Battle for the burbs: The fight for market access

The population on the edge of metropolitan areas is growing the fastest of anywhere. So hospitals are competing hard to get a piece of it.

By Katherine Vogt, AMNews staff. Jan. 31, 2005.

First, homeowners discovered the edge of suburbia. Then, retailers followed. Now, finally, it appears hospitals are following, too, leading many to believe that physicians will decamp to the outer suburbs as well -- though it appears doctors could be ahead of hospitals on this trend.

On the outer ring of metropolitan areas, hospital systems are competing heavily to stake their claims. In the Denver suburbs -- which include Douglas County, the nation's fastest-growing county -- at least six hospitals will have opened between 2002 and 2007. At least three hospital systems are competing to build in the Minneapolis suburb of Maple Grove, Minn.

Rick Wade, spokesman for the American Hospital Assn., says his group isn't sure how many new hospitals are being built in suburban areas, but he said his organization was familiar with similar building booms or attempts to create a building boom in such states as Arizona, California, Michigan and Virginia.

The stakes are high: Expanding medical services to the well-insured patient population in the area could help a system's urban hospitals diversify their payer mix enough to subsidize some of the indigent care that they provide to city dwellers, perhaps helping them stay afloat financially. It also could help them retain the patients that already use their outpatient services.

The obstacles, however, are formidable. Not only must hospitals prevail over competitors in a cutthroat industry to stake a claim on the business, but they also must win regulatory approval for the projects and overcome any legal challenges made to that approval. In Illinois, for example, the state's hospital board rejected plans by two hospital systems to build in Chicago's southwestern suburbs, saying those facilities were unnecessary and could financially drain other hospitals within a half-hour drive.