Archived Story

Health business booms on U.S. 93
By KIM BRIGGEMAN of the Missoulian

A worker hauls cinderblocks at St. Luke Hospital in Ronan. The hospital is the largest private employer in Lake County and is undertaking a $30 million expansion.

Editor’s note: Today, the Missoulian begins a three-day series of stories on health care in western Montana: the growth, and sometimes struggles, of hospitals from Whitefish to Hamilton; health care options, and their attendant costs, for rural residents; and Missoula’s ever-growing role as a medical hub.

Take this New Year’s challenge: Find, say, a dozen people in western Montana who didn’t walk through the doors of a hospital, clinic or doctor’s office in 2007.

Oh, and while you’re at it, shed those excess 20 pounds. By Friday.

The business of health and sickness care permeates our lives to an unprecedented extent, even as a day of reckoning bears down in the struggle to pay for it all.

In Missoula County, more than one of every eight workers drew paychecks from a hospital or other care provider in 2005, the last time figures were available.

Together, the likes of St. Patrick Hospital and Health Science Center, Community Medical Center and the Western Montana Clinic were adding three jobs a week two years ago - and the rate has only increased since then.

“Missoula has one of the highest concentrations of health care services of any city of its size in the United States,” said economist Larry Swanson, who has made the nationwide comparisons as director of the University of Montana’s O’Connor Center for the Rocky Mountain West.

But the Garden City’s not the Lone Ranger. The same is true for Billings, on a somewhat larger scale, Swanson said.

Indeed, the single biggest sector of Montana’s economy, measured in labor earnings, is health care. Second place is not even close, though just a dozen years ago health care trailed local government, which includes public school workers, and was neck-and-neck with retail trade.

By 2005, some $4.9 billion was attributed to health care spending, according to an analysis by the University of Montana’s Bureau of Business and Economic Research. On its list of the top 20 private employers in the state, the Montana Department of Labor lists eight hospitals and health care providers.

“Hospitals and health care are the economic underpinnings of every community in this state,” said Karen Sullivan, director of marketing at Missoula’s Community Medical Center.

Signs of the industry’s ascent are clearly seen on the west side, from Eureka near the northern border to Hamilton in the south.

The U.S. Highway 93 corridor is a land of beauty and, not coincidentally, growth. More to the point, it’s a land of aging, both in terms of its people and its hospitals.

In response, Whitefish replaced the old North Valley Hospital last March with a

$30 million facility on a 45-acre campus. Less than 15 miles away, Kalispell Regional Medical Center has poured some $60 million into expansions, renovations and new technology in the past decade, with more in the works as the Flathead fills up.

Polson finished a $13 million rebuild of St. Joseph Medical Center seven years ago. Now St. Luke Community Hospital in Ronan, the largest private employer in Lake County, is undertaking a $30 million expansion.

In Missoula, St. Pat’s is finalizing plans to double the size of its own emergency department, a project that, along with a larger emergency distribution system, will cost nearly $15 million. Community’s next brick-and-mortar project is a state-of-the-art obstetrics and neonatal intensive care center.

Construction began in the fall on a $5.4 million expansion to the emergency department at Marcus Daly Memorial in Hamilton, which has plans to add much more in the next 10-12 years.

Small hospitals are also investing millions to expand their facilities, equipment and services. Clark Fork Valley Hospital in Plains, for instance, recently followed up a $9.8 million remodel by adding a physical rehab pool.

“I’m a farmer from Minnesota,” Jim Oliverson said. “I don’t hike, I don’t ski, but I love it here. I can’t imagine living anywhere else.”

Oliverson is also a hospital administrator in western Montana, and has been for almost 38 years. He ran hospitals in Ronan and St. Ignatius, and for the last 20 years he’s been at Kalispell Regional Medical Center. In charge of marketing and public relations, he’s the oldest hospital vice president in Montana.

He has watched other folks, lots of them, flock to the area, drawn by the mountains and lakes and parks. Many are retirees who put an increased demand on hospital services. Others are the health professionals who help meet the demand.

“If I had to sum it up, it’s just this simple,” Oliverson said. “If you make a profit, you can get good equipment, which draws talented technicians and nurses, which in turn, when physicians come around and see what’s in place, join your medical staff.”

His own hospital has a national-caliber breast surgeon, cancer specialist and radiologist.

Resident and visiting physicians are drawn to the International Heart Institute, based in Missoula at St. Patrick Hospital.

“They could go anywhere in the world,” Oliverson said. “Why do they choose to come to Missoula?”

For the same reasons others are moving to western Montana - plus they have facilities and equipment of higher quality than most communities of the same size.

Top-flight doctors draw more top-flight doctors, Oliverson concluded, “and that whole cycle feeds itself.”

Today is a milestone of sorts: The first members of the baby boom generation turn 61. Over the next 18 years or so, the rest will come tumbling behind.

They’re already tumbling, into western Montana, at a rate out of proportion with the rest of the state and nation.

“The national growth rate for people moving into the 65-plus age group is right at 14 percent,” said Jeff Fee, CEO at St. Patrick Hospital. “According to our statistics, in western Montana we’re tracking at 19 percent.”

More than raw growth, it’s what has hospitals scrambling.

“They’re looking into their crystal balls and seeing this,” Swanson said.

Medical technology is making what Oliverson terms “incredible leapfrogs,” to keep up with the dynamics of an aging population.

Hospitals large and small strive to extend ever more sophisticated services to rural areas.

They’re doing it through telemedicine communication networks, through air transports, through top-drawer equipment once accessible at only the largest medical centers.

