Texas Health Resources leads its four-county Dallas-Fort Worth hospital market with a 23% market share. And the 12-hospital, not-for-profit system is not about to concede any ground to No. 2: out-of-towner HCA, the Nashville-based investor-owned chain nipping at its heels with a 21% share.
THR, based in Arlington, spends up to $150 million annually, or about 8% of its $1.9 billion in net revenue last year, in capital improvements to keep up with the changing marketplace. Technological advances, a population boom and other consumer demands have driven $665 million in land and other capital expenses from 1998 to 2002, and another $1.5 billion in projects are in the works for the next 10 years.
To staff the expanded services, THR plans to hire 2,000 employees in the next few years. "We identified certain markets (in which) we wanted to protect our position in the market and grow our position in certain markets," says Dave Ashworth, THR's executive vice president of strategy and system development.
Hospital operators are battling for a piece of the fastest-growing, most affluent patient population in northern Texas. They're employing some of the most sophisticated and profitable services in their arsenals to do so, many of which require increasingly skilled workers to operate.
Boomtowns in the Dallas-Fort Worth area could mean boon times for hospitals that operate the lucrative businesses, such as cardiac care, cancer treatments and diagnostic imaging, that prosperous communities demand. But what will the increase in services mean for an already stretched workforce?
Technological advances are spurring competing hospitals to build bigger, better facilities in suburbs across the Sun Belt, in states such as Texas and Florida, and hospitals are further squeezing resources to keep up with demand. The building boom in northern Texas, with several billion dollars of construction recently completed or under way, is a microcosm of trends across the country but without the regulatory restrictions that limit projects in many states. Texas scrapped certificate-of-need laws in the 1980s.
According to Modern Healthcare's annual Construction & Design Survey (March 8, p. 36), some $18 billion in construction nationwide was completed in 2003 and another $25.1 billion had broken ground while $44.3 billion worth were in the design phase.
More services, more jobs
Expanded services in the Dallas-Fort Worth area alone translate into an additional 2,000 registered nurses needed by 2007, or more than 13% of the area's current RN workforce, according to an expansion survey by the Dallas-Fort Worth Hospital Council, which represents 73 member hospitals.
That's a conservative estimate that doesn't take into account the current shortage of 1,500 RNs or the aging pool of RNs leaving the workforce in larger numbers, says Paulette Standefer, executive vice president of the hospital council. That puts the low end of the projected vacancy rate at 3,500 by 2007. The forecast for the next few years could be up to 25% higher.
"It's difficult to try to get a handle on how many facilities are on the drawing board," Standefer says. Her numbers are based on 1,537 additional beds at six hospitals in the next few years, but several large hospitals had not yet responded to the survey. The area hospitals-some of the biggest employers in the Dallas-Fort Worth area-spend more than $3 billion annually on its 70,000 full-time workers, including about 15,000 RNs, Standefer says.
In addition to THR's 2,000 new employees in the next few years, 96-bed Baylor Regional Medical Center in Plano, Texas, stated it would hire 600 workers in the months before its December opening. Eleven-hospital Baylor Health Care System, based in Dallas, estimates that it needs 150 additional nurses each year to keep up with the system's growth.
"We're scrambling to meet the needs of the area," Standefer says.
THR has planned eight campus expansions of $10 million or more. Among the system's first projects are a $62 million, 100-bed cardiac tower at 552-bed Harris Methodist Fort Worth Hospital, four operating rooms and cardiac catheterization rooms; a $177 million expansion and renovation at 692-bed Presbyterian Hospital of Dallas that will add 108 inpatient beds; a $130 million expansion project at 195-bed Presbyterian Hospital of Plano that will add as many as 190 inpatient beds as well as new ancillary and emergency services; and a $15 million expansion project at 29-bed Presbyterian Hospital of Allen that will add intensive-care and surgical beds and enhanced diagnostic services.
The system also is planning a joint $160 million, 162-bed replacement hospital-Presbyterian Hospital of Denton-with for-profit Triad Hospitals, based in Plano.
Of the $1.5 billion in projects planned since 2002, $1.1 billion of that spending is expected to come from operations, while $300 million will come from bonds and $100 million will be funded through philanthropy.
