Yes, central Pennsylvania has a lot of hospitals right near one another. But is that a problem?

HARRISBURG, Pa. (WHTM) — As recently as 2019, describing the physical footprints of hospital systems in central Pennsylvania — based on where their 24/7 hospitals with emergency rooms was, anyway — was easy.

Penn State had the biggest hospital of all but (including its children’s hospital) just one hospital location: Hershey. Western Dauphin County and the West Shore, including pretty much all of Cumberland County, belonged to UPMC. Central Lancaster was Penn Medicine’s. Almost everywhere else belonged to WellSpan:

But then UPMC, in its first major move since entering the region through its aquisition of the Pinnacle system, built a hospital in York (UPMC Memorial) to compete head-to-head against WellSpan York Hospital. Penn State bought Holy Spirit in Camp Hill from Geisinger and built a new hospital (Penn State Health Hampden) in the Enola area and Penn State Health Lancaster, encroaching — at least from a standpoint of big physical hospitals — on the territories, respectively, of UPMC and Penn Medicine:

Or is that what it did? Not from Penn State’s perspective.

“Our Hershey Medical Center hospital was always full,” said Dr. Robert Harbaugh, a senior vice-president with the system. So “we could either build more buildings on this campus, or we could say, ‘Well, you know, maybe we should go to where our patients come from instead of always asking our patients to come to Hershey.’”

In other words, Harbaugh says Penn State finally built hospitals in areas it always considered within its footprint.

David Gibbons, senior vice-president of UPMC Health Services Division and regional market president for UPMC in Central Pennsylvania, says the system’s foray into York with a full-service hospital — complementing its Harrisburg, West Shore (Enola area), Carlisle and Community Osteopathic (Lower Paxton Township) — worked well.

“We have a number of initiatives that we’re reviewing right now for continued expansion at that campus alone,” Gibbons said. “So it really has been a tremendous story of success and growth.”

WellSpan, meanwhile, is building three new “microhospitals” in Newberry, Shrewsbury and Carlisle.

Penn State Hampden’s 110 new beds are just a mile from UPMC West Shore’s 166 beds.

Many of the new hospital beds are — like those at Hampden and West Shore — in Cumberland County, which some years is the fastest-growing county in the state. Still, Harbaugh knows the criticism: “You can look at metrics that say: ‘This area is over bedded; there are too many beds.’”

Gibbons is even more direct: “We do have an excess of hospital beds in this region.” (For its part, WellSpan said in a statement, “Our hospitals operate at full capacity on a regular basis.”)

But if central Pennsylvania has too many hospital beds, for whom is that a problem? For the hospital systems, perhaps, which absorb the costs of unoccupied beds — but not for system patient or employees, according to several studies, including a working paper published in June by the National Bureau of Economic Research.

The paper found in less competitive regions, healthcare costs rise and health employment falls after systems merge, and salaries decline for the jobs that remain.

The 11 counties of abc27’s viewing area — Adams, Cumberland, Dauphin, Franklin, Fulton, Juniata, Lancaster, Lebanon, Mifflin, Perry and York — are served by six different hospital systems (ranked here in order of revenue for the full systems, including, for some, large parts outside central Pennsylvania, according to figures from the industry newsletter Hospitalology and other abc27 News research): UPMC ($27.7 billion), Penn Medicine ($10 billion), Geisinger ($7.7 billion), Penn State Health ($3.8 billion), WellSpan Health ($3.7 billion) and Fulton County Medical Center ($120 million).

Not all compete directly — few customers find themselves choosing geographically between Geisinger, Fulton County and Penn Medicine. Still, those are a lot of players compared to some regions with similar population sizes — a highly competitive market, both Harbaugh and Gibbons said.

Although these figures include the systems’ operations in all markets, the highly competitive central Pennsylvania market could partly explain the operating losses for both systems in their most recent fiscal years, according to Hospitalology figures — among all six systems with hospitals in the region, only Penn Medicine and WellSpan eked out operating profits.

But Gibbons said the competition that challenges the systems is great for consumers.

“Competition in health care is very, very good. It drives innovation. It drives new models of care. It drives competition to create greater access and convenience,” he said. “But the most imporant is that it drives the overall improvement in the quality of care.”

The Federal Trade Commission has generally accepted that argument and used the same logic to block mergers in other markets that could have resulted in less competition.