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.
All three of Delaware’s southern hospital systems are forming a unified coalition to block two proposed ChristianaCare campuses in Georgetown and Camden, as market share becomes more valuable to healthcare providers.
Bayhealth in Dover, TidalHealth in Seaford and Beebe Healthcare in Lewes are all challenging the two downstate campuses, as the systems look to protect what has historically been their territory. Long the dominant player in northern Delaware, ChristianaCare has increasingly invested below the C&D Canal in recent years.
Spotlight Delaware reported in August that Bayhealth, Kent County’s primary health system, submitted a letter to regulators asking them to halt two proposed ChristianaCare campuses in Georgetown and Camden.
Those regulators, who sit on the Delaware Health Resources Board, were set to discuss that letter in their meeting on Aug. 25, but tabled the discussion to allow for some additional internal review.
TidalHealth and Bayhealth submitted letters prior to the meeting. Beebe submitted its letter on Thursday.
In its letter, Bayhealth argued the proposals could run afoul of a new law signed this summer meant to curb the involvement of for-profit enterprise in nonprofit healthcare. TidalHealth made similar arguments and said that no legal framework exists for ChristianaCare’s downstate ambitions.
In comments submitted to Spotlight Delaware following the report that Bayhealth opposed the campuses, ChristianaCare said it is “committed to serving patients closer to home and making high-quality care more accessible in the communities where they live.”
“As this matter is currently under review by a state regulatory agency, we decline to comment on the substance of the proceedings,” a spokesperson for the hospital said at the time. “ChristianaCare will provide all necessary information to the Board and looks forward to participating in the regulatory process.”
Asked about the additional letters, ChristianaCare said it did not have any additional comments.
What do the letters say?
Delaware’s southern hospital systems are taking aim at a lack of regulatory guidance on how ChristianaCare is defining its Camden and Georgetown proposals.
When ChristianaCare said it aims to build two “microhospitals” in Kent and Sussex, a term the other hospitals believe makes them invalid for consideration.
A spokesperson for ChristianaCare said microhospitals are “an emerging model of care delivery” meant to deliver care at the “right level” and in the “right place.”
The CEO of TidalHealth, which operates campuses in Maryland and Delaware, submitted his letter to the board late last month and said the proposals “may not meet the threshold” to be considered a hospital.
The letter argued that because the hospital is not focused on providing mostly inpatient services, it can’t be considered a hospital. And if it was considered a hospital, there are no existing laws that say how a “microhospital” should be regulated.
“On either branch, the board cannot lawfully authorize and the Department of Health and Social Services cannot license the facility as proposed, and the application is premature,” Leonard wrote.
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.
Bayhealth Chief Operating Officer Kyle Benoit, who wrote the system’s letter, 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 SB 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 SB 313.
Beebe President and CEO Dr. David Tam similarly challenged the proposal on the grounds that it failed to meet the requirements of SBl 313. In his letter, Tam said because of ChristianaCare’s business arrangement with the for-profit developer, the board should examine that agreement with “careful scrutiny.”
Additionally, Beebe requested the board delay its review until its legal concerns are addressed.
“At a minimum, the board lacks a sufficient record to conclude that the proposed hospital would be built, owned, controlled and operated by a qualifying nonprofit entity as required by Delaware law,” the letter 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 the downstate hospitals are 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.
