New UCSD Hospital Plans Give Rival Facilities a Chill

As a new hospital for the UC San Diego campus nears approval, other area hospitals are reacting with a combination of curiosity and concern.

Curiosity over how a new hospital will alter a medical landscape where financial and marketing creativity have taken over as the main method for keeping institutions afloat.

Concern because the hospital could siphon off the most profitable patients from existing San Diego hospitals, at a time when hospitals see no relief from millions of dollars in financial losses that are piling up from caring for poor patients.

That concern is most pronounced just north of the planned UCSD hospital site, at Scripps Memorial Hospitals’ flagship La Jolla facility.

‘Potential Competitor’

“We’re taking serious cognizance of it as a potential competitor,” Scripps President Ames Early said of UCSD’s proposed new hospital. “We believe that it would offer strong competition to us, and we certainly have great respect for the potential that that hospital embodies.”

Early’s careful words stand out like a shout of “Fire!” in an environment where “no comment” is often hospital officials’ preferred tack when the issue is competition.

The cause of all the fuss is a longstanding UCSD dream of building a 120-bed hospital on the northeastern portion of its campus, east of Interstate 5 and south of Miramar Road. the University of California Board of Regents will be asked at a meeting July 14-15 in Los Angeles to give final approval to build the $68-million hospital. It would be completed in 1991.

UCSD officials have held a series of meetings with regents board officials over the last month that have set the stage for the vote, including a meeting June 16 between regents and officials of all five UC system hospitals, at which it was agreed that the hospitals must attract more private patients if they are to survive.

Attracting paying patients--the same ones Scripps is targeting--is a key reason UCSD cites in lobbying for the new Satellite Medical Facility.

Changing Mix of Patients

“For the whole system to be successful we need to have the hospital work in the black, or at least not in the red, and we can’t do that without changing the mix of the patients,” said Gerard N. Burrow, dean of the medical school.

As planned, the facility would take 120 beds now licensed for UCSD Medical Center in Hillcrest and transfer them to La Jolla, where they would be more likely to be filled by patients covered by private insurance or Medicare.

Those sources pay higher percentages of the costs billed to them than do government programs for the poor, such as Medi-Cal, which cover about half of the Hillcrest hospital’s patients.

Planners contend the transfer of beds would not decrease the number of beds available to the poor and indigent at the Hillcrest hospital. Instead, they contend, it would assure the Hillcrest hospital’s future by subsidizing it with revenues from the satellite facility.

“It’s not two hospitals in a single system. It’s a single hospital in two sites,” Burrow said.

But Burrow also emphasizes academic reasons for a campus hospital.

“I think it’s absolutely vital to the academic future of this medical school,” he said. “The perception on the outside is that for the school to be successful it has to have a general hospital on the campus.”

The hospital would provide opportunities for basic researchers in areas such as neurosciences and gene therapy to work with clinicians, he said. It would also allow doctors with medical offices on campus to easily follow their patients from office to hospital.

In addition, over the next several years, many faculty members hired when the school began in the 1960s will be retiring, Burrow noted. To attract good replacements, including the current search for a Department of Medicine chairman, the school needs to have adequate facilities, he said.

Making It the Best Job

“The word on the academic grapevine is that, with a clinical facility on campus, this is one of the best jobs in the United States. Without the clinical facility, it’s a good job,” Burrow said. “And the problem is that both Yale and Stanford had chairs of medicine, and they were considered to be good jobs, and it still took a very long time to fill them.”

The Stanford University vacancy took more than three years to fill and the Yale vacancy took 21 months, officials there said. UCSD’s post has been vacant for two years.

The new hospital also could raise the university’s hospital from virtual last place in the San Diego hospital marketing game to a contender--a development that Scripps Memorial officials hope at least to temper.

“We have had some general informal meetings with medical school and hospital officials,” said Early, the Scripps president. “They’ve been very positive meetings, and we believe that they provide the groundwork to establish communication channels between the two organizations.”

He expressed hope that the two institutions might be able to find a way to cooperate--for instance, by university physicians in La Jolla referring patients to Scripps for high-technology procedures they otherwise would have to go to Hillcrest to get. Whether UCSD would be willing to give up that revenue, however, is questionable.

On the other hand, Early acknowledged, “we think that probably we will be competitors on specific services.”

Not only will UCSD be going after the more affluent patients in north San Diego and North County, but it also will emphasize services needed by baby boomers as they age, such as cardiology. This is the same patient population that Scripps has identified as the source of its growth in the 1990s, Early said.

Growth Considered Crucial

That growth is crucial as Scripps grapples with the recent leveling off of its patient load--it is using only 83% of its licensed beds--and continuing losses from the hospital’s designation as a trauma center for the county. The hospital lost $635,000 on trauma cases last year and expects the figure to rise this year.

Furthermore, a push by Scripps Clinic and Research Foundation to cement a niche as a center for complicated cardiac operations can be expected to put further pressure on Scripps Memorial.

As part of its strategy to assure its future, the chain hopes to complete a 114-bed hospital in Carlsbad by 1991, the same year the UCSD hospital would open.

“We really are confident in our ability to compete in a strongly competitive market,” Early said. “We recognize that there will be strong competitors, (the) university certainly one of them, but we’re confident in our ability to play in that area. We have been for years.”

Scripps Clinic and the major hospital in the western part of North County, Tri-City Medical Center in Oceanside, say they don’t expect a new UCSD hospital to affect them.

But, like political scientists watching the Kremlin or baseball fans wondering how a trade might affect their favorite team, hospital marketers are watching closely.

“Actually, it may have a fairly dramatic ripple effect,” said Wayne Wilson, marketing manager for Tri-City. “If UCSD can successfully drain the high-paying, cream-of-the-crop patients from La Jolla, that’ll have a dramatic impact on the other hospitals. Sharp and Mercy may begin to take a real strong look at their competition.”

From what he regards as a relatively protected position, Wilson clearly is relishing the possible tableaux.

“It’s like camping out in their back yard,” he said.