North County’s Hearty Pulse Attracts Hospitals : Health: The anticipated growth and the affluent population, contrasted with the many under-insured patients elsewhere, attract hospitals.

They talk like the businessmen they are: of market shares, of discretionary income, of growth projections, of service areas, of freeway exposure and of making their product as accessible as possible to their potential customers.

But they’re not planning another car dealership, shopping mall, resort hotel or housing tract. They’re talking about people getting sick or needing an appendectomy or wanting a face lift. They’re talking about San Diego-based hospitals moving to North County, to cash in on the region’s growth.

North County, long served by two major medical centers and three community hospitals, is on the brink of hospital wars. Kaiser Permanente and Scripps Memorial Hospital are planning to build new hospitals in North County; existing hospitals are expanding, and other hospitals are maintaining out-patient clinics in North County, partly so they can funnel those patients to their hospitals in San Diego.

“The hospitals are awake,” says Charles Ewell, director of the La Jolla-based The Governance Institute, which provides consulting services to hospital boards of directors around the country.

“North County is an attractive market, where you don’t have the inner-city unemployment and under-insured characteristics you find elsewhere,” Ewell said. “North County is where all the action will be.”

Janice Frates, a health care research consultant and a marketing instructor at San Diego State University, added:

“The population is booming in North County, and, for the most part, it’s an affluent population with good insurance coverage and a good ability to pay co-insurance and deductible costs, as well as purchase discretionary services” that pay for themselves and help hospitals balance their ledgers.

There is no crying need for more hospital beds in North County. Area hospitals are generally 65% to 70% filled. But the state Health Facilities and Services Plan, published by the Office of Statewide Health Planning and Development, suggests that North County, which is now served by about 1,000 general acute hospital beds, will need 331 more beds in about 10 years.

Three years ago, the state stopped requiring “certificates of need” that regulated when hospitals could add more beds or build new facilities. Now that they can build wherever they believe the marketplace will support them, San Diego-based hospitals are posturing to move to North County, because of the areas’s favorable demographics and growth projections.

* La Jolla-based Scripps Memorial Hospital, which already operates a hospital in Encinitas, is planning a new, 114-bed hospital in either Carlsbad or San Marcos.

Scripps also is completing a $17-million expansion of its hospital in Encinitas by growing from 93 beds to 158 beds and adding a comprehensive physical rehabilitation and therapy unit, among other services.

And Scripps Memorial is building an $11.3-million medical office building at El Camino Real and High Bluff Drive in North City West that will be staffed by 60 physicians. Completion is expected by next spring.

* Kaiser Permanente, which operates a 233-bed medical center in San Diego and medical clinics throughout the county--including ones in Escondido and Carlsbad--wants to build a general hospital for its members with at least 100 beds somewhere along the California 78 corridor between Escondido and Oceanside, probably in San Marcos.

* The Scripps Clinic and Research Foundation, which operates Green Hospital in La Jolla and a number of medical clinics in North County, is planning to consolidate ones in San Marcos and the Tri-City area of Oceanside-Vista-Carlsbad with a new, larger medical clinic with still more physicians, either in Carlsbad or San Marcos.

* The public Tri-City Medical Center in Oceanside, the county’s largest civilian hospital with 451 available acute-care beds and the busiest emergency room in the county with more than 50,000 cases a year, has plans to open its own urgent-care, out-patient clinic in La Costa or Encinitas, not far from Scripps Memorial Hospital in Encinitas.

Tri-City is also expanding its main Oceanside facility. The $25-million project will, among other things, add a 200-bed skilled nursing facility, a surgery center, an emergency department and a remodeled women’s center. In 1986, Tri-City added 96 beds, a physical rehabilitation unit, a chemical dependency unit and an open-heart surgery suite.

* The Palomar-Pomerado Health System, a public hospital district based in Escondido that operates North County’s only designated trauma center, is completing its own $35-million expansion of the Palomar Medical Center. The project improved parking, increased the size of the emergency room, increased the number of critical-care beds, added new high-tech equipment including a cardiac catheterization biplane X-ray unit, and increased from six to 11 the operating rooms, including an open-heart surgery suite, a spinal surgery suite and one dedicated exclusively to trauma emergencies.

The hospital district is also embarking on an eight-week, $500,000 advertising campaign to enhance the image of the district’s two hospitals so fewer district residents will bypass them in favor of hospitals in San Diego and to reposition itself in the face of increased competition.

* UC San Diego hopes to break ground next spring on its Thornton Hospital alongside its La Jolla campus, featuring 120 beds to relieve the pressure on its downtown hospital.

* Two other San Diego-based hospitals operate out-patient clinics in North County: the Sharp Rees-Stealy clinic in Rancho Bernardo and the Mercy Family Medical Group clinics in San Marcos and Poway.