Rural health care is a focus at the federal level, said Aaron Murphy, press secretary for Sen. Jon Tester. He pointed to the $200 million spending bill signed last week by President Bush, which included $230,000 to help Marcus Daly Memorial Hospital in its emergency department expansion, $95,000 to help Powell County Hospital in Deer Lodge buy emergency room equipment, and $191,500 for a statewide rural health technology consortium.

Health care administrators cringe at the term “arms race,” but there’s undeniably an element of competition between hospitals.

“It’s a two-edged sword,” said Swanson, the economist. “It’s understandable, but by the same token you wish they could collaborate more often.”

“I think it’s the American way to have competition,” Oliverson said. “It keeps all of us on our toes. If I’m a dentist and two more dentists move to town, I’m going to work harder.

“The problem in health care is when you start to duplicate expensive equipment, and I don’t know how you get your arms around that. But the fact is our hospitals cooperate more than the public is aware.”

Two western Montana hospitals, St. Patrick and St. Joseph in Polson, are owned by the same corporation. St. Pat’s, at 134 the oldest of the Sisters of Providence’s 27 hospitals in the West, lends marketing, purchasing and staff support to St. Joe’s, said spokeswoman Lara Shadwick.

All the hospitals form partnerships through outreach programs and the like.

“We’re very connected, not through any formal managerial agreements, but we work closely with all the rural hospitals,” said Sullivan at Community. “We really believe in the philosophy of obtaining health care at home.”

That doesn’t go unnoticed when the boomer crowd looks for a place to retire.

“There’s a sense that it’s safe here, and the hospital is part of that,” Oliverson said.

“We’re going to have a lot of old people, and I hope to be one of those,” he added. “My concern is, if you agree with the experts who say heart disease and cancer are diseases of the aging, how are you going to pay for it?”

As more western Montanans rely on Medicare and retirement to pay the bills, health care providers are first to sense hiccups and downturns in the local economy.

“Your hospitals are almost analogous to the canary in the coal mine,” said Fee. “They’re going to feel it.”

People who can’t afford insurance, or who lose it when they lose their jobs, tend to forsake primary medical care. Sometimes they end up in the hospital. By then their physical problems are often acute, Fee said, “plus the fact they don’t have the ability to pay. But we’re still rendering services, as we should.”

It’s not just a Missoula phenomenon, he added, but the number of people coming to the hospital without insurance “has significantly increased, steadily, over the past few years.”

“We’re a healthy organization financially,” he added of St. Pat’s. “But with each year, the downward pressures on our revenue line items and the upward pressures on our expense line items make it more and more challenging to stay economically healthy.”

But still they build. It’s a matter of survival, in many cases.

“Equipment needed to provide high-tech care is, more often than not, considered to be the community standard upon which hospitals and physicians are measured,” Olsen pointed out.

“A community health facility can’t afford to fall too far behind its competitors or the entire organization suffers,” Olsen said. “Consumers simply prefer to obtain their care at up-to-date facilities.”

Just as the baby boom generation approaches retirement age, the hospitals it helped bring about have grown obsolete.

Many medical facilities in Montana and elsewhere are the products of the Hill-Burton Act, federal legislation passed just after World War II that spurred construction of and improvements to rural hospitals.

States were allotted money to provide 4.5 beds per 1,000 people. Hospitals sprung up across the country, not a few of them built to serve populations they never had.

“That was a big development push in the ’50s. Now here you are, 50 or 60 years later,” said Olsen.

Not only have the buildings aged, their uses have changed, Olsen said. As more hospitals obtain MRI machines with powerful magnets and linear accelerators to treat cancer, they need specially built rooms with thick concrete walls and shielding.

Space needs changed over time, then changed again.

“Some hospitals spent years converting excess inpatient treatment units to outpatient treatment space,” Olsen said. “Those hospitals now find themselves needing more inpatient capacity.”

No one’s happy with the high cost of going to the doctor, but it’s not necessarily tied to construction.

“You might think that a hospital project that costs millions means steep price increases follow,” said Bob Olsen of MHA (formerly the Montana Hospital Association).

In a paper titled “Cranes on Campus: How Health Facility Building and Development Projects Affect Health Care Costs,” Olsen said hospitals that renovate or rebuild might find that operating costs actually go down.

“This can happen because a new floor plan and more efficient use of staff, utilities and other resources can mean prices drop,” Olsen said.

Most building projects are funded, at least in part, by private and nonprofit contributions. When bonds are involved, they’re paid off over a course of perhaps 20 years.

“You can’t say it doesn’t have an impact (on patient costs), but it’s at a much lesser level than it would be for another kind of expense,” Oliverson said.

As the health care industry expands in western Montana, it’s in danger of outstripping its professional work force.

“It’s a challenge regionally, and we’re not excluded from it, in recruitment for primary care - family practice physicians, internal medicine physicians,” said Sullivan, who recently chaired a health care task force on Gov. Brian Schweitzer’s work force investment board.

Specialized nurses and physicians in a variety of specialties are also at a premium. At Community Medical Center, the average age of the nursing corps is in the 40s.

“We have to look to replenish those numbers over time,” Sullivan said. “I think all hospitals in the state could do a better job of getting out in the high schools and telling kids what an incredible career health care is.”

In these parts, the opportunities grow right along with the facilities - not to mention all the trials the multibillion dollar industry faces.

“There are challenges looming as we baby boomers start filling hospitals and needing new hips and knees and whatever it is that we’re going to need,” Sullivan said. “And we are going to need it. We’ll have a shortage of younger people to take care of us, so we need to figure it out.

“Health care is just this big, hairy gorilla. It’ll be very interesting to watch the whole pattern in the next year and the next decade.”

Reporter Kim Briggeman can be reached at 523-5266 or at


Subscribe to the Missoulian today — get 2 weeks free!