Upper Chesapeake Medical Center

Upper Chesapeake Health, which includes Upper Chesapeake Medical Center in Bel Air, merged with University of Maryland three years ago. It is one example of University of Maryland's expansion strategy. (Lloyd Fox, Baltimore Sun / February 17, 2012)

Since becoming a part of the University of Maryland Medical System three years ago, Upper Chesapeake Health has attracted new doctors, broken ground on a new $60 million cancer center and won over patients who once left Harford County for care.

Upper Chesapeake, with hospitals in Bel Air and Havre de Grace, was only able to afford such upgrades because of its new affiliation with the larger, better-capitalized University of Maryland Medical System, executives said. And it's not done. It plans to replace the hospital in Havre de Grace in the next few years and beef up services just as nearby military expansion brings thousands of new families into the area.

The University of Maryland has used the lure of its reputation and financial stability to buy out small community hospitals — like Upper Chesapeake — faced by competitive pressures and the uncertainty of health care reform. In recent years, it also has scooped up other hospitals, including several Eastern Shore facilities and Civista Medical Center in Charles County.

The aggressive expansion has enabled the medical system, which includes its well-established medical school, to double in size to 12 hospitals in the last six years, expanding its reach to almost every corner of the state. With operating revenue of $2.3 billion and 15,200 employees, the system owns more Maryland hospitals than any other entity. Columbia-based MedStar Health is the next largest, with six hospitals in Maryland and three in Washington, D.C.

The system could get even bigger in the next few years. University of Maryland has entered into an agreement to invest in Dimensions Healthcare System, which owns the troubled Prince George's Hospital Center in Cheverly, and likely add it to its network. It also is one of three finalists bidding for St. Joseph Medical Center in Towson. The financially troubled St. Joseph put itself up for sale last year after one of its cardiologists was accused of putting unnecessary stents in heart patients.

"We're anxious to serve the state of Maryland," said Robert A. Chrencik, CEO of the University of Maryland Medical System. "That means, I suspect, that we will see over time more hospitals come into our system across the state."

The university's network needs to get bigger to compete as hospitals face more financial pressures, he said. In Maryland, the state sets hospital rates, which is good for consumers but limits how much of a profit the institutions can turn. Even though the university system is nonprofit, it still must make enough money to operate, expand services and treat patients. Health care reform promises to expand access to health care services for hundreds of thousands of people in Maryland.

Competitors such as Johns Hopkins Medicine and MedStar also have expanded in recent years, though not at the same clip as University of Maryland. And they say they're not worried about University of Maryland's expanding footprint.

"People are looking for access to health care, and if we can get more quality health care providers, that is a good thing," said Jean Hitchcock, a spokeswoman for MedStar.

The mergers give growing networks like the university's access to new markets, increasing the number of patients they serve. Patients receive primary care in their nearby community hospitals, but the sickest are fed to the University of Maryland's main hospital in Baltimore. The university helps build up some specialty areas at the community hospitals as well.

Under the deal with Dimensions Healthcare, University of Maryland could gain tens of thousands of new patients. Today, nearly 25,000 Prince George's residents leave the county for medical care.

The agreement includes building a new regional medical center and academic teaching hospital in Prince George's County, serving Southern Maryland. University of Maryland is funding the preliminary studies and other work for that medical campus.

Hospital mergers offer financial benefits for both sides. The larger systems can operate more efficiently by borrowing and purchasing supplies on a larger scale. They also save on marketing costs by promoting the organization as a single entity.

"It's a seamless relationship and partnership," Chrencik said.

Smaller hospitals gain easier access to the money needed for building improvements and new technology. A larger system also offers a broader financial cushion during difficult economic times.

The community hospitals also can access the larger hospital system's expertise and resources. In the case of the University of Maryland, the community hospitals cap tap into the pipeline of doctors who graduate from the medical school, which trains half of the state's doctors.

Patients also gain more access to health care and specialists, even if they live in farflung areas.

But mergers are not necessarily good. Some patients worry they may have fewer choices if the health network eliminates services at the community level to draw patients to one its larger hospitals.

"I have a seen a lot of rural hospitals get shafted and lose their autonomy and are basically used as a feeder to the new hospital," said Jeffrey C. Bauer, an independent Chicago-based health and medical economist.