Another hospital in Utah County would drive occupancy rates down and health-care costs up, Utah Valley Regional Medical Center (UVRMC) officials say.
"It's pretty clear that there is not a demonstrated need for building additional beds in Utah County," said Larry Dursteler, hospital administrator.HealthTrust Inc., a national for-profit corporation that owns Payson's Mountain View Hospital, is considering building a new hospital in Provo. The company has circulated prospectuses and letters inviting area doctors to buy limited partnerships for $500.
The average occupancy rate at the 388-bed Utah Valley center was 66.4 percent in 1990. Orem Community Hospital and American Fork Hospital had occupancy rates of 39.7 percent and 39 percent, respectively. All three hospitals are owned by Intermountain Health Care Inc. Mountain View, which has 118 beds, is typically half full.
Dursteler said a new hospital would have a low occupancy rate and cause UVRMC's rate to decline. "That eliminates the economy of scale that exists with current facilities," he said. Health-care costs would increase because of that imbalance, Dursteler said.
Steve Walston, Mountain View chief administrator, disagrees.
Competition tends to moderate charges and makes hospitals do a better job caring for patients, he said.
Dursteler and Rod Lisonbee, UVRMC chief financial officer, also questioned the profit margins cited in the prospectus of the tentatively named Mountain View Hospital North.
Profit estimates for the proposed hospital range from 22 percent to 35.6 percent in its first three years of operation.
Lisonbee said UVRMC has a 2 percent profit margin. He said he doesn't see any way for a hospital to make that much money.
Dursteler also wondered how the proposed hospital could make 10 times UVRMC's profit while charging less than the Provo hospital. Walston said the new hospital would charge about the same as Mountain View. He said studies show Mountain View charges about 13 percent to 16 percent less than UVRMC.
"It's a free country. The profit motive is part of the American way. They certainly can't be faulted for doing what they think is appropriate," Dursteler said.
Another hospital in Provo would "very easily" be viable, Walston said.
Building a new hospital is an expensive undertaking. It would cost about $22 million to $24 million, he said. But HealthTrust, based in Nashville, Tenn., is "seriously considering" the plan, he said. Walston said he doesn't know when company officials will make a decision.