Pine Trees and Blue H’s: Pending Hospital Affiliations and the Performance Improvement Imperative

Jeffrey Sommer, MPP, Managing Director

C. Ryan Sprinkle, JD, Performance Improvement Practice Leader

Pine trees. Southern yellow pines, to be more exact. Driving down any rural stretch of interstate highway in the Southeast, one will undoubtably see acreage of southern yellow pines. This hardy genus is known for its strength, ability to dry rapidly, and receptivity to various chemical treatments, making the yellow pine a key element in a number of products ranging from paper to utility poles to residential construction. Officials estimate that by 2020, the amount of timberland throughout the Southeast will have quadrupled since 1980.

This tour of the southeast will include another common sight. The familiar blue “H” sign can also be spotted at intervals of 25 to 35 miles along the highway. These blue H’s experienced their own period of rapid growth from 1948 to 1975 as generous federal assistance allowed communities to construct new hospitals to serve growing populations across rural and urban portions of the country. Both phenomena, yellow pines and hospitals, were expanded and amplified via federal programs designed to encourage their growth.

Generous federal programs lowered the costs of entry in these capital-intensive businesses. The result was an increase in the available supply of both hospitals and timberland across portions of the country. In the intervening decades, though, market forces in both the forestry and hospital sectors have evolved. The new challenges brought on by the dynamism of these forces have upended the assumptions that once provided a solid foundation for these time- and capital-intensive investments.