Market Report: Healthcare Industry Tries to Drive Down Costs
The healthcare industry is segmented into many different markets. The correct site and facility location for businesses within these markets is critical to their success. Among the location factors to be considered are the availability of a skilled work force, access to transportation networks critical to operations, and the community engagement that stands at the core of many healthcare organizations, such as hospitals and long-term care facilities. Moreover, the industry faces pressure to reduce overall operating costs against a challenging economy.
Attracting and Retaining Talent
Whether it's a hospital, device manufacturer, or other medical firm or healthcare entity, the human resource is of prime importance in site selection. Todd Schmiedeler, vice president of Foundation and Community Outreach for Trilogy Health Services in Louisville, Kentucky, stresses the importance of finding and keeping the best talent. Trilogy Health Services operates 67 health campuses throughout Indiana, Ohio, Kentucky, Michigan, and Illinois.
"The key factor for our decision to locate our headquarters in Louisville, Kentucky, was the access to thought leaders and talent within the long-term care sector," says Schmiedeler. "In addition, the community is a perfect blend between the friendliness, conveniences, and cost of a small town and amenities and educated work force of a big city."
Todd Schmiedeler believes that a region's ability to attract talent, as well as to foster the collaboration of talent, is very important. "Over the next three to five years, the sector talent pool and opportunities to collaborate with peers and partners will continue to advance," he says. "Louisville has committed resources to enable sector leadership to discuss collaborations and foster innovation within our field. Our goals are mutual, and our advancements are accelerated as we move forward with these collaborations."
Joseph Steier, III, president and CEO of Signature HealthCARE, headquartered in Louisville, Kentucky, agrees that "proximity to a top-notch talent pool is a factor for everyone, and that was definitely key to our decision to move to Louisville." Signature is a long-term care provider operating 73 nursing communities in seven states with more than 12,000 employees. "As we look for progressive and innovative ways to meet the needs of the nation's aging population, it was also important for us to be able to partner with a growing research institution such as the University of Louisville," he adds.
For others in the healthcare industry, location is greatly influenced not only by the ability to attract top talent, but also to retain the talent already in place within the organization.
C3 Jian, Inc., is a clinical-stage biotechnology company developing and commercializing novel products to diagnose, treat, and prevent diseases related to oral health. The company recently made the decision to relocate from Inglewood, California, to a 35,000-square-foot biotechnology facility located in Marina Del Ray, California.
"We looked at a number of impressive locations and facilities up and down the West Coast, and were very close to moving to Seattle or San Diego," states Todd Patrick, president and CEO of C3 Jian. "Ultimately, we found the perfect facility for us very close to our current site, which means our employees will not have to relocate. That was the key factor in the decision."
For a hospital, the value of the regional attachment is very important. But when a hospital decides to expand and relocate, even locally, there are many challenges not common with other healthcare organizations because its patients can't easily be transported.
St. Anthony Central Hospital in Denver, Colorado, moved all its patients from an existing facility to a new, modern one in a nearby location in Lakewood, Colorado. It was a day-long evolution of carefully planned ambulance trips and critical-care ground transports to move some 160 patients to 222 private rooms of a new 560,000-square-foot, state-of-the-art hospital.
The new location for St. Anthony Central Hospital was carefully chosen, and the new facility built to meet the needs of patients with state-of-the-art equipment and an environment with advanced safety features and environmentally friendly operations.
Steier, like many CEOs is also concerned with and attentive to state corporate tax rates and favorable incentive packages when determining facility location. "An angel investment tax credit could help attract potential startup companies or entrepreneurs looking to launch new companies," he says. "And increasingly, states` ability to attract healthcare companies is going to depend on whether or not they have tort reform laws on the books."
For others within the healthcare industry, transportation sometimes plays a key role. Because diagnostic testing can be handled with overnight delivery, access to major carrier hubs is an important consideration. Recently, Oxford Diagnostic Laboratories, a global immunology-focused diagnostic company, opened a new 5,000-square-foot, state-of-the-art laboratory in Memphis, Tennessee.
"Locating our new lab near our strategic partner, FedEx, gives us a competitive advantage in processing immunology samples and allows us to give our customers unparalleled test turnaround time," comments Dr. Peter Wrighton-Smith, CEO of Oxford Immunotec.
As healthcare reform begins to be implemented, firms within the healthcare industry will need to adapt to changing times. The Camden Group, which publishes an annual outlook of the healthcare industry, projects that the years ahead will be challenging for the industry as a whole.
"While these are unsettling times for healthcare, uncertainty cannot be an excuse for paralysis," says Steven T. Valentine, president of The Camden Group. "The reality is that healthcare reform is locking into place on schedule, and we expect it to continue as presently configured. Preparing to accept and manage financial risk for a defined population is a core competency that providers must develop in the next three years."
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