Hospital Foresight from Crains Chicago Business

NOTE: This article appeared in Crain's Chicago Business in late September of 2006, and as I reread it last night and thought it might be an excellent post with some good background. Again, recall this was before the Round Lake/Advocate announcement.

Hospitals racing for edge in Lake

Rival systems map plans for growing western area

Lake County has emerged as the latest battleground for health systems vying to build a hospital in the suburbs.

Advocate Health Care executives have met with officials from Round Lake to discuss constructing a hospital in the western Lake County community, about 14 miles west of Waukegan, according to a person close to the talks. The village expects to buy a 57-acre tract on its southwest border for nearly $6 million, which it would then annex and lease to Advocate, the source says.

About eight miles to the northeast, in Lindenhurst, Vista Health of Waukegan wants to build a 150-bed hospital with an infusion of new cash from Tennessee-based Community Health Systems Inc., a for-profit hospital operator that acquired Vista Health in July for $103 million. Vista, which runs two Waukegan hospitals, already owns land in Lindenhurst. Officials expect to submit plans to the state this year for a new hospital.

A spokeswoman for Oak Brook-based Advocate won't confirm the Round Lake discussions, but says, "We're always evaluating opportunities (in Lake County) because it is an area of high-growth potential and there is a need there."

EXPANDING, AFFLUENT AREAS

Meanwhile, Condell Health Network in Libertyville got state approval in July for a $104-million expansion that will add 90 beds to its medical center, giving it a total of 214. It's also expanding its emergency department to become Lake County's only Level One trauma center, which will enable it to accept the most severely injured patients.

The health systems are competing to accommodate the region's growth. Lake County's population surged 36% from 1990 through last year, to more than 700,000 residents. And the target communities are more affluent than other parts of the county: The median household incomes for Round Lake and Lindenhurst in 2000 were $58,051 and $74,841 respectively, vs. $42,335 for Waukegan.

But it's uncertain whether the Illinois Health Facilities Planning Board would okay two new hospitals in such close proximity. Major investments in medical facilities must get approval from the board, which is charged with controlling health care costs by preventing overlapping services.

In the last 30 years, the board has approved just one new hospital in a location where one did not already exist: a 138-bed facility in southwest suburban Bolingbrook, now being built by Hinsdale's Adventist Midwest Health. In June, the board denied a proposal by Edward Hospital for a new facility eight miles from the Bolingbrook location, citing the proximity.

WATCHING FOR OVERLAP

"If one project is approved, the board would have to assess the need for a second project and determine if there would be any unnecessary duplication of services," says Mark Silberman, a Chicago health care attorney and former Planning Board general counsel.

Representatives for both Vista and Condell decline to comment on Advocate's interest, saying the Planning Board ultimately would determine the need for more hospital services in the area.

Lindenhurst Mayor Jim Betustak knows a nearby Advocate project would represent direct competition for Vista's plans, which he has backed for years. But he believes Vista has the inside track.

"They own the land and they're sitting there ready to go," he says. "A bird in the hand is worth two in the bush, if you ask me."