HealthLeaders-InterStudy, a leading provider of managed care market intelligence, reports that while expansion plans in many regions of the country have halted because of the economic downturn, strong health system sectors in Buffalo, N.Y., and Baton Rouge, La., are positioning hospitals in these markets to not only weather the economic downturn, but also continue expansion plans.
In Buffalo, state mandates have forced the consolidation of several hospitals, including two of the area's largest health systems--Kaleida Health and Erie County Medical Center--which will be united to create the Great Lakes Health System of Western New York. According to the recent Buffalo Market Overview, the restructuring means fewer beds in the area, as well as significant grant dollars from the state for complying with the mandate, which puts local hospitals in good financial position. The move has also enabled Kaleida to begin work on a $150 million heart and vascular center.
"The effort toward consolidation also puts health systems in Buffalo in a strong position to negotiate with health plans for better reimbursement," said Carolyn McMeekin, director of Market Overview analysis for HealthLeaders-InterStudy.
In Baton Rouge, increases in patients and revenue following Hurricane Katrina have propelled expansion plans. According to the recent Baton Rouge Market Overview, the popularity of physician-owned specialty hospitals in the Baton Rouge market has also forced health systems to adopt strategies to compete with these facilities for higher-profit, shorter-stay surgical procedures. As a result, hospitals are looking to develop specialized centers or align with these surgical centers. For instance, the area's largest health system, Franciscan Missionaries of Our Lady, has bought a stake in one of the large specialty hospitals, Surgical Specialty Center. The Franciscan system has also started construction on a $15 million expansion to increase pediatric, orthopedic and trauma surgery capacity.
"While health systems in Buffalo and Baton Rouge will struggle with issues that are common throughout the hospital sector--proposed cuts to Medicaid programs and higher rates of uninsured patients--there are market drivers affecting healthcare that make them well-positioned to weather the current economic downturn," said McMeekin.
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