St. Vincent and Bellin "will probably have to do more adjusting than St. Mary's," Howe said.
For example, last month, Women's Specialty Care-a seven-physician OB/GYN practice previously affiliated with Bellin-moved to Aurora HealthCare, the result of several years of discussions between the practice and the system, Howe said. The seven doctors did not acquire an ownership stake in the new hospital.