Demand fuels hospital expansions: nearly every health facility tackling some construction project.

Michael L. Wall, president of Northridge Hospital Medical Center, sums up the pressures of operating a hospital in today's San Fernando Valley with a simple statistic: Five hospitals closed since 1995.

It's no accident, Wall said.

"What we're seeing right now are the strong getting stronger and mission kinds of hospitals--those that serve the poor, the indigent that don't necessarily have most reimbursements--are struggling more and more," he said. "You've got two different types of classes: those in the right neighborhood with the right market and the right mix and do well and those mission-driven hospitals that are struggling."

Such daunting concerns are among the hundreds of challenges facing Valley hospitals, which employs more than 80,000 people, according to the 2006-2007 San Fernando Valley Economic Report.

Among the most pressing issues is the state legislation requiring medical institutions to meet certain seismic standards before 2008. The law, passed in the wake of the 1994 Northridge earthquake, has hospitals scrambling to retrofit existing facilities or build wholly new structures from the ground up.

Budgets, however, have skyrocketed and hospital officials report there are few contractors or engineers versed in the complex process of building a heavily regulated hospital building.

Another state regulation still affecting hospitals is the one signed in 1999 by then-Gov. Gray Davis setting minimum staffing levels in hospitals. The rule, which didn't go into effect until 2004, requires a certain number of nurses per patient in California hospitals.

Nursing shortage

While heralded by patient groups, the regulation has triggered a pervasive shortage of nurses in the state, and especially in Southern California. To keep staffing at the level required by the state, hospitals have resorted to offering new nurses signing bonuses, sponsoring visas for foreign nurses, contributing funds to college nursing programs and paying thousands of dollars for traveling nurses

Another major issue is how to care for those without health insurance, said Cathy Casas. director of hospital operations for Kaiser Permanente, which has hospitals in Woodland Hills and Panorama City.

"Within the valleys, we continue to grapple with the issue of access to healthcare for the underinsured (and) uninsured population," she said. "The system is really challenged with meeting the needs of the uninsured."

Challenging because Medi-Care and Medi-Cal reimbursements continue to dwindle, leaving hospitals to foot the bill--and pass fees onto customers.

"The fact is, the government, particularly Medi-Cal, does not pay at full cost of caring. So hospitals are forced to cost shift," said Albert L. Greene, president and CEO of Valley Presbyterian Hospital in Van Nuys.

"It's all about location. If it's a well-insured community, you're going to do well versus if it's not a well-insured community and you're dealing with government pay," Greene said.

Hospitals are also facing escalating competition from outpatient clinics, locations operated by doctors that offer simple medical procedures, such as cardiac checkups or colonoscopies.

Because clinics are often geared toward a designated set of procedures that don't require overnight stays, overhead can be kept low. Patients like that they can determine where and when they have a procedure, which often happens much faster than a traditional hospital.

The result is that outpatient clinics are drawing patients away from hospitals in droves, further damaging the bottom line.

Deficit spending 

The amount Valley hospitals spend continues to outstrip how much they earn. The collective operating loss in 2005 was a daunting $35 million, according to the most recent Valley Economic Report.

"Southern California is a tough healthcare market. It's a tough financial healthcare market," said Scott Reiner, president and CEO of Glendale Adventist Medical Center.

All of this is happening as the bulk of the baby boom populace nears the beginning of their twilight years. The state's senior citizen population--around 4 million today--is expected to double by 2020, according to the California Assembly Committee on Aging and Long-term Care.

With that many sophisticated issues afflicting a single industry, it begs the question: is the time-honored hospital model a dinosaur?

Greene of Valley Presbyterian said the current model has to evolve to meet new standards.

Thirty years from now, "I think we're going to find ourselves in a much more integrated role," he said. "If we're going to deal with cost containment, if we're going to deal with quality issues, all of these have to be aligned and the only way you're going to do that is through some form of integrated system."

BY CHRIS COATES 

Staff Reporter

Henry Mayo Newhall Memorial Hospital

Upside

Independent, community-led hospital; recently completed $14.1 million ER project; plans to add new lobby and link buildings; began 25-year campus master plan; added new cath lab and services for older adults.

Downside

Eliminated helipad in March; campus expansion and elimination of transitional care unit met with fierce community opposition; as the only acute care facility in the Santa Clarita Valley, hospital is seen as having the healthcare market largely monopolized.

West Hills Hospital and Medical Center

Upside

Workers with SEIU United Healthcare Workers West recently agreed to contract through 2009; broke ground on 47,000-square-foot addition in May.

Downside

During labor dispute this summer, workers criticized what they said were unsafe staffing levels.

Encino-Tarzana Regional Medical Center

Upside

Major contributor to Pierce College nursing program; recognized diabetes care center and San Fernando Valley Heart Institute.

Downside

Hospital operations divided between two facilities in Encino and Tarzana; been on the selling block for years; worries about new owner and fate of workers.

Glendale Adventist Medical Center

Upside

Constructing a new patient care tower; increasing the number of rooms; close to area freeways; strong outpatient services and medical education residency programs; one of the oldest healthcare institutions in the region, established in 1905.

Downside

Limited patient parking; dated facility.

Providence St. Joseph Medical Center 

Upside

In the middle of an extensive upgrade of its campus, including the construction of a new cancer center; added new 200,000-square-foot, 128-room patient care tower early last year; largest hospital in San Fernando Valley region at 427 beds.

Downside

Had second-highest occupancy rate in 2005 at 90 percent; average daily census increased from 289 in 2004 to 302 last year.

Providence Holy Cross Medical Center 

Upside

Ranked in top 5 percent in nation among best hospitals by Health-Grades; recently expanded its ER; recently added new satellite center in Valencia.

Downside

Forced to handle large numbers of patients from Santa Clarita Valley; had 93 percent occupancy rate in 2005, the highest among 20 hospitals in the San Fernando Valley region.

Kaiser Permanents Woodland Hills

Kaiser Permanents Panorama City

Upside

Part of the largest healthcare network in the region, with 11 legal facilities and 461 system wide; in the middle of renovation and seismic construction projects on both campuses; large array of specialty doctors.

Downside

Operations are spread among various facilities; subject to overcrowding.

Valley Presbyterian Hospital

Upside

Recently added now patient tower with 100 beds and high-tech bedside features; 2005 occupancy rate was 44 percent, the lowest among the 15 largest hospitals In the Valley region.

Downside

Despite upgrades has one of the oldest campuses In the Valley; has been forged to absorb patients from Northridge Hospital's Sherman Way campus tinge It wan shuttered in 2004.