“We have good diversification in both our markets and the size of our markets,” Swindle said. After entering the Houston market last year through the purchase of St. Luke's Health System, CHI is planning further acquisitions of hospitals and regional systems, Swindle added.
It also has big plans in cities surrounding Houston, where it recently signed a letter of intent to buy Memorial Health System of East Texas, in Lufkin. “We think there are other growth opportunities that will help us build that scale and build our market in the Houston area,” Swindle said.
Its competitor in Houston, Memorial Hermann Health System, which says it has 24% of the inpatient market, is also “bullish on growth,” said Dennis Laraway, its CFO.
Laraway pointed to the future Grand Parkway—an outer beltway being proposed around Houston—as a sign of the booming development in the market. The parkway will follow the energy corridor, and “so will we,” Laraway said, adding that it is expanding its campus in Sugar Land, for example.
Unlike many of its peers that have struggled with inpatient volume, Memorial Hermann's admissions have grown about 4% per year, a trend that has continued into the first quarter of this year.
It also has expanded its network of ambulatory and convenient-care sites; outpatient volume has experienced a compound annual growth rate of 7.5% since 2009.
Northwestern Memorial Healthcare, Chicago, is building a 1 million square foot ambulatory-care center as patients increasingly want to receive care closer to where they live. Those who travel downtown for care tend to need more complex care, President and CEO Dean Harrison said.
Systems across the country said they are employing more physicians. But with labor costs still accounting for about half of its operating expenses, Northwestern Memorial Healthcare is thinking about how to balance staffing levels against a goal it has set to increase patient satisfaction scores, Harrison said.
