Healthcare: Froedtert Health courts customers in affluent areas

By Guy Boulton for the Journal Sentinel

The $45 million medical office building that Froedtert Health plans to build in New Berlin is the most recent example of the competition among health systems for suburban patients.

That trend is well-established in the Milwaukee area, and it is becoming increasingly common throughout the country, according to a study published this month in Health Affairs, a health policy journal.

Health systems are competing for insured patients through targeted expansions in more affluent communities by building hospitals and clinics and by buying physician practices, according to a long-running tracking study of 12 large metropolitan communities by the Center for Studying Health System Change.

The strategy is a shift in how hospitals and health systems compete, said Emily Carrier, a physician and senior health researcher at the Center for Studying Health System Change.

Competition once focused on profitable services, such as orthopedics and cardiology, and offering cutting-edge technology, such as the CyberKnife Robotic Radiosurgery System.

Beginning around 2007, health systems began to look to nearby and often more affluent communities.

The Milwaukee area is not one of the communities in the tracking study, but the same trend can be seen in this market.

Aurora Health Care spent about $500 million to build hospitals in Summit in Waukesha County and Grafton in Ozaukee County, while Wheaton Franciscan Healthcare spent $89 million to build a hospital in Franklin and $39 million to open an orthopedic hospital in the same building in a partnership with surgeons.

For Froedtert Health, the 135,000-square-foot medical office building in New Berlin will lessen the pressure on its Wauwatosa campus, where clinic visits have increased almost 40% in the last five years.

The site, at S. Moorland and W. Beloit roads, is part of a 48-acre parcel where Children’s Hospital and Health System opened a pediatric outpatient clinic in 2009.

Construction will begin this month and is expected to be completed late next year.

The new building gives Froedtert Health and the Medical College of Wisconsin an additional presence in a suburban market.

William Petasnick, chief executive of Froedtert Health, said the project is part of Froedtert Health’s strategy to expand its network of primary-care clinics.

That’s become increasingly important for academic medical centers such as Froedtert Hospital, he said.

Academic medical centers once could rely on referrals from independent primary-care physicians. But primary-care physicians now typically work for a health system and refer patients to specialists and hospitals within that system.

In recent years, a joint venture of Froedtert Health and the Medical College has been buying primary-care physician practices and hiring physicians.

“This is very march part of that strategy to expand our geographic region,” Petasnick said.

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