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The Battle for the Kids

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With two children's hospitals already in place, the Orlando pediatric market is about to get even more crowded. Will there be enough patients to go around?

In the not-too-distant future--probably within the next three years--The Nemours Foundation will open the doors on a new 95-bed, $258 million pediatric multispecialty hospital in the Lake Nona section of Orlando. When that happens, Orlando will easily be the smallest metropolitan area in the nation to be served by three or more dedicated children's hospitals. But not everyone is happy about it.

The city is already home to the 155-bed Florida Children's Hospital, which is in the midst of adding another 80 pediatric beds. There's also the 443-bed Arnold Palmer Medical Center, which has 158 dedicated pediatric beds and is one of seven hospitals in Orlando Regional Healthcare--a system that also includes the 273-bed Winnie Palmer Hospital for Women & Babies, with its 112-bed neonatal intensive care unit, the fourth-largest NICU in the nation. Florida Children's, part of the eight-hospital Florida Hospital system, and Arnold Palmer are concerned that Nemours will cherry-pick patients, ignore the uninsured and poach staff. In fact, both hospitals have appealed Nemours' certificate of need approval with the Florida Agency for Health Care Administration.

"This could very easily create a situation where we increase healthcare costs, and that is the counterintuitive aspect of healthcare," says Richard Morrison, regional vice president of government and regulatory affairs at the Florida Hospital system. "We are talking higher labor costs, and you don't have an infinite supply of patients. You have to look at the increased demand for doctors. If the demand outstrips the supply, the price goes up."

Orlando Regional Healthcare officials echo those concerns. "We feel that we already have all the resources needed to take care of children years ahead," says ORHC spokesman Joe Brown. At the same time, Florida Children's, Arnold Palmer and Nemours are privately negotiating a settlement that they hope will allow them to avoid years of litigation and high-profile public feuding. "We think it's a better thing to do than to get into this fight and get the community up in arms," Morrison says. "People start taking sides. It's not pleasant."

Why does Nemours think it can succeed in a crowded market? Nemours officials declined repeated requests for comment on the new facility while they're negotiating the agreement with their competitors. A statement on Nemours' Web site says only that "the Central Florida community understands and wants the benefits offered by a new top-tier children's hospital and associated pediatric research, advocacy and training."

Some trend data suggests that fears about an oversaturated pediatric market in Orlando may have some merit. Victims of their own success, pediatric hospitals have seen admissions drop an average of 3 percent nationally over the past several years, according to the National Association of Children's Hospitals and Related Institutions.

"There has been a long-term effort within pediatric medicine to keep children out of the hospital," says Lawrence McAndrews, chief executive officer and president of NACHRI. "There has been the development of ambulatory surgery, the emphasis on miracle drugs and better techniques--all of these forces from a medical point of view are converging to keep patients out of the hospital, and children are affected by these same forces."

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