“More than 90 million Americans live with at least one chronic illness, and seven out of ten Americans die from chronic disease. — For patients with chronic illnesses, geography matters.” 1
Over the years Dartmouth Atlas studies have focused on understanding the relationship between health care, supply and costs. The findings have honed the observations on medical services, offering insights to factors for improving medical results. Their reports often view the subject through one of three prisms, effective care, preference sensitive care and supply sensitive care. The latter being the one that raises questions about cost efficient care.
Supply sensitive concerns are where the State’s report raises an alarm to the growing cost of health care in New Jersey. It puts forward the concept that excess accessibility (capacity) of certain clinical services encourages use, thereby increasing costs. With Medicare and Charity Care costs spiraling out of control it isn’t a topic to be ignored, but excess and access aren’t both necessarily transitive verbs to cost.
That issue of accessibility is a factor that needs to be balanced with capacity in a reasonable way. The number of beds is but that, a number of beds. Whether they are licensed or maintained beds is a cost choice made by hospital managements. Excess maintained beds drive costs. Excess licensed beds offer opportunities to increase maintained beds IF a hospital is able to increase volume with competitive services.
The Valley and Englewood Hospitals along with their supporting politicians act as though people who may need service access are secondary variables in the equation. They seek to increase selective hospital volume by artificial means, reducing patient choice.
When you look at the average population within the five-mile radiuses accessible to each hospital, there are nuances that should affect each hospital’s management’s decision process. Note: the numbers below do not take into consideration the overlap competition amongst these or other area hospitals. They strictly represent the market opportunity to each hospital’s management within 5 miles.
5-Mile Radius 2009 Population* |
Holy Name Hospital |
Englewood Hospital |
Valley Hospital |
Hackensack Hospital |
For Reference: State’s Report: 2006 NJ Demographics |
Total Population |
441,228 |
317,737 |
271,696 |
558,041 |
8,683,143 |
Black Population |
7.5% |
9.3% |
4.8% |
8.5% |
13% |
Hispanic Population |
22.0% |
19.8% |
12.4% |
27.7% |
17% |
Asian Population |
17.2% |
19.4% |
9.7% |
13.0% |
Included in Other |
Other Population |
2.8% |
2.8% |
2.7% |
3.0% |
9% |
White Population |
50.5% |
48.7% |
70.3% |
47.8% |
62% |
Total Population |
100.0% |
100.0% |
100.0% |
100.0% |
101% |
Under 18 |
20.9% |
21.5% |
23.6% |
22.1% |
26% |
Age 65+ |
15.5% |
15.3% |
15.8% |
14.5% |
13% |
Total** Households |
169,357 |
119,680 |
94,245 |
202,779 |
- |
Households without Automobiles |
9.8% |
9.1% |
5.2% |
12.0% |
- |
Households without Insurance |
16.9% |
15.0% |
10.2% |
18.3% |
Highest % in Orange, and Lowest % in Green |
| Sources: *Applied Geographic Solutions/July 2009 & **Simmons Profiles (Consumer Behavior Database – Current Year Only) | |||||
Compare the projected percentages for households without insurance. Valley has only 10.2%. Consider then the other characteristics of the population. These factors do not support a denial for the use of an already approved—extended—certificate of need. Certainly not within any current argument outline offered by Valley, or Englewood.
Hospitals are naturally going to seek prospects to expand their revenue opportunities. Offering a variety of services and filling beds is a scenario the hospitality industry faces daily. Competition keeps them balanced and competitively priced. The third party payer system is the money variable in the equation that differentiates hospital revenue streams from the hospitality industry.
The 2008 Dartmouth Atlas report notes that there needs to be more attention on “supporting policy development and demonstration programs that include a focus on fostering accountable care organizations and shared savings models.” 1 One would assume such responsibility would include greater accountability for hospital managements and the politicians that support them to consider the people’s actual needs.
Hackensack University Medical Center (HUMC) is suggesting a shared savings model. It offers a similar opportunity one would suspect St. Joseph’s Healthcare System enjoys with its subsidiaries; and if management had been more imaginative and efficient at Solaris Health System with their JFK Hospital, it’s a model that could have worked at Muhlenberg Hospital. Just consider the synergy potential in purchasing, quality control, negotiating clout with insurance companies, etc., if managed effectively.
HUMC’s proposal reestablishes a smaller hospital in Westwood. It enables support for emerging trauma situations. It would compliment HUMC’s as a feeder resource to it own extensive central services, helping offset the many challenges the future will hold. It costs the taxpayer nothing. It generates tax revenue for local, County and State, in a time when new tax resources are needed; and it offers accessibility to the at risk patients in the Pascack and Northern Valleys.
1. Tracking the Care of Patients with Severe Chronic Illness-The Dartmouth Atlas of Health Care 2008
Uh-oh, Senator Weinberg is going to jump all over this. More blacks around Englewood then Valley. Looks like we don’t need our hospital.
