Not-for-Profit Hospitals Increasingly Moving From Cities to Suburbs

Not-for-profit hospitals moving from low-income areas of cities where the majority of patients are uninsured to more affluent areas, often in the suburbs, where a larger portion of patients have private coverage has become an "increasingly common strategy," the Wall Street Journal reports. According to the Journal, not-for-profit hospitals have closed "facilities from Los Angeles to Chicago to Newark, N.J., while spending billions on suburban expansions." The Journal reports that the trend has occurred as large not-for-profit hospital chains are experiencing "some of their most prosperous times ever."

The Journal profiles Ascension Health, the largest not-for-profit hospital system in the U.S., which has closed three hospitals in Detroit in the past 10 years but is opening a new $224 million hospital 30 miles away in an affluent suburb. Last year, St. John Health System closed Riverview Hospital, which had been the only hospital on Detroit's economically disadvantaged east side. The number of hospitals within Detroit city limits has declined from 42 in 1960 to four currently. Officials from St. John, Ascension's Michigan subsidiary, said Riverview lost $16 million in 2006, just prior to its closing.

In 2003, St. John officials lobbied local regulators to allow the hospital system to build a new hospital in Novi, an affluent suburb 30 miles northwest of the city, which they said would help offset the deficits incurred by its facilities in the city. However, Ascension spokesperson Trudy Barthels said that using profits from hospitals in more affluent areas to subsidize hospitals in low-income areas "would mean that needs in other communities may not be met." Robert Hoban, St. John's chief strategy officer, said uninsured city residents were using the hospital's emergency department for primary care, which is inefficient and expensive. Hoban added that Detroit's east side needs more primary care physicians instead of a hospital. However, critics of Riverview's closure note that at least one-third of the 50 physicians whose offices are on the hospital's campus either have left or reduced their office hours since the hospital closed (Martinez, Wall Street Journal, 10/14).