The business of health care — from providers to insurers — is good for Central Pennsylvania's economy. In every midstate county, hospitals are among the top employers, and nearly every facility right now either has a construction project recently completed, under way or on the drawing board. It's a significant portion of the region's GDP.
The primary driver for this robustness is demographics. Pennsylvania is an aging state, and with age comes a greater demand for health care. But while Pennsylvania’s population overall is expected to grow less than 2 percent during this decade, most of the midstate is expanding much faster. Cumberland County in particular is projected to grow nearly 10 percent between 2010 and 2020.
So it’s no surprise that PinnacleHealth last week announced a $155 million construction project that includes a brand-new, $100 million hospital on the West Shore, in Hampden Township.
The new hospital makes good business sense for Dauphin County-based PinnacleHealth, which stated a goal of having one of its physicians within 10 minutes of any patient, an outpatient facility within 20 minutes and a hospital within 30 minutes. Not the least of its advantages is that the strategy will allow PinnacleHealth to offset cuts in Medicaid payments by catering more to better-heeled insured patients.
It also is indicative of how competition in health care has changed. No longer restricting intake geographically, hospitals are establishing outpatient facilities and physician practices virtually in each other’s backyards. PinnacleHealth’s new hospital, for example, will be eight minutes from Holy Spirit Hospital, which itself opened a family medicine and urgent care center in South Middleton Township, seven minutes from Carlisle Regional Medical Center, and has a cardiac rehab center across the road from CRMC. CRMC has partnered with Penn State Hershey Medical Center for oncology services and has a wound care center in Shippensburg.
The shift toward accountable care organizations, in which providers are reimbursed according to efficiency measures and patient outcomes rather than merely services delivered, means we will be seeing more of this kind of integrated outreach.
But the jury is still out on whether market-driven decisions in health care are good for the community in the long run. A number of studies on health care costs show the rise of big hospital networks, instead of driving costs down through competition, actually results in higher costs: Bigger providers have the clout to demand higher reimbursements from insurers, which pass those costs along in their rates.
That’s bad news for businesses, already struggling to provide affordable health care benefits for employees.