Health care ‘arms race’ under way on North Shore
Unprecedented competition among three major hospitals is brewing on the North Shore, as they spend a combined $200 million-plus on state-of-the-art outpatient facilities within just a few miles of each other.
None of the North Shore projects — which will all be online by next summer — required the state’s Determination of Need approval process.
But the surge raised a red flag, prompting legislators this year to pass a law reasserting state oversight for hospital capital spending on outpatient construction projects worth $25 million or more.
“The Department of Public Health, if they could turn back the clock three or four years, probably would not have allowed the kind of expansion going on,” said Robert Fanning, former CEO of NHS, the Beverly-based hospital group whose new outpatient facility will compete with Lahey and Partners. “It may be good for health care in the North Shore (in the short term) but it is going to end up being very expensive at the end of the day.”
Paul Dreyer, director of the Department of Public Health’s Bureau of Safety and Quality, which handles the oversight process, said he’s aware of the North Shore situation and has heard arguments on both sides.
“How those play out will depend on the facts,” he said.
Partners is building the $140 million Massachusetts General/North Shore Center for Outpatient Care in Danvers on Endicott Street. Set to open next summer, the 122,00-square-foot center, working with Partners’ North Shore Medical Center in Salem and Lynn, will house both expanded general outpatient services and a bigger cancer center. An adjoining 80,000-square-foot medical office building is also part of the plan.
NSMC President Robert Norton said the construction is necessary because the biggest growth in hospital care is on the outpatient side. Norton also insists he sees plenty of room for everyone.
“There’s been plenty of business to go around in the North Shore for many, many years and as long as I can see in the future,” he said.
The center, built in a prime location easily seen from Route 128, is just across town from Northeast Health System’s $30 million ambulatory care facility on Maple Street in Danvers.
Northeast Health System CEO Stephen Laverty would not comment.
The Danvers center will give Partners easy access to patients who might have avoided trips along often clogged roads around the system’s Salem and Lynn operations.
Lahey Clinic is well under way with a $50 million expansion at its North Shore hospital, in an old bank building at Northshore Mall. Easily seen from Route 128, the project will add another 65,000 square feet, to be ready by next May. Lahey senior vice president Robert Schneider acknowledges competitive risks. But he said Lahey’s main focus is accommodating existing demand.
Whatever the reason, rapid health care construction ultimately risks driving up costs, said Jarrett Barrios, who runs the Blue Cross Blue Shield of Massachusetts Foundation.
“Unchecked expansion of health care services results in an increased number of unnecessary procedures, particularly in the specialty fields,” he said.
That is a worry echoed by Fanning.
“If more technology will be used more (often),” Fanning said, “the end result for the business community on the North Shore is increased health care premiums.”
Mark Hollmer can be reached at mhollmer@bizjournals.com.