Phoenix Health Care Market Grapples with Population Boom, Sluggish Economy

News Release
Aug. 26, 2003

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ASHINGTON, D.C.—Rapid population growth, rising unemployment and a continuing influx of undocumented immigrants are pushing health care capacity to the brink in Phoenix, according to a new Community Report released today by HSC.

Hospitals, faced with significant capacity constraints, are struggling to find medical personnel, especially nurses. To meet the needs of the area’s growing population, hospitals are investing millions of dollars to expand inpatient capacity. In the meantime, hospital capacity constraints are creating treatment delays, especially in emergency departments and for some elective surgeries. Specialty physicians’ unwillingness to provide on-call emergency department coverage has intensified capacity problems.

"The combination of population growth and medical personnel shortages is threatening access to care in Phoenix," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation.

Other key findings of the report, Population Growth, Economic Downturn Stress Phoenix’s Health Care Capacity, include:

• Hospitals are increasing investment in freestanding specialty hospitals in response to the continued growth of physician-owned specialty hospitals.
• Employers are aggressively passing on higher health care costs to workers now that the labor market is less competitive. At the same time, most health plans are prospering as they improve pricing and purge unprofitable business.
• Public health insurance coverage through the Arizona Health Care Cost Containment System has skyrocketed, nearly doubling in the last two years to about 905,000 people statewide, or nearly 17 percent of Arizona’s population. Two key safety net hospitals, however, remain financially troubled, threatening access to care for the uninsured.

Orange County is one of 12 communities across the country tracked intensively by HSC researchers through site visits and surveys. The new report is based on an April 2003 site visit and interviews with nearly 100 health care leaders, representing health plans, employers, hospitals, physicians and policy makers.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.