Comment by Dirk — October 13, 2009 @ 9:38 AM
Its no wonder Valley’s doing so good. Lots of wealthy insured people.
Comment by Anonymous — October 13, 2009 @ 9:53 AM
Interesting demographics. Valley has an affluent patient base. HUMC has the most challenging but also the largest base potential. Volume is a great compensator. Holy Name looks like it has what appears may be an average BC population. Englewood looks to have one principal problem, where it needs customer count it has water. There really is no good reasoning to keep PVH closed. The responsible move would be to have Englewood adjust their bed capacity to the realities of their location. Like you said, geography matters, not just for patients but in business too.
Comment by Hedgevestor — October 13, 2009 @ 11:25 AM
“The responsible move would be to have Englewood adjust their bed capacity to the realities of their location”.
Wow! A “rational” solution that would enhance the public interest of an under-served population here in the northeast corner. Ewe Reinhardt would be proud of you! (no pun).
Comment by Ray — October 14, 2009 @ 9:43 AM
Interesting is the market definition by a 5 mile radius and the population coverage. The hospitals have a large canvass on which to paint their business model. It certainly hints that if Englewood is struggling it has a hole in its market plan.
Many franchises will set their market parameter by a diameter around an origin. They know how big a population is needed to support a unit and how far a customer may be willing to travel for their product. The better the product, the larger the diameter.
The business environment respects that if competition exists then a product has to distinguish itself if it’s going to survive. It’s either that or adjust an operation to the market to generate a sustainable profit. From looking at one of your earlier posts, Englewood’s profit has been inconsistent suggesting they’re sluggish in responding to changes.
How’s public transportation around Englewood? Population numbers also reflect on the mobility of a customer base. Looking at the percentage comparisons, the mobility is more closely aligned to the Hispanic population then any other. It would be interesting to have numbers from the hospitals to see the cultural characteristics of customers in their ERs.
It’s foolhardy thinking that by eliminating the opportunity of the access to a portion of a population you strengthen a health system. Under that thinking then St. Mary’s in Passaic should be allowed to fail. That’s assumes of course all people in NJ are treated equally.
Public service needed products require competition balanced with regulation. It’s the only way to assure a management continually improves its product and value. It’s the reason governments are so poor at managing costs, no competition to inspire innovation.
Comment by Business101 — October 14, 2009 @ 12:30 PM
How do you read the senior percentages in your thinking?
Comment by C. Harper — October 14, 2009 @ 8:51 PM
I noticed this blog has a lot of info available if its followed. On a Dec. 22 post there is a NJ report available that talks about the senior population. It seems to note that Bergen had the highest 60+ population. It looks like the 65+ has only grown so it’s a demographic that implies increasing demand.
Comment by Business101 — October 19, 2009 @ 1:32 PM
Why do these numbers mean anything. Are the people who need help just a number, a statistic? Each person is a somebody.
Comment by Lucy J — October 13, 2009 @ 12:32 PM
Apathy? The inability of the current Westwood council people and the mayor glow with it when it comes to this hospital. What leadership have they shown after two years. The license was supposedly held open to reopen a hospital. Has anybody used that extension as a reason to take an aggressive stance? Here we are playing politics. Senator Weinberg runs for lieutenant governor and says our health concerns don’t matter. If this hospital comes back it won’t be because any politicians around here did squat!!!!!
Comment by Don — October 16, 2009 @ 11:05 AM
We in Westwood like our routines. Grefrath is a 14 year council veteran. Phayre is a popular local DJ. I don’t think they’ve accomplished anything but they’re nice and nice matters. The mayor’s nice too.
Comment by Sharon57 — October 18, 2009 @ 4:38 PM
Nice would be having our hospital back. Anything else is politics.
Comment by Rafferdy — October 18, 2009 @ 9:59 PM
Do you like your taxes to go up 20 % every so often because the spending has been hidden from you?
The Governor seems nice too. And we have the highest taxes in the country.
Comment by Lite Bulb — October 19, 2009 @ 2:11 PM
I read local letters to editor and they all say same thing about grefrath and phayre, they nice. So what? Bernard madoff was probably nice too. How come no one writes about what they done? I read a letter to editors ask same question and no one answer. So what they do for this hospital reopen?
Comment by Samim — October 19, 2009 @ 4:54 PM
Did some one say this Peter and William aren’t nice! Who cares! This hospital matter is about results! Two years and we’re still in limbo! Nice and idle promises(?) appear to have gotten the property owner big developer rights. What has nice got us? I want results on a hospital!
Comment by Tabitha S. — October 19, 2009 @ 7:05 PM
What is HUMC and Legacy doing during this interim while we wait for the election to be over. Weren’t they suppose to be preparing something to bring the hospital home? What happens when that extension expires? Is it extended until there’s another hearing or something? They’re not really waiting on the election are they?
Comment by Millicent — October 18, 2009 @ 10:55 PM
Who’s Peter and William?
Comment by Gibbs — October 19, 2009 @ 11:33 PM