Together, Baylor, HCA, Methodist Health System and Tenet Healthcare Corp. have committed to $1 billion in construction projects in the Dallas-Fort Worth area, much of it funded by operating revenue and bond financing.
"It tells a pretty dramatic story in itself," Standefer says of the healthcare system spending in the area. Millions more are being spent by other hospitals and physician owners. About 60 acute-care facilities operate in the area, and of those, five operate trauma centers.
"We're growing so fast," Standefer says. "We're looking easily at 8 million people in 2010," up from about 5 million in 2000.
Tenet, the for-profit giant hobbled recently by reimbursement controversies and financial losses, built a $118 million acute-care facility in Frisco, a booming suburb in northern Texas, even as it scrapped capital projects elsewhere. The 118-bed Centennial Medical Center can expand to 195 beds as demand grows. Tenet spent $150 million during the past two years in the Dallas market and invests about $600 million annually at its hospitals nationwide. The Santa Barbara, Calif.-based hospital system is moving its headquarters to Dallas within the next year and has sold chunks of its California properties.
"Our management is always looking at markets and market dynamics and reviewing opportunities," says Steven Campanini, a Tenet spokesman. "While we are certainly watching what our competitors are doing, at the end of the day, the community always wins out with the variety of facilities" available to them.
That could depend on the community you're talking about. Most of the work at facilities in northern Texas are renovations, expansions and specialty projects in Denton and Collin counties. In 2000, Collin County had a population of about 492,000, up 86% since 1990, compared with a 23% increase for the state overall. In 1999, the median household income in Collin County was $70,835, compared with $39,927 for Texas overall, according to the U.S. Census Bureau. And the county is growing increasingly more populated and prosperous, according to recent estimates by area healthcare systems.
More people, more uninsured
Even with all the construction projects in the works, what's not being built in the Dallas boom are facilities for the indigent population, Standefer says. Emergency care, community clinics and wellness education are all areas of patient care that need to be expanded, she says. The Dallas-Fort Worth area has five trauma centers but could use additional centers, she says.
Baylor operates one of the two Level I trauma centers in the area and treats a patient population in which one-quarter are uninsured.
That's a big issue facing hospitals in the Dallas-Fort Worth area, says Joel Allison, Baylor's president and chief executive officer. With the booming population, hospitals are seeing a proportionate growth in the indigent population.
Texas has among the highest population of uninsured patients, as well as an increasingly diverse ethnic community. "The makeup of the population makes it essential that we address the diversity issue," Standefer says.
Meanwhile, Parkland Memorial Hospital in Dallas, one of two county-owned hospitals in the area, has shelved plans to build a women and infants' center along with a surgery center, first proposed six years ago, citing budget concerns. The 730-bed hospital has lost money on operations for the past two years but is expecting to post a profit this year.
"Trauma and uncompensated care are exerting tremendous pressure," Standefer says.
Dallas-Fort Worth continues to be an important strategic market for both regional and national hospital systems. "Being based in Dallas, you can be on either coast in a couple of hours," says Ken Sutherland, vice president of construction and design at Tenet. The area's central location and the fact that it's home to many large corporations make it a population growth epicenter.
HCA, with nine hospitals in the Dallas-Fort Worth area and 36 in Texas, has $194 million in capital improvements for its Dallas-Fort Worth hospitals under way and will spend $655 million on projects statewide. The 191-hospital system plans $1.65 billion in companywide capital spending this year, compared with $1.8 billion in 2003 and $1.7 billion in 2002. Dallas is a "mature market, so a lot of it is expansions and additions," says Jeff Prescott, an HCA spokesman. Prescott says his company is concentrating expansion efforts in Texas as well as in Florida, both high-growth states.
Baylor, meanwhile, has planned a five-year $390 million investment in new beds, offices and specialty services. Allison expects the population of the Dallas-Fort Worth area to double by 2025, and says the system is focused on "expansion with the right model of care." Along with its upcoming $150 million Plano facility, the system plans other expansion and renovation projects, including spending $50 million to nearly double the number of beds at Baylor Regional Medical Center at Grapevine to 201 beds.
The construction projects are part of the system's primary-care clinic strategy, with more than 360 physician offices and 70 clinics in the Dallas metropolitan area, or what Allison calls the "right care at the right place at the right time at the right price."