A Boom in Beds

By Hannah Wallace October 31, 2004

The deluge started five years ago: a flood of applications from hospitals and healthcare companies across Florida to the state Agency for Health Care Administration, all of them itching to expand.

First in line, in fact, was Manatee Memorial, requesting permission to build a medical center in Lakewood Ranch, says Jeff Gregg, chief of the bureau of health facilities regulation.

Gregg, who follows national demographic figures, wasn't surprised. With state officials approving five new projects in the past five years in Sarasota and Manatee counties alone, it's a furious rush to play catch-up to population growth, he says. "We had a slowdown in hospital expansions in the '90s that lasted so long that population growth and aging caught up to the hospitals."

The twin factors of 1980s-era hospital expansion and the rise of managed care depressed the rate of 1990s hospital expansions, he explained. That was because one of the easiest ways for managed care programs to save money turned out to be by avoiding unnecessary inpatient care, therefore reducing the need for new hospitals.

The hospitals themselves paint a broad picture of a healthcare culture moving quickly toward currently underserved locations, especially where there are pockets of older residents on Medicare, and away from the traditional large hospital campuses of old. They're doing it through buyouts and locating specialized care centers in far-flung parts of the region.

Our older population is key. In the last five years, local hospitals have targeted older patients, who typically have Medicare or private insurance, with a focus on high-profit services like radiology departments and on-site clinical laboratories. In the future, Medicare payments for elderly patients will become an even more important source of hospital income, jobs and regional economic growth since Florida's elderly population is expected to double to 2 million, or 26 percent, by 2020.

All of this hospital growth-and the recent additions of a Florida State University regional medical campus in Sarasota and Lake Erie College of Osteopathic Medicine in Lakewood Ranch-is good news for economic development people. Hospitals are some of Sarasota and Manatee's largest employers, typically paying above service industry wages. And when these hospitals are staffed with good doctors and the latest treatments, they also attract an educated, affluent population that continues to demand the latest in medical care. The Milken Institute, in a 2003 study, looked at the potential impact the health care industry has on local economies. Sarasota/Bradenton ranked 76 out of 317 regional economies around the country, largely because of its expanding older population, which puts good healthcare high on its list of priorities. "The demand is there," says Perry Wong, a senior research economist at Milken. "When you're in your 60s, relocating for good jobs is not an issue. Being close to doctors and good medical services is."

Here are the biggest developments in those all-important medical services:

Manatee Memorial Hospital

Manatee Memorial Health Care System started an ambitious $40. 5 million project to build a medical office building and relocate 120 beds to a new acute care hospital in fast-growing Lakewood Ranch.

The state issued a certificate of need-the first of the new applications in the area-in May 2001, and by August of that year Manatee Memorial Health Care System broke ground for the new, 60,000-square-foot medical office building. In 2002, construction started for a new 120-bed hospital facility. The complex opened in September.

The new center includes units for women, emergency services and surgery. The women's center has 12 labor-delivery-recovery-postpartum suites, operating rooms, triage rooms and beds. The emergency services center is affiliated with All Children's Hospital in St. Petersburg and has a community outreach center.

On the main downtown Bradenton campus, Manatee Memorial Hospital plans major aesthetic and service changes to its facility with the addition of a 75,000-square foot tower in next two years. The tower will add an additional 269 private and semi-private rooms to the 57-year-old hospital's 491-bed total.

Blake Medical Center

The 383-bed Blake Medical Center started a $45-million expansion project last summer to add 10 much-needed new operating rooms to its west Bradenton campus as well as renovate 32,226 square feet of existing space.

Bon Secours-Venice and Bon Secours St. Joseph Hospital in Port Charlotte

Last summer, nonprofit Bon Secours Healthcare Corp. sold Bon Secours Venice Hospital and Port Charlotte's Bon Secours St. Joseph Hospital to Naples-based Health Management Associates Inc. (NYSE: HMA), over bids from Hospital Corp. of America and Sarasota Memorial Hospital. HMA officials expect to move forward with the purchases despite damage from Hurricane Charley to the company's other Charlotte County hospital, Charlotte Regional Medical Center.

The sales come just one year after Bon Secours Venice established its Regional Heart Center, an on-site cardiac care unit pioneered by physicians from the award-winning Ocala Heart Institute. The facility provides comprehensive cardiovascular care, including open-heart, vascular and thoracic surgeries, diagnostic services, catheterization and rehabilitative care.

