Can Gilbert take two? - East Valley Tribune: Business

Can Gilbert take two?

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Posted: Sunday, September 28, 2003 2:58 am | Updated: 1:09 pm, Thu Oct 6, 2011.

Two companies proposing major hospitals across the street from each other in Gilbert say the area is in need of heath care services so badly that both projects could succeed, creating a cluster of medical facilities in the region.

Both sides suggest their projects could be complementary, a departure in a metropolitan area where cities and developers fight to be the first to land everything from sports stadiums to malls.

Banner Health and Catholic Healthcare West say their battle is not with each other. Instead, they say, the challenge will be serving one the fastestgrowing areas in the United States.

"We do see it as a race. But we see it as a race to be able to meet the needs of the community, not a race to get up before a competitor," said Scott Nordlund, Catholic Healthcare West vice president of corporate strategy and business development in Arizona and Nevada.

"As you look at the market demographics and the demand analysis that we’ve conducted, we’re probably looking at a need for an additional . . . between 600 and 900 beds over the next 10 to 12 years. Even with two competitors in the market, we’ll probably get to the point where there still isn’t enough beds to meet the demand if the growth patterns continue as they appear they’re going to. The race is to get services to a community that’s going to need them."

A Banner spokesman admits the two planned 120-bed hospitals will compete, but not to be built first.

"The demand for hospital services will catch up with the available capacity," Dan Green, vice president of communications for Banner. "The only question really is timing so if we build sufficient capacity and put beds in service to match that growth, we’re pretty confident that Banner Gilbert Medical Center will be a success.

"Clearly, because the hospitals are located close to each other, there will be competition . . . and frankly we think this competition will make us both better in terms of serving the residents of Gilbert and those surrounding areas."

The hospitals plan to be on opposite sides of Val Vista Drive just south of the future Santan Freeway stretch of Loop 202. Banner has 40 acres of Maricopa County land and Catholic Healthcare West has 100 acres of land in the town.

Banner hopes to break ground next year and open in early 2006 and Catholic Healthcare West plans to start construction next year on its Gilbert Medical Campus and be open in late 2005.

Both would have emergency rooms and specialize in delivering babies. Both are planning adjacent medical offices for general practitioners and specialists who could see patients in their offices and operate on them nearby.

The goal is to serve a region that includes Gilbert and Chandler as well as Pinal County. Currently there is only one medical center south of U.S. 60 — Catholic Healthcare West’s Chandler Regional Hospital.

According to Catholic Healthcare West, the region reached a population of nearly 1.1 million in 2002 and has a projected population of 1.75 million by 2017.

Greg Tilque, Gilbert’s economic development director, said its possible the market is big enough for both hospitals.

"We rely on their expertise and they have, to date, said they’re moving forward and the market can sustain it," he said. "It may come to . . . who gets there first. But all we know is they’re both moving forward. They’re both nice projects. There would be some nice jobs associated with those on the medical side. Those kinds of things drive the need for restaurant and retail space because they have people that need to go at lunch and shop and eat."

The dueling hospitals have created some controversy, however.

Gilbert Mayor Steve Berman said the Catholic Healthcare West project has been threatened with a referendum by eight families who are adjacent to the site, but on county land.

"They think there’s already going to be one across the street so we don’t need two," he said. Berman and the two companies met Wednesday after allegations arose that the referendum was being supported by Banner, a charge the company denies.

"We’re going to discuss the positive aspects of us all being on the same corner and how we’re all going to work together and all the cooperative things we’re going to do together," Berman said of the meeting. "We’re going to make it clear no one is behind the referendum that has anything to do with the hospital."

Berman said leaders of both projects say their nearby hospitals are overcrowded and the Gilbert sites would handle the overflow.

"When you really think about what difference does it make if they’re a mile down the road," he said. "It’s not like it’s a Circle K. . . . If you get a Subway sandwich shop across the street from the Cardinals stadium, that’s a coup. Or a McDonald’s across the street from a high school, now you’re talking ‘location, location, location,’ but a hospital, it’s a good deal to have to have them in one location. We benefit from it."

It’s fairly typical for hospitals to to be built close together, said William G. Johnson, professor of economics at Arizona State University’s School of Health Administration and Policy.

Johnson was an instructor at Syracuse University. He recalled how that college had a health care center made up of a mental health facility, a university teaching hospital, an acute care hospital, a veterans hospital and a community hospital within four blocks of each other.

"It’s not unusual for general hospitals to be located next to each other," Johnson said. "I think what’s different here is you have hospitals that are moving into areas that are rapidly expanding.

"The area they serve just increases dramatically in the number of people. It may not make much difference in where they’re located and there may be some convenience to having them close together."

Johnson said if both are built, doctors, medical offices, emergency services and lab testing could all be in one convenient place.

Banner’s Green says it’s unlikely both hospitals will spring out of the ground with 120 beds each.

The company is serving 70 percent of patients from Gilbert at its other hospitals, but that won’t result in the building staffing 120 beds immediately.

"What we’re doing is taking this facility and moving it closer to where they live and work," he said of residents. "We will match beds with demand as it evolves."

As far as competing with Catholic Healthcare West, he said Banner will focus on excellent clinical care and patient service.

Federal laws aimed at preventing monopolies prevent the hospitals from working together to plan services in the area, Green said.

Catholic Healthcare’s Nordlund said the company has been looking to expand farther south and east for as long as six years. Its urgent care center in Gilbert serves 30,000 patients a year and the number is growing.

While he agrees both projects are needed, he said it’s possible one could be built immediately and another one constructed later.

"There’s absolutely nothing I see in the future that would stop us from continuing down this path," Nordlund said. "We were disappointed Banner chose to come in next to us after we had already bought our land, but that certainly is not going to keep us from moving on."

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