How a 2019 Florida law catalyzed a hospital-building boom

In BayCare Hospital Wesley Chapel’s 86 private rooms, patients can use voice-activated Alexa devices to dim the lights, play music, or summon a nurse.

BayCare boasts a few of the latest high-tech equipment. Yet, the corporate said, its $246 million facility that opened here in March doesn’t provide any health care services beyond what patients could receive at a hospital just 2 miles away.

BayCare Wesley Chapel’s luster as the most recent hospital on this fast-growing Tampa suburb of 65,000 people won’t last. One other general hospital is on the best way — the third inside a five-minute drive.

“It’s sort of crazy,” said Pat Firestone, who works at Macy’s in an upscale shopping area near the hospitals. “It’s good to know there’s a hospital nearby, but I’m undecided all of this is required, especially when other areas lack any hospitals.”

Wesley Chapel is only one scene in a hospital-building boom across Florida unleashed almost 4 years ago, when the state dropped a requirement that firms obtain government approval to open latest hospitals.

Florida is among the many states which have abandoned a decades-old regulation meant to maintain medical costs in check. The requirement, used nearly nationwide until the Nineteen Eighties, allowed latest hospital construction provided that a state issued a “Certificate of Need,” or CON. The method involves would-be hospital builders applying to the state and the state government evaluating need based on criteria comparable to population growth and existing hospital capability.

About two-thirds of states still require a CON. But several, including Georgia, Kentucky, and South Carolina, have this yr debated whether to scrap or loosen restrictions. West Virginia relaxed its rules in March.

Critics of the CON process say it stifles competition and limits access to care. However the hospital industry often defends the method, which protects facilities from would-be rivals.

In most industries competition drives down prices, but more hospital beds and services can actually boost the associated fee of patient care as pressure to recoup all that investment spreads through the system.

When there’s excess medical capability, doctors may overprescribe — as an illustration, by ordering an expensive CT scan as a substitute of a less expensive X-ray, said Steve Ullmann, a University of Miami health policy professor.

“All that construction must be paid for one way or the other,” said Allan Baumgarten, a Minnesota-based consultant who analyzes health care markets.

Competition can even bid up labor costs, which contribute to health costs.

Meanwhile, more hospitals could leave medical teams at anybody hospital performing fewer complex procedures and dilute quality, some experts say.

What’s more, as Wesley Chapel shows, latest construction doesn’t necessarily favor the areas that need it most. Hospitals are inclined to follow the cash — to relatively affluent markets as a substitute of underserved rural or urban communities.

While dozens of recent hospitals are planned for Florida, none are going up between Jacksonville and Pensacola, a greater than 300-mile swath of largely rural counties spanning two time zones.

Republican Gov. Ron DeSantis signed a law eliminating Florida’s approval process in 2019. From 2020 through 2022, firms announced plans to construct no less than 65 hospitals in Florida, in keeping with state data. Many are in South Florida, the Tampa area, and the Orlando area.

In contrast, from 2016 to 2018, the state approved just 20 latest hospitals. Florida has about 320 hospitals in all.

Those tallies include not only general “acute care” hospitals but additionally inpatient facilities specializing in rehabilitation, psychiatric care, and emergency medicine, amongst others.

The college system for Pasco County, where Wesley Chapel is positioned, welcomed the brand new construction. Mary Martin, who oversees advantages for varsity employees, anticipates it should shorten wait times and provides patients more options while strengthening health plans’ hands in price negotiations with hospitals.

“It is a big win for our employees,” Martin said.

Yet, health experts say residents could get stuck with greater health care bills.

“It’s inflationary to have so many hospitals,” said Linda Quick, former president of the South Florida Hospital & Healthcare Association.

“When you do not have enough people using it, then the fixed costs should be made up by the variety of people who do,” Quick said.

Patients are inclined to go where insurers allow and where doctors send them as a substitute of shopping around and comparing prices. When an insurer is footing the bill, a patient may not balk at the associated fee.

Insurers pass costs to patients by raising premiums and deductibles and restricting coverage by, for instance, requiring members to make use of narrow provider networks, Ullmann said.

In South Carolina, the legislature has debated killing or reforming its CON regulation for years. A state report last yr highlighted high costs and long delays that hospital firms experience while looking for state approval. In September 2022, a hospital opened in Fort Mill, outside Charlotte, North Carolina — greater than 15 years after it was proposed.

Before Fort Mill’s hospital opened last yr, residents often drove 45 minutes for care, in keeping with Fort Mill Mayor Guynn Savage.

The shorter drive will assist in emergencies, Savage said.

The South Carolina Senate passed a bill in February that might essentially repeal the CON requirement, however the bill faces an uncertain future within the House.

While South Carolina hospitals favor some leisure of the regulations, they oppose full repeal.

That irks South Carolina Sen. Larry Grooms, a Republican, who’s pushing for full repeal.

Hospital leaders favor retaining the law to guard “their very own turf,” Grooms said. “That is not how capitalism works. That is not how free markets work.”

The Florida Hospital Association fought efforts to repeal the regulation for brand new hospitals but acquiesced when it now not had the votes in an increasingly conservative legislature.

Today, Florida hospital officials say they’re merely expanding to maintain up with a growing population.

Yet, hospitals are also seeking to grow in markets that may yield the very best profits. They have an inclination to avoid constructing where many individuals are uninsured or on Medicaid, the federal government medical insurance program for low-income people.

As well as, hospital systems are attempting to broaden their geographic footprint, which provides them greater leverage when negotiating reimbursement rates with private insurers. The hospital systems’ increased bargaining power can result in higher premiums for consumers, said Baumgarten, the Minnesota-based consultant.

BayCare, which owns 15 other hospitals within the Tampa Bay area and central Florida, had opposed efforts to eliminate Florida’s regulation, anxious that ending it will allow competing hospitals to enter BayCare’s turf and siphon off its highest-paying patients and scarce staff, said Keri Eisenbeis, BayCare’s senior vp of corporate relations.

The corporate, based in Clearwater, Florida, bought property in Wesley Chapel in 2006. It applied to construct a hospital here in 2012 but was turned down when the state approved a competing application from Adventist Health System, a hospital chain now called AdventHealth.

BayCare applied again in 2018 and the state granted approval. But AdventHealth appealed the choice, and the appeal threatened to maintain the difficulty in litigation for years. When the state lifted its CON requirements in 2019, BayCare moved forward with its original plan.

As well as, in 2022, Orlando Health unveiled plans to construct a 300-bed hospital in Wesley Chapel. Construction has yet to start. And PAM Health announced plans in January of this yr to construct a rehabilitation hospital in Wesley Chapel.

Rebecca Schulkowski, BayCare Wesley Chapel president, predicts BayCare patient rooms will fill quickly given the variety of young families and retirees moving to latest housing developments.

One big challenge Schulkowski faces is hiring enough staff. That features luring doctors and other medical examiners to the town as a substitute of just hiring employees away from rival AdventHealth.

Though BayCare argued the town needed more hospital beds, AdventHealth’s Wesley Chapel hospital often has had loads of empty beds. In response to essentially the most recent annual data posted by the state, in 2021 its occupancy rate was 66%.

Even with the state’s growing population, “none of those communities have a shortage of inpatient care,” said Quick, referring to suburban areas like Wesley Chapel. “What now we have is a shortage of sick people.”

This text was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.