HMA owns 53 hospitals in 16 states, including 14 in southern and central Florida. The company "has a history of buying struggling hospitals in non-urban markets and turning around the operations to provide high-quality health care close to home," says John Merriwether, vice president of investor relations.

For the quarter ended June 30, HMA reported earnings of $89.3 million, compared to $75.9 million for the same period last year. It also reported $817 million in revenue, up from $647.1 million. The firm declared a quarterly cash dividend of two cents per share in July, and was on track to report 16 years of uninterrupted earnings growth overall. In contrast, Bon Secours Venice, in quickly growing south Sarasota County, reported $12 million in losses in 2003.

North Port HMA Inc.

South Sarasota County, especially North Port, is popular with hospital planners because of the expected population surge in the unincorporated areas. The University of Florida Bureau of Economic and Business Research reported a 37.53 percent population increase in the North Port area between 2000 and 2003, compared to just a 7 percent increase in Sarasota County, and an 8.67 percent increase for Manatee County for the same period.

Last June, HMA also won approval to build an 80-bed, $78-million facility in North Port. Manatee Memorial had requested to build a 120-bed facility there as well, but lost to HMA. The state ACHA listed HMA's $3 billion in total assets as one of the reasons for the approval. The company, the report said, "has the financial resources to fund this project."

Sarasota Memorial Hospital

Sarasota Memorial Health Care System has hopped on the South County bandwagon too. The group, which operates Sarasota Memorial Hospital, applied for a certificate of need in September to move 160 of its 828 beds to a new facility, which will be roughly equidistant from the county's southern growth hotbeds, Englewood and North Port.

This isn't the first time Sarasota Memorial has placed a facility outside of the main campus, although it does represent its first plans to move such a large number of beds. The hospital-the second largest public acute care facility in the state-already maintains care facilities at Clark Road, Bahia Vista Street and University Parkway in Sarasota, and Blackburn Point Road in Osprey.

"Probably the last eight years, the hospital has had a long-term strategy of moving resources off the main campus. The facilities are following the patients," according to hospital spokesman Mike Vizvary. It's also a way to hold on to market share by checking the growth of relatively unregulated privately owned clinical and outpatient facilities. If approved, the $100- to $150-million facility would open in 2008, and provide beds for emergent care, medical-surgical, intensive care, maternal-obstetrical and cardiac care.

Sarasota Memorial also began an expansion of its busy Emergency Care Center in September to handle the jump in patients from 55,000 a year in 1993 when it was built to 80,000 today and a projected 118,000 by 2010. The almost $30-million expansion will be phased in over five to seven years, and will eventually add 43,000 square feet to the center for a total of 81,000 square feet, and 28 to 30 treatment areas for a total of 90.

HealthSouth LTAC of Sarasota Inc. and HealthSouth of Sarasota Limited Partnership

HealthSouth Rehabilitative Hospital, which added 15 beds to its current facility in 2001 for $1.4 million, has placed its bet on the need for medical care east of I-75. The hospital broke ground in April on the $12.7 million HealthSouth RidgeLake Hospital, a 40-bed long-term acute care facility at the intersection of Bee Ridge Road and I-75.

"We will hopefully be open in January," says HealthSouth spokesman Nancy Hielscher. HealthSouth has also applied to build a 76-bed replacement hospital near the long-term facility.

Doctors Hospital in Sarasota

Privately-owned Doctors Hospital in Sarasota has no current plans to add to its 168 licensed beds, but has purchased property adjoining its Cattlemen Road campus, according to Nilene Pacher, director of marketing and planning. The property is unlikely to be developed for at least another year.

In the meantime, the hospital will try to become Southwest Florida residents' first choice for treatment for their aching hips and knees. Doctors will give more attention to its orthopedic department in the coming months and years, as it takes advantage of some of the new developments in musculo-skeletal technology, including artificial bone substitutes that make it a bit easier for surgeons to do reconstructive surgery. "We're a prime area for that; we have very active seniors here," says Pacher.

But younger people are out of luck: the hospital still has no maternity beds, and its other planned area of service expansion is in cardiac care, another field that tends to serve patients who are at least middle-aged.

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