Business is booming in one sector of Chicago`s recession-bit economy, and I don`t mean Bankruptcy Court.
It didn`t get much press, but in November, while Midway Airlines flopped and employers such as Ameritech and First Chicago laid off thousands, two big players in one of Chicago`s major industries announced $810 million worth of upgrade and expansion plans.
Trouble is, not everyone agrees that this countercyclical success story bodes well for the rest of the economy.
We`re talking about the development campaigns announced by Chicago`s two largest downtown medical centers.
On Nov. 14 the board of Rush-Presbyterian-St. Luke`s Medical Center, at a black-tie affair at the Chicago Hilton and Towers, unveiled plans for $310 million in improvements to its complex on the Near West Side.
The plan is aimed at making Rush ”the pre-eminent clinical institution in the Midwest.” It calls for a new ”hospital-within-a-hospital” wing that combines ”state-of-the-art resources within comfortable community hospital settings” along with a new building for Rush`s ”constantly expanding research initiatives.” It also creates six ”Rush Institutes” in the fields of cancer, aging, heart disease, mental health, orthopedics and the neurosciences.
On Nov. 23 the board of Northwestern Memorial Hospital, assembled at the new Stouffer Riviere on Wacker Drive, announced plans for $500 million in improvements to its Near North Side complex.
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Northwestern aims to become ”the pre-eminent medical center in Chicago.” The plan includes two major new buildings, one for ambulatory care and another for in-patient treatment. It also creates eight ”Centers of Excellence” including ones for cancer, aging, heart disease, mental health, orthopedics and the neurosciences.
The timing and similarity of the two mega-plans suggest that there`s an institutional ”arms race” afoot. Both hospitals deny that. They point to cramped, inefficient quarters and the demands of new technologies. They also hope to raise much of the funding through contributions.
No doubt they are sincere. These are two of the most respected, and powerful, governing boards in the city. They are Chicago`s business elite-men and women of civic accomplishment. There is no malice here, no self-dealing.
But there is a good deal of irony.
A week ago the Chicago Association of Commerce and Industry, led by many of the business leaders who direct the two medical centers, made some news regarding things medical. The association issued a press release with the headline: ”Survey Finds Health Care Costs Restraining Chicago Economy.”
In a poll of top executives at 164 Chicago companies, nearly half identified rising health-care costs as the major obstacle to competitive pricing of their companies` products and services. One in three said the rising cost of health benefits will limit expansion plans.
”We face a situation where escalating health-care costs are actually undercutting the local economy,” said association President Samuel R. Mitchell. ”This does not bode well for the future of our city.”
The survey did not ask the business leaders how they feel about expansion of the city`s high-tech medical centers. Perhaps it should have. I would guess that a lot of Chicago`s CEOs are ambivalent about expanding those centers now. After all, business managers all over America are on the verge of despair over the rising medical-care costs. Last year, the nation`s medical bill rose by more than 10 percent for the third year in a row, to $666 billion or more than 12 percent of the gross national product. Last year employers spent $145 billion, or $3,217 per covered worker, on group health insurance. The Big Three automakers are spending nearly $700 per car on health insurance. Big Steel spends $22.50 per ton. In a global marketplace, that is a major competitive disadvantage.
To cut their losses, companies are making workers shoulder part of the increased cost through higher deductibles and co-payment thresholds. Health-care benefits are being ”managed” (rationed?) with second opinions on surgery and limits on where care can be obtained, as in health maintenance organizations and preferred provider organizations.
Life is no bowl of cherries for the big downtown hospitals, either. Northwestern wrote off $50 million last year in care to working poor without insurance and welfare recipients whose Medicaid covered only 52 percent of the hospital`s cost of treatment.
The health-care cost crisis is an extraordinarily complex problem with many causes. It would be a gross oversimplification to blame it solely on the expansion of high-tech medicine and just as naive to call that expansion a non-factor.
As consumers we want the best, and the best is what Rush and Northwestern are out to provide.
One also can argue that the Chicago region will benefit long-term from the jobs and brainpower that go with developing world-class medical centers like those in Houston or Rochester, Minn.
It`s good to have the best . . . as long as we`re willing to pay for it.