Updated 10:36 a.m., Nov. 25, 2009
AKRON, Ohio — Akron Children’s Hospital Medical Center is talking about expanding its main campus… again.
“We need office space,” said Shawn Lyden, executive vice president and general counsel for the children’s hospital. Akron Children’s also needs a new neonatal unit, emergency department and more operating rooms.
But the children’s hospital is expanding with more than bricks and mortar. Its board of trustees wants the hospital to expand its complex businesses – often subspecialists’ services that earn higher reimbursements from public and private insurers.
This business expansion could help Akron Children’s weather an environment made turbulent by falling reimbursement rates and health care reform.
“In terms of the general strategy, it’s pretty well assumed … that the payment rates for the more complex procedures, relative to their cost, is better,” said J.B. Silvers, health systems management professor at Case Western Reserve University’s Weatherhead School of Management. That means both hospitals and physicians get paid more for these types of procedures.
The addition of subspecialties, such as pediatric plastic surgery, are “vital to Akron Children’s Hospital’s ability to meet the growing demands of the communities we serve,” said John Zoilo, executive director of Akron Children’s Hospital Foundation, in a letter to potential givers.
In addition, a health care reform deal cut by the American Hospital Association with the Obama administration and Congress would reduce the “disproportionate share” payments received by hospitals that provide more uncompensated care than other hospitals, Silvers said.
Because children’s hospitals rely on reimbursements from Medicaid — the federal health care program for the poor — they also rely on disproportionate share payments from Medicaid. Reductions in these payments would hurt children’s hospitals. “That’s the turmoil they’re talking about,” Silvers said.
So hospitals like Akron Children’s are looking to provide “more high-end services” that could fuel continued growth and cushion against fallout from health care reform. ”That’s one of the reasons we’ve been focusing a lot of our efforts on surgery,” Lyden said.
For the Akron hospital, the high-end services come in the forms of subspecialist practices and surgeries.
An office building named after President and CEO William Considine, opened in 2003, is nearly full. With one exception, the Considine Professional Building is full of offices of hospital doctors.
Its ear, nose and throat specialists just moved into the building, Lyden said. ”Our urology practice, which is a private practice, is building out its space. We’re building out space for our new plastic surgeon. And then we need to make some plans … for a neurosciences center. We have a new neurosurgeon coming on board in January,” he said.
The subspecialist doctors fuel demand for office space. “The plastic surgeon that we hired is the first pediatric, fellowship-trained plastic surgeon in Akron. He’s amazing,” Lyden said. “The neurosurgeon specializes in epilepsy surgery. There’s never been a pediatric neurosurgeon specializing in epilepsy surgery in Northeast Ohio.”
The subspecialists also fuel demand for surgeries, so Akron Children needs more operating rooms. The hospital expects to raise the $50 million to $60 million it needs to expand its neonatal, emergency and surgical facilities by selling bonds to investors, probably in 2011 or 2012, Lyden said.
The children’s hospital already is in 78 locations throughout Northeast Ohio, from specialists’ offices to pediatric emergency rooms in Norwalk east to Youngstown and south to Mansfield, employing 4,000 people.
Reserve your seat now for MedCity CONVERGE, to be held July 9-10 in Philadelphia. Discover strategies, solutions and startups in healthcare innovation. Be a part of this gathering where the entire healthcare ecosystem converges.