Editorial: The hospital arms race

Aurora should justify economically its decision to build another hospital in an area that is already adequately served by other health care systems.

Milwaukee Journal Sentinel, August 2, 2007

Officials of Aurora Health Care say that their decision to build a new hospital in Grafton and to purchase Advanced Healthcare, the state's largest physician group, dovetails with their goal of improving health care in this area and reining in rising costs by increasing competition.

But building another hospital, particularly in an affluent suburban area that is clearly not underserved, is not going to control costs. On the contrary, most health care economists would contend, the new hospital will drive up costs even more, in part because this area already has enough beds.

We believe they're right.

The decision to build another hospital comes only a year after Aurora was given approval to build a $189 million hospital in western Waukesha County, another growing, affluent area that is adequately served by two existing hospitals.

Competition in health care does not by itself reduce costs, especially when there is excess capacity. Someone must pay for the cost of two new hospitals, equipping them with the latest technology and staffing them - and it's going to be consumers, employers and others already burdened by the area's higher-than-average health care costs.

Aurora officials say the move to acquire Advanced Healthcare and build the Grafton hospital will lessen the geographic concentration of health care systems in this area, which was cited in a 2006 study as contributing in part to high health care costs here. Aurora officials say the moves also will allow them to provide more integrated care between doctors and hospitals.

But Aurora isn't the only health care system focusing on integrated care. So is Columbia St. Mary's, an Aurora competitor, which has a relatively new hospital in Mequon that is undergoing expansion only several miles from where Aurora wants to build the Grafton hospital, further stretching health care resources and available dollars.

Entering a growing, lucrative market appears to be a very good business decision for Aurora, but as a private, not-for-profit system, it should justify why this is beneficial for a public weary of high health costs. We don't believe it is.