Better Solutions for Healthcare

Axios: The concerns behind pricey hospital projects

The concerns behind pricey hospital projects
By Bob Herman
November 9, 2017

The UPMC health system in Pittsburgh said this week it will spend $2 billion to build three new, glitzy specialty hospitals that focus on treating specific diseases. But UPMC’s plan, and other similar hospital system investments, raises concerns about whether hospital organizations that hold a lot of financial and political power are wasting health care dollars to entrench their positions.

The catch: These kinds of projects can just be ways to maximize revenue, experts say — especially since UPMC will be investing in new treatments that are expensive, and since its new facilities don’t really match what the health care system needs.

The details: UPMC’s investment will result in a heart and transplant hospital, a cancer hospital, and a vision and rehab hospital. Those facilities will be attached to existing UPMC hospitals, and there will be no net addition of inpatient beds.

UPMC, previously known as the University of Pittsburgh Medical Center, is more than just a regional system that controls 60% of Pittsburgh’s inpatient market. It is a growing not-for-profit behemoth that has more annual revenue ($14.3 billion) than other more commonly known companies like Monsanto, Kellogg and Viacom. And with the new project, UPMC wants to invest in cutting-edge medicine that will attract as many people as possible, which will bring in more revenue.

“This isn’t just meant for local care, but also national and global care,” said Steven Shapiro, UPMC’s chief medical and scientific officer. The system also will advertise the specialty hospitals, but a marketing budget hasn’t been set. “We will want people to know what a special thing this is,” Shapiro added.

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