Valley growth propels hospital upgrades

By Michelle Swafford / Staff Writer

A tortoise is part of a desert theme on a pediatric floor inside the Sunrise Children's Hospital expansion on Nov. 4, 2005. Photo by R. Marsh Starks

Hospitals are expanding rapidly in the Las Vegas Valley. Two chief reasons are: Patients' need for additional beds and services and hospital operators' demand for profit. Patient and physician demand is a major reason why three hospitals have opened in the Las Vegas Valley in the past five years and several others are in various stages of completion.

Universal Health Services opened Spring Valley in October 2003 and broke ground on Centennial Hills in July, which is scheduled to open in 2007. The King of Prussia, Pa.-based company has invested about $200 million in the last five years in existing facilities and is spending $82 million for Centennial Hills.

HCA opened Southern Hills in March 2004 and purchased land to build a hospital in Henderson, but no timeline has been set for that hospital. The Nashville, Tenn.-based company has spent more than $240 million in construction in the past five years.

Catholic Healthcare West opened St. Rose Dominican Hospitals -- Siena Campus in 2000 and is opening St. Rose Dominican Hospitals -- San Martin Campus next summer. The San Francisco-based company invested $256 in construction in the past five years.

Hospital operators say they look to population projections, current patient volumes and health care expertise to decide which services to focus on and whether to expand an existing facility or build a new one.

"We try not to reinvent the wheel," said Mike Tymczyn, spokesman for St. Rose Dominican Hospitals. "Because we know the number of X-rays, lab tests and hip replacements that will be done on a population we can build for demand and growth."

Hospitals' business plans -- often written with projections for five to 10 years -- evolve as building codes change, technology emerges, homebuilding shifts and physician expertise increases.

"Physicians play a huge role in deciding what services to offer," said Vince Leist, Sunrise Hospital's senior vice president of operations. "The economic vitality of a hospital is proportionate to the acceptance in the physician community."

Tymczyn said convenience for doctors is considered when choosing hospital locations, which is part of the reason why the San Martin Campus is under construction near the Las Vegas Beltway.

In Southern Nevada, it's not uncommon for hospitals to announce how many beds it will add and when it will open those beds but then change those decisions because they must meet city, county and state building codes, which can alter plans or slow down the opening if changes are needed. Hospital blueprints typically go through three or four iterations that have to be approved by local and state officials, said David Bussone, Valley Health System group director.

"It's not that often that something is overlooked in the planning phase, but it's common, during the survey, to have to make some changes," Bussone said, adding that the changes are typically minor.

Also, hospitals often don't open with as many beds as they're licensed for by state health officials.

"It doesn't make sense economically to build a hospital and open it to its capacity on Day One unless you think you're going to be swamped with patients," Bussone said.

For example, Centennial Hills Hospital will open with 171 beds initially and two unfinished floors that will provide space to bring the bed total to 244 in the future.

Hospital operators concentrate on a fivemile radius when they first open a facility and then expand into other ZIP codes that may overlap with other hospitals.

Hospitals open with basic services to meet the needs of their surrounding areas such as maternity care for the younger demographics who live, or are projected to live, near Centennial Hills and St. Rose -San Martin.

"As the community grows and doctors join the staff, more advanced services are added that create a higher-level facility," Tymczyn said.

For example, St. Rose-Siena now offers open heart and neurosurgery services, but it did not when it opened.

Sunrise has become one of the more advanced hospitals within HCA's local network of hospitals.

Leist said hospitals add specialized service once the physical infrastructure and clinical expertise are mature enough to meet patients' needs adequately.

"For example, we wouldn't want to have complex brain surgery at Southern Hills today -in five years maybe," he said. "The more of one thing you do -- the potential for variation or error is reduced."

While additional hospitals are needed to meet the needs of new communities, they alone cannot meet the Las Vegas Valley's health care needs or hospital operators' income needs.

Hospital companies invest in existing facilities by upgrading equipment and adding beds as patient demand increases.

"In some markets it doesn't make sense to put in a new hospital, but it makes sense to put in a new tower," Bussone said. "When you're looking at every nook and cranny for a bed, like at Summerlin Hospital, then it makes sense to build a tower."

Summerlin Hospital added 274 beds with its patient tower. Whether hospital operators are adding beds at one of the Las Vegas Valley's 11 existing hospitals or adding hospitals, they have to be profitable to sustain themselves.

"You certainly have to get a return so you can reinvest in a community," Bussone said. But profitability isn't the deciding factor for all services because hospitals have to offer emergency services, which are not always profitable since that is the health care entry point for uninsured patients and cost more to provide generally.

"The (Sunrise) Children's Hospital is not the most profitable business in the community," Leist said. "There is a margin, but it's not like you would do with an outpatient imaging center. Our hospital has to be a community member to survive."

Las Vegas Valley hospital operators do not have to rely on their local profits to expand though. They are backed by their parent companies, which dole out the needed funds when an expansion, upgrade or addition is warranted.

"We don't set aside money for each of the hospitals locally to make investments," Bussone said. "It would be very easy for the company to be investing more money more rapidly than you're generating it."

Catholic Healthcare West relies on public bond offerings to raise money instead of turning to company shares like publicly held companies do.

"All of us needs access to capital markets particularly when you're in a market that that requires you to reinvest rapidly," Bussone said.

Michelle Swaford covers health care and small business for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached by email at swafford@lasvegassun.com or at (702) 259-2326.

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