Is Children’s $1b project really necessary?

A rendering of Boston Children's Hospital proposed new building.Shepley Bulfinch

A serene stretch of trees and grass at Boston Children’s Hospital soon could be replaced by an 11-story glass building with state-of-the-art facilities to treat the sickest of kids.

The plan has drawn fire because Children’s would build over the beloved Prouty Garden. But beyond that fight is a more fundamental debate: Is the expansion really necessary?

The state’s dominant pediatric hospital, with 404 inpatient beds and numerous outpatient clinics, wants to add 71 beds to its Longwood campus and an eight-floor outpatient center in Brookline — a more than $1 billion plan that is the biggest capital project to date to come up for Department of Public Health approval. In addition, Children’s has proposed adding as many as 48 inpatient beds to its campus in Waltham.

Yet demand for children’s hospital care is declining both here and nationally, a trend supported by Children’s own data. Medical advances are allowing more patients to be treated with fewer overnight stays. Meanwhile, the state’s population of children is expected to dip.

Some health care industry experts, executives at competing hospitals, and activists trying to save the Prouty Garden say that a bigger Children’s would need to pull patients away from less-expensive providers, undercutting the state’s efforts to bring health spending under control. State data show Children’s has the most expensive physician network in Massachusetts.

“It seems like an odd thing to do, to add new and expanded inpatient capacity given what’s going on in pediatrics in terms of demand,” said Nancy Kane, a professor at the Harvard T.H. Chan School of Public Health who studies hospitals.

Children’s executives insist they see enough demand to justify the project, especially among patients with complex and chronic conditions. These children are staying in the hospital for longer periods, they say, causing frequent bed shortages. Adding clinical space is necessary, they say, so doctors can treat more fragile premature babies, perform more heart surgeries, and provide more psychiatric care, among other services.

Children’s executives also have promised to build new gardens and green spaces to make up for the loss of Prouty Garden.

Given the scale of the project, public health officials required Children’s to pay for an independent analysis that examined its cost implications. That report, from the firm Navigant Consulting, concludes that Children’s will see growing numbers of patients from outside New England and throughout the world. The report indicated that little if any growth would come from Massachusetts.

But many believe those projections are too optimistic. They note that many countries that now send patients to the United States for treatment have been improving their health care systems, so they may send fewer patients here in the future.

“I worry greatly that the most likely scenario may be very different, meaning that once Children’s builds this billion-dollar building, if it doesn’t get all of these out-of-state patients, they’re going to need to try to obtain growth [locally] in order to make the economics of the expansion work,” said Dr. Paul Hattis, a professor at Tufts University School of Medicine and former member of the Health Policy Commission, an agency that monitors costs. “That might well mean taking care away from other hospitals where care can be provided just as well at lower cost.”

Similar concerns were voiced a couple years ago when Partners HealthCare, the state’s largest health system, tried to acquire three community hospitals. Partners eventually gave up on those deals after facing strong opposition and the threat of an antitrust lawsuit from Attorney General Maura Healey. Healey, the Health Policy Commission, and others argued that Partners’ further growth would have bolstered its already great market power and increased health spending.

Now, executives at Partners’ biggest hospital, Massachusetts General, are raising questions about the Children’s plan.

“If the marketplace becomes monopolized by one institution, then we and the other providers of tertiary care for kids won’t have a sustainable model to maintain these services,” said Dr. Ronald E. Kleinman, physician-in-chief at MassGeneral Hospital for Children. “We’ll then have a situation where there is only one player in town and it provides the most expensive care possible.”

Executives at Tufts Medical Center’s Floating Hospital for Children also argue that Children’s cannot fill all the new beds it’s planning with international patients alone.

“They have to be anticipating that they’re going to move market share from other competitors,” said Dr. Michael Wagner, chief executive of Tufts. “It’s just not the right decision for the state to allow this to go ahead.”

Mass. General and Floating each has about 100 pediatric hospital beds. If Children’s is allowed to expand, it would have 475 beds in Boston.

Public health officials are expected to consider the proposed expansion this fall.

Sandra L. Fenwick, chief executive of Children’s, said the new clinical spaces wouldn’t prompt the hospital to battle with local competitors to fill beds. She said Children’s sometimes turns away patients because it is running out of space.

Asked about the high prices at Children’s, Fenwick said the rates are lower than those of some pediatric hospitals in other states.

“Patients are finding their way here because we are offering treatments that others do not,” she said.

Children’s expects patient discharges to reach more than 28,000 by 2026, an increase of about 4,000 over about a decade. The hospital expects that growth to come from increased global and national market share, according to the Navigant report.

Fenwick, who called the estimates conservative, said Children’s is following a “diversified strategy,” catering to patients from many different regions who need many different types of services.

Some pediatric hospitals in other states are also expanding. Texas Children’s Hospital in Houston is building a tower with 126 beds, for example, and Stanford’s children’s hospital in Palo Alto, Calif., is nearly doubling the size of its campus, adding 149 beds.

These specialized standalone pediatric hospitals are responding to a growth in “medically complex” children, said Mark Wietecha, president of the Children’s Hospital Association, a trade group. The number of children in the United States deemed medically complex is expected to double over the next decade to about 6 million, he said, including babies born prematurely with heart defects and other serious issues.

“We are confident that we have a strong case for why this is important,” Fenwick said. “What we are trying to do is consistent with what the city and the state are trying to be, and that is a destination in health care.”