A nationwide building boom among children’s hospitals is dramatically changing the pediatric landscape
Children’s hospitals are growing up—fast. Once confined to modest community buildings or attached to adult hospitals, the nation’s more than 250 pediatric hospitals are expanding their reach, both in terms of breadth and depth. They’ve opened new facilities, launched specialized research institutes and spun off satellite locations, including free-standing emergency departments and full-service minihospitals.
Growing pains are inevitable.
Hospital administrators must balance community needs with a desire to raise their institution’s research profile to garner national attention and recruit scarce subspecialists. They have to wrestle with budget and space limitations even as they vie with other pediatric facilities to see who can open the largest and most family-friendly patient rooms. And they must position themselves to compete with, and protect against, the adult hospitals for certain pediatric services.
How much growth are we talking about? Children’s hospitals trail only heart hospitals in specialty facility construction projects, according to a February 2007 survey conducted by H&HN’s sister publication, Health Facilities Management. A 2003 survey by the National Association of Children’s Hospitals and Related Institutions found that at least 41 hospitals had either completed an expansion or were planning to do so within the next two years. And square footage continues to stack up. FKP, one of the leading firms in pediatric hospital design, was working this summer on just shy of 5 million square feet in pediatric projects, totaling more than $1.2 billion in construction costs, notes Diane Osan, a principal at the Houston firm.
“It seems like any children’s hospital of any significance has a major project,” Osan says. “It’s not only that they are building. It’s the magnitude of the size of what they are building.” Lawrence McAndrews, executive director of NACHRI since 1992, also describes the building surge as unprecedented: “This is probably as much construction as I’ve ever seen.”
At some level, pediatric hospitals face the same issues as adult hospitals when breaking new ground: increasing patient loads; updating aging buildings; and meeting new building codes, such as for earthquakes.
Meanwhile, today’s hospitalized children are more likely to be repeat patients, requiring sophisticated support and amenities, says Dee Ellingwood, senior vice president of planning and business development at Cincinnati Children’s Hospital Medical Center. “The chronic illnesses of children are more survivable today,” he says. “That is also creating a greater ongoing demand for services to take care of those children.”
At this point, pediatric hospitals’ balance sheets appear sufficiently strong to handle ongoing construction projects, says Suzie Desai, a health care analyst at Standard & Poor’s. The hefty reliance on Medicaid and other public funding always adds an element of uncertainty, but children’s hospitals overall have “a very good operating cash flow,” Desai says. “On top of that, they are incredibly good fund-raisers.” A Standard & Poor’s analysis of 18 stand-alone children’s hospitals showed that as of mid-2006 they generally garnered higher credit ratings than acute care hospitals, although Desai cautions that S&P is more likely to rate only the highest-tier pediatric facilities.
With growth, though, pediatric administrators must resolve some key strategic decisions. “They can’t be all to things to everybody at one campus,” FKP’s Osan says.
Relocating and Rebuilding
The Children’s Hospital of Denver left its longtime central-city facility this month and moved about eight miles east to the University of Colorado at Denver and Health Sciences Center’s campus. In the process, it left the headaches and limitations of an aging building behind, as well as its landlocked downtown location.
The new $560 million Anschutz Medical Campus, which includes a 270-bed hospital, medical office buildings and ambulatory clinics, is 73 percent larger than the old facility. The hospital incorporates amenities that are increasingly common in today’s pediatric world: surrounding green space, lighted atriums, larger private rooms, numerous family and employee lounges, facilitywide wireless capacity and a kids’ recreation area. At 270 square feet, the general inpatient rooms are large enough to accommodate two sleeping parents. Respite areas at the end of each corridor provide family members a loungelike setting, with sofas and stunning mountain views.
“Children need their families to surround them—that’s part of the healing process,” says Jerrod Milton, director of campus transition and occupancy planning. “I think if their families are comfortable, kids can sense that.”