With the possible exception of UCSD’s Medical Center, a teaching hospital whose expansion into La Jolla is brought on more by necessity and logistics than marketing, North County is clearly targeted by private and public hospitals and health clinics alike as the place to be at the turn of the century.

“We did a growth potential study in the Carlsbad-San Marcos area and found that, over the next 20 years, there’s going to be a real population explosion up there,” said Michael Dabney, a spokesman for Scripps Memorial Hospital. “The area certainly has--and will have--a growing number of young families with children, and there are a lot of senior citizens. We felt that, along with the high growth potential, will be the coming need for a new medical complex.”

Scripps Memorial wanted at first to build in Carlsbad and purchased a 70-acre site there, near Palomar Airport Road east of Interstate 5. But the plans are in limbo as the city and the hospital debate the conditions that would be required before construction, including who would pay for public works projects in conjunction with the hospital.

For a fall-back position, Scripps is looking at potential sites in San Marcos. “We’ve had some very fruitful discussions with San Marcos and are looking at land. We hope to make a decision by the end of the year.”

The facility will feature a $50-million to $75-million, 140,000-square-foot acute-care hospital with 114 beds and plans to to expand for a psychiatric hospital, a skilled nursing facility and other services, Dabney said.

The Scripps Clinic now has about 100 physicians based in clinics in Oceanside, Lake San Marcos, Escondido and Rancho Bernardo “but we have designs on a bigger presence than we currently have in the North County,” said Robert Erra, chief operating officer of the clinic and research foundation.

“Our facilities can accommodate the current population, but what we’re trying to react to is the growth in that population,” he said. Long-range planners are also sensitive to increasing freeway congestion and want to make the outreach clinics convenient to patients, Erra said.

If there is a tail wagging the dog in the health industry in San Diego County, it might well be Kaiser Permanente, which, through its health plan, provides exclusive medical coverage for about 340,000 residents--or about one of every seven county residents.

“We’re experiencing phenomenal growth in our membership that’s even surprising us,” said Kaiser spokesman Jim McBride. “That’s created a good kind of problem because we’re having to accelerate our expansion activities to keep up with it.”

So Kaiser is looking to build a second and third hospital in San Diego County: one in the South Bay, and one in North County, where Kaiser is looking for a 30-acre site for a 100- to 125-bed hospital in addition to outpatient medical offices. Kaiser also wants to build another clinic in North County. Dabney said the North County facility isn’t intended to recruit more members for Kaiser, but serve those North County residents who already belong to the Kaiser health plan and now must drive to Kaiser’s hospital in Mission Gorge.

Of the existing North County hospitals, the Palomar-Pomerado Health System, which operates the Palomar Medical Center in Escondido and Pomerado Hospital in Poway, is responding most strongly to the prospect of more competition and, through its new advertising campaign, is trying to promote itself in inland North County.

The district’s own figures indicate that many patients are leaving the district for care elsewhere, partly because they have moved to North County in recent years but still patronize physicians in San Diego.

Compounding Palomar-Pomerado’s handicap is that, unlike most of San Diego County’s major hospitals that enjoy freeway exposure, both Palomar Medical Center and Pomerado Hospital are several miles off the freeway and are evident only to those who happen to drive by on a surface street.

Palomar-Pomerado officials are also sensitive to the positive image enjoyed by such major players in the county as the Scripps institutions.

“Scripps is a magical name--whether you’re talking about the newspaper chain, the ranch, the hospital or the research clinic,” said Bob Edwards, chief executive officer of the hospital district. “They’re all playing on the Scripps name, even though they’re unrelated, but it’s an insidious message that says, ‘We’re Scripps, we’re good.’ ”

Scripps Memorial’s and Kaiser Permanente’s plans for North County “obviously are of concern to us,” Edwards said.

Officials at the Tri-City Hospital District, which serves Oceanside, Vista, Carlsbad and parts of Encinitas and San Marcos, are also taking note of the competition, although they have no media blitzes planned to counter it.

Wayne Wilson, marketing director for Tri-City, said the medical groups and out-patient clinics operated by San Diego-based hospitals in North County haven’t been considered a threat to Tri-City.

“They’re basically service feeders into main hospitals, but I don’t think they’ve been all that successful at pulling business out of North County,” he said. “Still, I view them as competitive.”

Spokesmen for Mercy Hospital and Medical Center, which operates out-patient clinics in Poway and San Marcos, and the San Diego Hospital Assn., parent company of Sharp Health Care and owner of the Sharp Rees-Stealy Clinic in Rancho Bernardo, acknowledge that their clinics may funnel North County patients to hospitals in San Diego. But physicians who staff the clinics, they said, also refer patients to North County hospitals.

