Bayhealth pushes back on ChristianaCare’s downstate goals

Why Should Delaware Care?
Delaware’s hospitals are powerful and often consolidated entities. For decades, each of the state’s three main hospital systems have remained within their bounds by county line. But as more retirees flock to the state, those boundaries are being disregarded. 

The Dover-based hospital system Bayhealth has taken the first shot in what had been a looming turf war between state healthcare providers over access to the valuable southern Delaware market.

Earlier this month, Bayhealth leaders sent a letter to the Delaware Healthcare Commission and the Delaware Health Resources Board challenging two proposed ChristianaCare campuses in Georgetown and Camden. 

Long the dominant player in northern Delaware, ChristianaCare has increasingly invested below the C&D Canal in recent years. 

But Bayhealth claims that ChristianaCare’s proposals could run afoul of a new law signed this summer meant to curb the involvement of for-profit enterprise in nonprofit healthcare. 

The Delaware Healthcare Commission and the Delaware Health Resources Board is responsible for approving hospital expansions that cost more than $5.8 million. The board is set to discuss this letter at its meeting later this afternoon.

Get Involved:
The Delaware Health Resources Board will meet at 2 p.m. Tuesday, Aug. 25, in the Herman M. Holloway Sr. Campus Main Administration Building, located at 1901 N. DuPont Highway in New Castle. Virtual attendance options can be found here. 

Bayhealth’s challenge to ChristianaCare’s expansion highlights what has been a quiet, but contentious race among hospitals to hold the most market share below the C&D Canal, as retirees from across the Northeast flock to Delaware’s coastline. With that aging population, comes a greater demand for medical services.

The letter also demonstrates the evolving role of a Delaware regulatory board meant to act as a watchdog to ensure the state’s healthcare systems don’t make unnecessary investments that could end up costing a captive patient population.

Bayhealth did not respond to a request for comment on the contents of its letter. 

What’s in the letter?

The letter, written by Bayhealth Chief Operating Officer Kyle Benoit, challenged ChristianaCare’s plans to build two new “micro-hospitals” in Camden and Georgetown. 

In his letter, Benoit said ChristianaCare’s plans to build micro-hospitals may be in noncompliance with the regulatory review because there are no statutory definitions of a micro-hospital in Delaware. 

Bayhealth also prodded at ChristianaCare’s business plan for the downstate facilities, questioning whether its proposal complied with Senate Bill 313 – a law signed this summer that prevents the sale of Delaware’s nonprofit health systems to private equity firms. 

Benoit noted that ChristianaCare’s plans for the downstate facilities involved a partnership with Emerus Holdings, a for-profit healthcare real estate developer.

The developer has already partnered with ChristianaCare on two sites in the Philadelphia suburbs, with a similar micro-hospital approach in Chester and Delaware counties.

Gov. Matt Meyer signed Senate Bill 313 into law earlier this summer, establishing a two-year moratorium on the purchase and or sale of nonprofit hospital systems to private equity firms. 

“If the governing agreements provide for a for-profit participant with rights that constitute prohibited ownership, control or operational authority, the applications are not legally eligible for approval,” Benoit wrote.

As part of its request to the board, Bayhealth requested ChristianaCare disclose its corporate and structure agreements with Emerus to ensure compliance with Senate Bill 313. Additionally, Bayhealth requested the board delay its review until its legal concerns are addressed. 

ChristianaCare did not reply to a request to comment for this story. 

Separately, ChristianaCare recently received a permitting break on both micro-hosptials from the governor’s office, who accepted them into the state’s “JobsFirst Permitting Accelerator.” According to a press release published earlier this month, the permitting accelerator is meant to streamline regulatory approvals for complex projects, and complete them within 120 days. 

According to the website for JobsFirst, the program focuses on housing, broadband, energy infrastructure, water, sewer and mixed-use projects. 

Asked in an email why ChristianaCare qualified for this permitting fast-track, a spokesperson for the governor said the executive order creating the program allows Meyer to determine if projects are critical. 

“The EO allows the Governor flexibility to designate a project as critical infrastructure, and he sees this project as critical as we see gaps in service,” the spokesperson said. 

What is ChristianaCare hoping to build? 

For the better part of two years, ChristianaCare has spent millions on an expansion blitz.

It’s proposed and opened sites in Pennsylvania, further entrenched itself in New Castle County, and has begun to reach farther south. 

In February, ChristianaCare announced that its first major downstate campus would be a $65 million healthcare facility in Georgetown.

In May, the hospital also announced it would open a $58.1 million health campus in Kent County, continuing its push into contested downstate markets.

At the time, Bayhealth offered a diplomatic opposition to the facility, saying in a statement it “remains focused” on providing care to its patients. But the hospital also said care should not be “fragmented.”

It said it would “actively participate” by sharing data and ways to address cost, access and quality of care in the area.

“We recognize that patients across Delaware are looking for faster access to care,” a spokesperson for the hospital said in an email.

The 38,000‑square‑foot ChristianaCare Kent County campus would open in Camden about a mile from the Walmart on U.S. Route 13. The state healthcare giant said in a statement the new campus would offer emergency and inpatient beds, as well as primary care and outpatient services.

It hopes to open the facility by late 2028 or early 2029.

ChristianaCare also said the new facility would bring 83 new jobs. As it has done with other recently announced ventures, ChristianaCare positioned its expansion as a means of supporting Delaware’s growing and aging population.

The healthcare system also expects its new Georgetown facility to open by 2028. It is partnering with Emerus Holdings to build the facility — which would offer emergency beds, behavioral, specialty and primary care — at 20769 DuPont Blvd., just south of the Bridgeville Road intersection. 

Turf war brews

For decades, Delaware’s three major health care systems largely fit into geographic monopolies: ChristianaCare serving New Castle County, Bayhealth serving Kent County and Beebe Healthcare in Sussex County.

But over the last five years, a health care arms race heated up between Bayhealth, Beebe and now TidalHealth, coming up from Salisbury, Md. They have all built or broken ground on major projects in locations, such as Lewes, Milton or Millsboro in recent years.

It follows a post-COVID population boom in Sussex County. The region is now designated as a “Medically Underserved Area” by the federal government, with projections showing that the population will increase from 237,000 in 2022 to over 361,000 by 2050. The county is also rapidly graying, as the population growth is largely driven by retirees who will demand more health care needs.

The arrival of ChristianaCare, which to date only had primary care offices in Milford and Rehoboth Beach, will bring needed resources, but also new competition to the crowded market.

But Bayhealth is hoping to convince the Delaware Health Resources Board that ChristianaCare’s plans would flood the market and offer redundant services.

In 2019, the board was central in a debate over whether to allow Beebe to build a freestanding emergency room in Georgetown. It ultimately denied that project, saying it was too close to Bayhealth’s Milford campus and Nanticoke Hospital in Seaford.

The board was also expected to be critical of plans by Bayhealth to build its own freestanding emergency room in Milton, which led the Dover-based health system to pull its plans.

Both of those projects predated the population surge that has particularly struck Sussex County after the COVID housing market boom though.