Hospital leaders have faced some flak, though, about moving the facility out of Denver’s urban center. The move is occurring about the same time that two other downtown hospitals are relocating. The remaining downtown hospitals are bracing for an influx of spillover cases into their emergency departments.
Denver Health, which receives public funding and operates a Level 1 trauma center downtown, already handles about 22,000 pediatric emergency and acute care visits annually, says Peg Burnette, the hospital’s chief financial officer. That patient load is predicted to increase about 30 percent within the next year or so. The hospital plans to expand pediatric emergency space proportionally by 2010 and is in the process of hiring some pediatric specialists.
“We think it’s a loss,” Burnette says of Denver Children’s decision to leave downtown. “Along with picking up the additional Medicaid patients—and everyone knows that Medicaid doesn’t make you flush with cash—there will also be uninsured kids and other hospitals in the area will have to pick that up.”
To help ease the load downtown, Denver Children’s will open a 16-bed pediatric unit at Exempla Saint Joseph Hospital. It includes eight inpatient rooms, as well as observation beds and emergency services. “We realized that we needed to maintain a presence in that community,” Milton says. “We’re not abandoning anybody.”
Jim Schmerling, Denver Children’s CEO, says payer mix is not driving the move. Pointing to lower-income neighborhoods near the new facility, he says: “We expect our payer mix to be the same, if not worse.”
Bob Bonar, chief executive of Dell Children’s Medical Center of Central Texas in Austin, can sympathize. Finding a good location downtown with sufficient expansion room isn’t always feasible, he says. His 149-bed hospital, attached to Brackenridge Hospital, was strained to the limit and similarly landlocked, when officials started scouting a new site. “There are many days, especially in the wintertime, when we are in excess of 100 percent of capacity,” Bonar says. “We’re holding children in the emergency department and basically don’t have a bed for them.”
Hospital officials couldn’t find a downtown site that met their long-term growth needs and built the new facility about five miles away. The $200 million, 450,000-square-foot facility, which opened in June at three times its former square footage, contains 170 beds, but can easily grow to 350-plus. The neonatal intensive care area could be expanded out and an inpatient tower could be added with minimal disruption.
Because the facility was built from the ground up, it was able to incorporate some environmental innovations, with the goal of achieving the highest “green,” or Leadership in Energy and Environmental Design, designation issued by the U.S. Green Building Council.
Anchors & Spokes
A number of pediatric hospitals are sticking with their urban roots while also establishing vital services in fast-growing, and often profitable, suburban regions. “Hospitals are beginning to develop this satellite campus system,” Osan says.
Texas Children’s Hospital, as part of a $1.5 billion capital plan through 2010, is building a $220 million, 96-bed second hospital on Houston’s West Side, which is projected to be the city’s epicenter by 2020.
Children’s Medical Center in Dallas broke ground in 2005 on a second hospital in Plano. The 72-bed facility will open in phases and begin admitting inpatients in 2008.
One challenge with operating two hospitals is the time commitment and commuting logistics they pose for already overstretched physicians. Michele Riley-Brown, director of the West Campus, says Texas Children’s believes smart strategic planning will optimize schedules and mitigate the headaches. She points out that some physicians are accustomed to practicing at the downtown hospital and at health centers.
Other hospital leaders aren’t convinced. Cincinnati Children’s Hospital initially considered building a second smaller hospital to handle explosive growth on the city’s north side. One concern was putting physicians “on the road for long periods of time,” Ellingwood says. The other was maintaining a high caliber of care at both campuses. “To split those services, would diminish the service in one place or another,” he says. “You couldn’t make them equal.”
Instead, Cincinnati Children’s broke ground last year on a 200,000-square-foot outpatient center on the north side. When it opens next year, the $83 million facility will include a 24-hour emergency department and eight outpatient surgery beds. That should help relieve other overtaxed EDs, says Juliet Rogers, vice president of health care operations and research at Karlsberger, a design firm involved in the project. “It unloads some of the less-acute volume,” she says. “But the trauma still goes downtown.”
