Children’s hospitals face challenge from emerging megasystems

Vanderbilt isn’t alone among children’s hospitals in facing heightened competition in the pediatric-care market. “We’re seeing a number of regional systems that want to build their pediatric capabilities even in areas where there’s an established children’s hospital,” said Mark Grube, managing director at consulting firm Kaufman Hall. “They want to keep more services in-network.”

In the past, most general hospital systems didn’t have enough patient volume to support the large number of pediatric subspecialties required to offer a comprehensive service line. But megamergers are changing the landscape. “The system formation work that’s going on is supporting the development of pediatric programs,” Grube said.

As a result some children’s hospitals, such as Lucile Packard Children’s Hospital at Stanford, are moving to strengthen alliances with larger provider systems and developing regional expansion strategies. In addition, to fortify their position at a time when health plans are shifting to narrower networks of lower-cost providers, children’s hospitals are backing a bill in Congress that would give states the option to establish nationally designated children’s hospital networks operating across state lines to provide coordinated care for medically complex children.