Just being bigger isn’t good enough anymore as hospital sector adjusts
As the winds of uncertainty continue to blow through the nation’s health care industry, the hospital sector in Houston appears to have mostly weathered the storms.
That is not to say that the city’s massive medical infrastructure has been completely immune, with headline-grabbing layoffs hitting some of Houston’s marquee institutions, as well as consolidations, acquisitions and an overall rethinking of health delivery mechanism.
Still, the overall outlook remains bullish.
“Houston’s health care industry remains strong and continues to be a major driver of development and employment,” according to a 2016 year-end research and forecast report by Colliers International, a commercial real estate firm.
Consider the new construction that continues to roar ahead both in the city’s Texas Medical Center and across the far-flung suburbs — bucking the trend in most of the rest of the nation where hospital construction is mostly flat.
Memorial Hermann Health System, the region’s largest health care system with more than 26,000 employees and more than 4,000 beds across the network, has multiple projects underway and recently announced a joint venture with Emerus Holdings, bringing two facilities in Tomball and Sugar Land into the fold.
Similarly, Houston Methodist, which employs more than 21,000 across its system, will be opening a 67-bed facility in The Woodlands this summer. Texas Children’s Hospital and the University of Texas Medical Branch also have major expansions on the horizon.
Meanwhile, another health care player in the region, HCA Gulf Coast Division, has announced the acquisition of Cypress Fairbanks Medical Center, Northwest Medical Center, Park Plaza Hospital and Tomball Regional Medical Center.
But amid the flurry of growth and deal signing, there have been shakeups.
Both the University of Texas MD Anderson Cancer Center and Catholic Health Initiatives’ Texas division, the parent company of CHI St. Luke’s Health, recently shed more than a 1,000 jobs each as the institutions pulled back to become more efficient and rein in spending.
“We grew very quickly,” Michael Covert, CEO of CHI St. Luke’s Health, acknowledged.
While the emphasis will continue toward becoming a regional powerhouse, he said the steps to getting there must make financial sense. For example, the health system just closed two of the five free-standing
emergency centers it acquired last year.
Covert said Houston remains “hospitalcentric,” but he also thinks the future is in smaller regional centers. He calls the pace of change “palpable” as administrators must be nimble enough to react to the shifting politics of health care.
Beth Young, senior vice president at Colliers, senses a similar future.
“Health systems have often reminded me of PacMan — always absorbing another hospital or system to be the biggest, which was considered better. But now bigger isn’t good enough. Now systems have to deal with outside forces that are beyond their control, while making sure they are more coordinated and costeffective.”