What you need to know about the forces reshaping our industry.


April 14, 2015

City hospitals move to the suburbs: 'You move to where the money is.'

Daily Briefing

    A small but growing number of hospitals are relocating to capture the business of privately insured patients living outside of city centers, but observers worry the trend will hurt access to health care services for low-income and uninsured city residents, Phil Galewitz reports for Kaiser Health News/USA Today.

    Historically, hospitals have relocated as population patterns changed. According to Galewitz, the recent raise in relationships is partly due to the desire to leave aging facilities built in the 1950s and 1960s and to attract a better payer mix.  Paul Ginsburg, chair of medicine and public policy at the University of Southern California, says, "Where you choose to place new facilities almost always involves moving to an area where there is a substantial privately insured population."

    Currently, hospitals in Alabama, Florida, Georgia, Illinois, Tennessee, Ohio, and other states are planning or completed a relocation project. And some of those projects have been controversial, including one plan to move St. Elizabeth's Hospital in Belleville, Illinois.

    One hospital relocation project causes controversy

    St. Elizabeth's is in the process of transitioning to O'Fallon, a suburb seven miles from its current location, where the population is growing and tends to be wealthier than the downtown population. According to Galewitz, the median income in O'Fallon is $75,000, compared with $47,000 in Bellevue.

    The hospital, started by three nuns from a Franciscan order in Germany, has been a landmark in downtown Belleville since 1875 and is known for treating scores of low-income and uninsured patients. But after nearly 10 years of declining margins, including a $10.5 million loss on $148 million in revenue in 2013, St. Elizabeth's officials decided a move was necessary.

    N.C. mayor walks to Washington to protest hospital closure

    Belleville residents are fighting the hospital's plans, saying the move would effectively abandon poorer residents who might not be able to travel seven miles to receive care at the new facility. It also could cause overcrowding at Memorial Hospital, the only other hospital in downtown Belleville. Belleville Police Captain John Moody says, "The loss will be catastrophic and I fear unrecoverable."

    St. Elizabeth's CEO Maryann Reese says the hospital is not disregarding the poor, and says it will leave behind a walk-in clinic.

    'Long live fewer hospitals'? 24 rural hospitals have closed since 2013

    She explains the hospital's current infrastructure has made treating patients difficult in recent years. "It is extremely challenging to operate a hospital that was designed and built for health care in the 1950s," she says. According to officials, patient rooms are too small, the ED waiting area is cramped, and one-way roads near the facility make travel in and out of the facility difficult.

    Belleville Mayor Mark Eckert says the city offered to help the hospital rebuild in downtown Belleville, suggesting a new facility located near a college and a train station. But he says Belleville declined.

    Does location matter? Rural patients skip nearby hospitals in favor of urban facilities

    Gerard Anderson, director of the Center for Hospital Finance and Management at the Johns Hopkins Bloomberg School of Public Health, says the problem is made more complicated by St. Elizabeth's not-for-profit status. "Hospitals were established in inner cities where the greatest needs were and now, essentially, that charity obligation has gone by the wayside as they are looking at their bottom line," he says, adding, "You move to where the money is" (Galewitz, KHN/USAT, 4/11).

    The takeaway: More hospitals are relocating to appeal to a more diverse payer mix and leave aging facilities. But the cities they're leaving behind say the moves could hurt health care access for low-income residents.

    More from today's Daily Briefing
    1. Current ArticleCity hospitals move to the suburbs: 'You move to where the money is.'

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.