Health care giant in race to dominate suburban market; Will Dignity-Common Spirit open Elk Grove’s 'first' hospital?

By Michael Monasky | 

There’s a market battle brewing in northern California that is commanding attention in the board rooms of at least one health care giant, Dignity Health. Just last year Dignity merged with Catholic Health Initiatives, forming Common Spirit. 

At about the same time, California Northstate University (CNU) announced competing plans for a 400-bed acute care hospital in Elk Grove. Most of the executives for CNU are male; the dais for Dignity’s announcement was predominantly female.

Laurie Harting oversees Dignity facilities in the greater Sacramento region. Since the buildings do not meet 2030 state seismic structural codes, the company plans to eventually close 160-bed Methodist Hospital serving impoverished zip codes ($40K median household income). 

It will re-open in about seven years with 100 private room beds in a middle-class area primarily populated by government workers with $80K median household income. Ms. Harting and her colleague, Phyllis Baltz, president of Methodist Hospital, announced on January 8 that Dignity will start construction around 2023 and begin operations around 2026-2027.

Harting said that due to greater emphasis on outpatient services, “inpatient census will continue to go down; so we’re very confident that 100 beds will continue to meet the needs [of the community].” 

She further stated that “managed care...populations [like Elk Grove] tend to have less acute care bed’s been in the plans for a long time; we’ve owned this property for many, many years now. We wanted to make sure we understood where the health care trends were going so we built the right size hospital for the time.” 

When asked if Wednesday's announcement was affected by its corporate restructuring and competitive pressure from CNU to build a hospital, Harting said “the merger has no impact on our timing or the building [of a hospital in Elk Grove]...this has been prioritized as one of the greatest needs in all of Common Spirit; so we’re already approved to move to the next phase. The formula that we’ve used, and used for many years to calculate the need for beds is different from what they’ve quoted [CNU’s claim for 400 needed beds]...As population grows, and we can demonstrate a need for additional beds there will be a phase two...I doubt that we will ever go to 400, because we just don’t see 400-bed hospitals built anymore.”

Common Spirit is the second-largest non-profit health care system in the United States treating over 20 million patients; with revenues of $28 billion it sets aside 15-percent for charity care and unreimbursed services ($4 billion). As costs continue to soar and quality diminishes in today’s American health care market, it is a dominant, bloated vector in our economy that requires a close watch.

Copyright by Michael Monasky © 2020. All right reserved.


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D.J. Blutarsky said...

The CNU calculation for 400 beds may still be valid. My memory is a little fuzzy, but I think I recall some public comments made in the past about this place being some kind of birthing facility? I don't know, for some Asian country, I just can't recall which, but it was a big one?

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