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Hospital War Centers Around Achieving Better Payer Mix

Cheryl Clark, for HealthLeaders Media, April 2, 2010

A decades-old hospital war erupted Thursday when the University of California announced plans to build a $664 million, 245-bed medical center next to its 119-bed facility in affluent La Jolla—minutes from Scripps Health's two flagship hospitals and the 236-bed VA facility.

UCSD said it plans to scale down its existing 386-bed hospital in Hillcrest, near downtown San Diego, which now serves large segments of the poor, and move Hillcrest imaging, advanced surgery, neonatal intensive care, and women's services to its new Jacobs Medical Center in La Jolla by 2016. The 50-year-old safety net hospital building near downtown must undergo seismic repairs to meet state requirements by 2030.

Scripps President and CEO Chris Van Gorder immediately blasted UCSD's plan, calling it "an ambush" that goes against reassurances UCSD gave years ago that such an ambitious expansion would not go forward or be this extensive. "We don't need [more] beds here," he says. "This is a business move for payer mix and philanthropy—not patient care."

Van Gorder, who recently became president of the American College of Healthcare Executives, adds, "UCSD said three years ago that they were going to keep Hillcrest open until 2030—they did so in their own documents.

"Not once did they ever state they were going to move core services to La Jolla by 2015—as was their original plan. [They said] the only thing they were building [in La Jolla was] their heart hospital for their 1,100 cases a year versus Scripps' 10,500 cases.

"This building of a replacement hospital before 2030 is an ambush and makes any commitment made just three years ago false," he says.

In a statement, Van Gorder said the plan "will destabilize the healthcare safety net across the region" and duplicates services already provided by Scripps. "The question our community must ask is, what kind of hospital will be left in Hillcrest once UCSD relocates these key services to La Jolla?"

With such an addition of beds in La Jolla, UCSD is trying to increase its market share, which has been 6% to 8% for the region, and tap more aggressively into a wealthier area of the three-million population county that is more likely to have commercial insurance. Officials have previously said that it must do that to stay viable, and continue to provide uncompensated care.

The new Jacobs Center will stand 10 stories and house separate "hospitals" for cancer care, women and infant services, and advanced surgery in its 490,000 square feet. Construction will start in 2012 and is made possible in part by a $75 million grant from Joan and Irwin Jacobs, Qualcomm Inc. founder and CEO. Other financing will come from financing ($350 million), philanthropy $131 million, and state bonds, reserves, and leases.

It will round out another adjacent 54-bed UCSD hospital now under construction exclusively for cardiovascular care and research, UCSD's eye center and outpatient cancer center.

Also, the expansion will facilitate translational bench-to-bedside medicine between UCSD scientists, school of medicine students, and the dozens of other research institutes nearby, including a planned building for stem cell research. The synergy is expected to bring in more federal research dollars, said UCSD.

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