New academic hospital ups the ante in San Diego

The opening of UC San Diego Health's new $943 million hospital later this year—the first new hospital in San Diego County completed since 2012—will bring cutting-edge technology for cancer treatment and other specialty care while also stirring up competition in the market.

Administrators and staff at Jacobs Medical Center are running through real-life scenarios in the already-completed building to make sure the rooms, operating suites and equipment are ready for patients, said UCSD Health CEO Patty Maysent.

The new hospital, sited in La Jolla, an affluent area about 10 miles north of central San Diego, signals increased competition for that population's health dollars, observers say. Some, including competing healthcare systems, say the new medical center may also signal that UCSD Health is preparing to reduce its presence in the central city, where it serves as a vital resource for a more diverse, underinsured and often uninsured population.

Jacobs Medical Center is triangular building connected by footbridges to UCSD's Thornton Hospital on the La Jolla campus. Jacobs will be home to three specialty practices and a surgical area with 14 operating rooms, including an advanced surgical suite of four ORs that will share an MRI and 64-slice CT scanner for real-time imaging.

The medical center, with 245 acute-care beds, will house a cancer center with 108 beds. One floor is dedicated to blood and bone marrow transplant surgery and recovery, a collaboration with San Diego-based Sharp HealthCare. The floor receives specially filtered air to help protect patients with compromised immune systems while allowing them to move about the facility.

The hospital also houses an intensive-care unit with 36 beds in family-friendly rooms, 36 postpartum beds and a 52-room, Level 3 neonatal intensive-care unit.

Construction of the 10-story, 509,500-square-foot building began in January 2012 on land adjacent to Thornton that the health system already owned. Originally budgeted at $664 million, cost overruns, some of it related to changes in technology, pushed the finished price to $943 million.

The cost doesn't seem out of bounds to John Nackel, a California healthcare business analyst. “In California, costs per bed are literally twice that of any other place in the nation, New York included,” he said. “Because of regulatory requirements and seismic-safety requirements, it's impossible to rationally compare costs.” The hospital should have no trouble finding its place in the San Diego County market, both in rankings and geography, he said.

San Diego is California's second-most populous city, with 3.3 million residents in a 4,250-square-mile area. The county has about 17% fewer acute-care beds per 100,000 residents than the statewide average, according to a June report released by the California Health Care Foundation. The county also has a slightly higher percentage of privately insured patients than the statewide average of 51%, according to the report.

Sharp HealthCare, with 30% of the county's inpatient discharges in 2014, and Scripps Health, with 26%, are the leading health systems in the market. UCSD is third, with 11% of inpatient discharges that year, while Kaiser Permanente has 9%.

Jacobs' La Jolla location, in the county's central coast where the population is generally affluent and well-insured, also offers easier access for north San Diego County residents who are generally upper-middle class—and are served by just three other hospitals.

The new hospital should serve as a boon to the UCSD system, Nackel said. “It's important to remember that patients tend to go to the nearest hospital recommended by their physician,” he said. “The specialty programs don't give it any particular advantage; the location does,” he said. “They will be able to skim a little cream off the top.”

Ha Tu, a senior researcher with Mathematica Policy Research who wrote the California Health Care Foundation report, concluded that Jacobs Medical Center was planned around the region's wealthy, well-insured population. “It was a very deliberate move on UCSD's part to move services into Scripps' backyard,” Tu said. “Opening up a high-end facility in this market with these lucrative specialties harkens back to the medical arms race.”

For Scripps, UCSD's plans could be troublesome on two fronts, Tu said. First, the new center—with its new cancer center and specialty care services—is across the street from Scripps Memorial Hospital, the system's flagship and key profit center.

Secondly, the opening of Jacobs could signal the beginning of a reduced UCSD presence in Hillcrest, just north of downtown, where UCSD's first San Diego hospital, UC San Diego Medical Center, and Scripps Mercy stand blocks apart. Both hospitals in Hillcrest run busy emergency departments serving a high percentage of uninsured or underinsured patients.

The Hillcrest hospitals treat patients from the large, densely populated and often lower-income areas surrounding downtown San Diego and serve as trauma centers for about 50 square miles.

“We are very concerned about there being less resources available—it means Scripps Mercy will assume the burden of caring for the underinsured and uninsured,” said Barbara Price, Scripps Health's vice president of business development.

UCSD plans to stay in Hillcrest, Maysent said. “It's not just the health system that's invested in Hillcrest. The entire university is invested in Hillcrest,” she said. “When I hear UCSD is not committed to Hillcrest, I think you must not be in the meetings I'm in. We have more commitment to the underserved and uninsured than anyone in the region.”

In fact, she said, with the UC San Diego Medical Center preparing to celebrate 50 years of service, long-range plans for the central city hospital include expensive seismic-safety upgrades and creating a geriatric emergency department and single patient rooms.

“La Jolla wouldn't be possible without Hillcrest. Our history of innovation began there, the staff at Hillcrest are a deeply committed group of people and we plan to make the most of that,” she said.

Marty Graham is a freelance writer based in San Diego.