Stephen Salisbury, senior vice president of Sharp Health Care, which owns the three Sharp hospitals in San Diego County, wouldn’t say whether Sharp also plans a hospital in North County.

“I’d rather not comment on that,” he said. But, he added:

“We are committed to providing the services that the community needs in the most affordable, accessible and convenient manner. We don’t necessarily look at that from the standpoint of what the market share opportunity may or may not be in North County. If there’s a demand for services, and we have those services available here (in San Diego), there’s no need--and it’s improper and irresponsible--to duplicate them, particularly when health services cost so much money.”

Sharp, however, has purchased an existing skilled nursing care facility in the Temecula Valley, alongside Interstate 15 in southern Riverside County, and is planning on building an acute-care hospital there, possibly within five years, Salisbury said.

That hospital could affect Fallbrook Community Hospital, where about half the patients come from the Temecula-Rancho California area, said hospital marketing director Denise Stearns.

“But the Temecula-area population continues to escalate, and we don’t expect a great deal of erosion when Sharp comes,” she said. “As a public hospital, we don’t have the resources to build our own, new facility in Temecula.”

The 50-bed Fallbrook hospital is also expanding, having recently completed a $1.2-million women’s center.

Tri-City’s Wilson said the biggest threat to his hospital is Scripps Memorial’s possible move to Carlsbad. “That would be the first time a competing facility ever got onto our turf--literally, within our hospital district. We’d view them very carefully.”

In the meantime, Tri-City is planning its own counter-offensive by establishing an urgent-care out-patient clinic in the La Costa or Encinitas area--neighborhoods that might now be more prone to go to Scripps Memorial Hospital in Encinitas.

In contrast to Palomar-Pomerado’s advertising blitz, Tri-City focuses its marketing on direct-mail to new residents to the North County coastal area and on sponsoring community events, ranging from athletics to health fairs.

“It’s extremely expensive to do image advertising,” Wilson said. “We don’t think it’s cost-effective to do a full-blown media campaign to promote our services, especially since we don’t draw that much from San Diego.”

More subtle promotion was Palomar-Pomerado’s strategy for years as well. The district tried to refashion the image of its Escondido hospital last year, when the name was changed from Palomar Memorial Hospital to Palomar Medical Center. Last month, the district changed its name from the Palomar-Pomerado Hospital District to the Palomar-Pomerado Health System--a move that is intended to more accurately reflect the various health care components offered by the district: the two general hospitals, two skilled nursing facilities, a hospice, a blood bank, home nursing care and several joint ventures with physicians, including an out-patient surgicenter in Escondido.

“We’ve matured into a modern medical center. We no longer have to apologize for who we are,” said Dr. Harold Brown, one of the hospital district’s trustees. “So we’re going to actively seek out our customers--who are our voters--as well as seek business elsewhere, outside our district. Hospitals are getting competitive, and we’re going to enter the fray in a very strong way.”

Brown said the addition of another hospital in North County is “ridiculous.” “More beds won’t improve medical care,” he says.

Others disagree.

The city of San Marcos is wooing both Kaiser and Scripps Memorial to build hospitals.

“It takes nine to 12 minutes to drive from San Marcos to Palomar Medical Center, and a little longer to get to Tri-City Medical Center in Oceanside,” noted San Marcos Mayor Lee Thibadeau. “But, with all the seniors and children in San Marcos--the people who most often need medical care--we want a hospital here.”

He said the city is assisting both Kaiser and Scripps in finding buildable sites in San Marcos and promises to “facilitate” the bureaucratic approvals necessary for construction. Thibadeau argues that his city is a logical choice for one or two new hospitals, given the freeway access and proximity to both the new state university in San Marcos and Palomar Community College, which has an honored nursing education program.

But all of North County stands to benefit by one or more new hospitals in the region, Thibadeau contends.

“In the free marketplace, if you create a greater supply of a particular service, that will reduce prices so the consumer will benefit,” Thibadeau said. “Look at what happened when all the apartments were built up here. They started offering three months’ free rent and maid service.

“With hospital fees and insurance rates what they are, the addition of another competing hospital will reduce those rates, and that will help the consumer dramatically.”

Dr. Lynn Sheffey, president of the San Diego County Medical Society and himself a physician practicing exclusively at Palomar Medical Center, isn’t so sure Thibadeau is right.

“Competition generally has beneficial aspects in that hospitals tend to listen more to what the public and (insurance) providers are saying and maybe become responsive to that,” he said.

“But, if the hospitals don’t have enough occupancy, they start scrambling for new gadgets and fancier rooms and more nurses and fancy meals and more of this and that--PR things--to attract patients. That will kick up the prices, so it gets to be a vicious circle.”