HealthLeaders-InterStudy, a leading provider of managed care industry intelligence, reports that, unlike most metropolitan areas with rapidly growing suburbs, Seattle is not seeing an acute-care hospital building boom. According to the latest issue of the Seattle Market Overview, the quiet market is due mainly to strict Certificate of Need (CON) laws and other regulations, which keep the lid on the kind of expansion going on elsewhere in large metropolitan markets.
"When Franciscan Health System's planned hospital in Gig Harbor received state approval in 2004, it was only the second new acute care hospital in Washington in two decades," said Patrick Powers, HealthLeaders-InterStudy senior analyst. "That area, north of Tacoma, is expected to see significant population growth after the second Narrows bridge opens in 2007. In most parts of the country, you'd see a lot more hospital system competition preparing to serve a rapidly expanding population."
East Seattle population is also growing, particularly along Route 90, but the CON board has denied requests by Swedish Medical Center and Overlake Hospital Medical Center to build new acute-care hospitals in Issaquah, claiming that there are enough beds within a 12-mile radius to serve the area for the next decade. The hospitals are fighting back by requesting reconsideration of their applications.
The governmental restrictions have not been as strict on physician-owned facilities and as a result, physician groups have been building their own outpatient clinics or buying them from hospitals, and building facilities in conjunction with health systems. In 2005 alone, Providence, Franciscan, Harrison and Highline hospitals opened new facilities in conjunction with physician groups.
This window of opportunity for free-market competition has not escaped the notice of the Legislature, and in 2005 it passed bills to re-examine the CON process and to establish a moratorium on specialty hospitals through July 1, 2006.
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