Vital signs: expanding hospital systems compete for location, proximity to customers.

• Author: Stokes, Jeanie
• Position: Hospitals Compete

When chief executives of the major hospital groups operating in Denver are asked to differentiate their facilities from the competition, they happily talk about their Front Range geographic coverage, concierge services for employees, state-of-the-art technology and long-standing commitments to the communities they serve.

**********

What they don't talk about is who delivers the best bang for the health-care buck.

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

The consolidation of the Front Range hospital market that occurred in the late 1990s created three large, multi-facility organizations--HealthOne, a for-profit partnership partly owned by HCA Inc., and two not-for-profits, Exempla Healthcare and Centura Health. The consolidations were supposed to reduce the cost of health care by taking advantage of volume buying and eliminating overlapping services.

Has it worked?

"If you look at hospital pricing from 2000 to 2004, it's gone up," concedes Exempla President and CEO Jeffrey Selberg. Among the reasons for those increased costs is that, until recently, the Denver metro area has been a suppliers' market--too few hospital beds to accommodate the needs of a growing and aging population. The building of new hospital facilities across the Front Range represents the first real signs of bottom-line competition in Colorado's medical community.

"We're starting to see more capacity being built, which is starting to lead to some competition between the hospitals," says Joe Hoffman, vice president and Colorado general manager for Anthem Blue Cross, a health insurer. "I would like to get to the point where hospitals are starting to compete not only on cost, but also on quality and outcome measures."

The 10-county metropolitan region surrounding Denver will have about 1.8 available beds per 1,000 population by July 2005 with the addition of HealthOne's Sky Ridge Medical Center in Lone Tree, Centura's Parker Adventist Hospital, Exempla's Good Samaritan Hospital in Lafayette, the first unit of the University of Colorado Hospital at Fitzsimons, and a new Foothills hospital campus for Boulder Medical Center.

That's still slightly less than the two beds per 1,000 people that's optimal for a market where about 80 percent of the population is covered by some form of managed health-care insurance, says Larry Wall, president of the Colorado Health and Hospital Association. But it's not just the number of beds a hospital system offers that makes it competitive.

...