Administrators say the trend is for children’s hospitals to become more integrated institutions, rather than single facilities. In Denver, Schmerling describes the newly opened children’s hospital as an anchor that will serve an expanding network of satellite treatment locations. Long term, he says, “our intent is for children to have access to us within seven to 10 minutes of their home, wherever they live.”
Raising the Profile
To attract and retain scarce subspecialists, some children’s hospitals feel they have no choice but to raise their research profile. Trained at high-profile academic facilities, today’s subspecialists develop a certain expectation for resources and technology, Rogers says. Thomas Hansen, M.D., chief executive at Children’s Hospital & Regional Medical Center in Seattle, is more blunt: “I tell everyone that the best doctors will only work at the cutting-edge research institutions.”
Seattle Children’s leaders have committed to ranking in the top five pediatric research institutions nationwide. In May, they purchased a prime piece of downtown property, which, along with two recently acquired buildings, provides the hospital with a two-block swath near other high-profile institutions, like the University of Washington and Fred Hutchinson Cancer Research Center. The research campus, some of which is already occupied, will be expanded in phases and could reach 1.5 million square feet.
“Seattle is becoming very much of a bio-tech hub,” Hansen says. “We want to become part of it.” At Denver Children’s, Schmerling believes the children’s hospital’s move to the University of Colorado campus will create a similar synergy between university researchers, medical school faculty and physicians.
In the 1990s, adult hospitals began to highlight specific areas of treatment expertise by creating centers of excellence. Children’s hospitals are quickly catching up. Texas Children’s is building a $215 million neurological research institute, which officials say will be the largest of its kind, with more than 23 pediatric neurologists.
Bells and Whistles
To maintain their market position, children’s hospitals have to remain one step ahead of their adult competitors, Rogers says. Although adult acute care hospitals readily defer much of pediatric care, there remains competition for profitable niches, such as orthopedic surgery for teen athletes. Women’s hospitals have also taken advantage of an opening, adding neonatal intensive care units. “Women really like the idea that if their baby needs care, it’s going to be in the same place they will be,” Rogers says.
To cement their child-friendly position, pediatric hospital expansions typically include a long list of amenities: family lounges, coffee bars, business centers for parents and teen recreation rooms, to name a few. Dell Children’s new facility encompasses seven courtyards, each featuring landscaping of the various regions of Texas.
Meanwhile, patient rooms grow in size, with some prototypes—like those at the University of Minnesota Children’s Hospital–Fairview—approaching 400 square feet. Some hospitals are building private neonatal intensive care rooms, reducing noise and light exposure for infants. Blank Children’s Hospital in Des Moines, Iowa, one of the first to go to private rooms six years ago, offers 200-square-foot rooms with a refrigerator and a couch that pulls into a bed. Families “feel like it’s more like their own home,” says Bob Van Zuuk, R.N., NICU nurse manager.
Dell Children’s found that good environmental practices can make a building more pleasant for those inside. To reduce electricity bills, there’s a hefty reliance on natural light, including numerous windows and interior courtyards. Except in the surgical area, you can’t walk more than 32 feet without passing a window, says Alan Bell, director of design and construction at Seton Family of Hospitals, which includes Dell.
The LEED-related investments, expected to be recouped within about six years, have already paid off in a number of ways, says Bonar. A healthy building attracts more philanthropy in search of a green investment. It also attracts clinicians who want to work in a healthy building.
The trickle-down economics will reverberate for years in energy savings—and far more, Bell says. “This is a building that’s going to be built one time for a long time,” he says of Dell Children’s new facility. “The idea was that if we’re doing this once, let’s make it the healthiest place for you to send your kid.”—Charlotte Huff is a freelance writer in Fort Worth, Texas.
This article first appeared in the October 2007 issue of H&HN magazine.