Spokane Journal of Business

Health care to stay strong, but with some bumps

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Spokanes three major hospitals say they expect robust gains next year and are drawing up plans for big expansion projects, but add that a tight labor market and declining reimbursements pose obstacles to their continued growth.

We continue to see a substantial inflow of patients from the region, says Mike Wilson, president of Sacred Heart Medical Center & Childrens Hospital. I think that the overall health-care sector going forward is growing at a more rapid rate than the population, largely due to the aging baby boom generation.

Wilson projects that Sacred Hearts patient volumes, net revenue, and employment levels all will increase by between 2 percent and 3 percent next year. The hospital currently employs 3,300 people full time, nearly 4 percent more than it expected when it started the year, he says.

Holy Family Hospital, which currently employs 931 people full time, expects employment levels to increase roughly 4 percent next year, says Tom Corley, its president. Corley projects patient volume and revenue both will rise between 3 percent and 4 percent next year, compared with the 6 percent growth in patient volumes and 10 percent growth in revenue thats expected by the end of this year.

Sacred Heart and Holy Family, both par of the Renton, Wash.-based Providence Health & Services network, currently are developing a 10-year master plan for future expansion projects.

Meanwhile, Empire Health Services, which operates Deaconess Medical Center and Valley Hospital & Medical Center, says its acquisition by Community Health Systems Inc. will mean $100 million in funds available for capital projects and other improvements over the next five years.

Empire Health expects about a 3 percent increase in both patient volumes and revenues in 2008, says Keith Richardson, its assistant vice president for finance. Through October of this year, patient volumes were up 2 percent from the year-earlier period and revenues were up 9 percent, Richardson says.

Empire Health anticipates employment levels will stay fairly steady next year. As of Nov. 21, the hospital operator had 1,864 full-time employees, up from 1,650 last year, although some of that growth occurred when Empire added employees this year to handle functions it previously had outsourced, Richardson says.

Although Richardson is optimistic about the continued health of the industry, hes concerned about the fallout from the federal governments recent sweeping changes to Medicare. The government expanded the number of codes used to classify hospital services that determine how much Medicare pays for treatment of Medicare patients, he says. As a result of those changes, Medicare raised its reimbursement rates this year by less than 1 percent, rather than matching the medical inflation rate as it has done in the past, he says.

Wilson says another concern facing the health-care sector involves the growing number of uninsured patients. Also, more patients now have private health plans with high copays and deductibles, which increases the potential for bad debt, he says.

Perhaps the most pressing challenge, though, is the tightening labor market here. Corley says that nurses, physical therapists, pharmacists, and medical technologists all are in high demand here, and recruiting physicians has been particularly tough, he says.

Staying on top of staffing is going to be a real challenge for us, Corley says. These are issues facing every hospital in the community right now.

  • Emily Proffitt

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