For the Kids: Pediatric Hospital Growth Accelerates

There has been no shortage of hospital closures in the United States over the past year. As the financial impacts of the One Big Beautiful Bill Act begin to affect health system bottom lines, hospital closure headlines are unlikely to fade from the news cycle anytime soon. Amid the wave of closures, several health systems around the country have started developing or otherwise announced plans to construct new pediatric hospitals, including:

1. Two North Carolina health systems announced a partnership to develop a $2 billion freestanding children’s hospital and campus in the Triangle region (consisting of Durham, Chapel Hill and Raleigh);
2. A health system based in the western United States announced plans to construct a children’s hospital in the Las Vegas area, with an anticipated groundbreaking in 2026;
3. A Kentucky-based health system announced plans to develop a pediatric hospital campus on 156 acres in Louisville; and
4. A Texas-based health system has begun construction on a $5 billion pediatric hospital campus in Dallas that is expected to include two twelve-story towers.

Much of this growth can be attributed to ongoing population increases in suburban areas. For instance, North Carolina’s Triangle has experienced a population surge of over 5.6% in the past five years. By targeting these types of suburban communities for the development of new projects, health care providers aim to offer more accessible care for children and families and reduce commutes to a centralized hospital campus.

Another key driver of this growth is the rising demand for pediatric behavioral health services. A study recently released by Children’s Hospital of Philadelphia found that nearly 40% of surveyed high-school-aged children experienced depressive symptoms in 2023, an increase of approximately 14% over the previous two decades. The study also reported a similar rise in loneliness among American teenagers. This spike in need has outpaced the current capacity of many health care providers, leading to long wait times and limited access to timely care. In response, many health systems are prioritizing expansions to improve access to behavioral health care and to meet the needs of their adolescent communities.

But investing in pediatric hospitals is not without its challenges. Pediatric care traditionally emphasizes prevention, early intervention and long-term development outcomes. Such care is typically delivered through integrated, team-based models that are difficult to quantify and monetize. Further complicating the financial model, many pediatric patients are covered by Medicaid, which typically reimburses at lower rates than commercial insurance or Medicare. This financial reality makes it difficult for children’s hospitals to generate the revenue necessary to invest in, expand and sustain operations.

The most successful pediatric hospitals navigate these challenges by focusing on delivering highly specialized child-centered care. They are at the forefront of groundbreaking research in complex pediatric diseases, and they consistently excel in quality metrics such as infection control, surgical outcomes and patient satisfaction. These strengths not only attract top clinical talent but also draw philanthropic support and research funding. Equally important is these hospitals’ commitment to addressing social determinants of health by partnering with schools, housing organizations and public health agencies to improve outcomes beyond the hospital walls. This community-centered approach is not just a moral imperative, but also a strategic one that reinforces pediatric hospitals’ role as trusted anchors in the health and well-being of children and families.

Practical Takeaways

Despite the uncertain financial future faced by many health systems today, off-campus children’s hospitals represent a strategic evolution in health care delivery, bringing specialized, high-quality pediatric services closer to where families live. While financial and operational challenges remain, particularly around reimbursement and sustainability, the growing number of successful models across the country demonstrates what is possible with vision, innovation and community alignment. As health systems continue to adapt to demographic shifts and rising behavioral health needs, investing in accessible, community-rooted pediatric care will be essential to ensuring healthier futures for children and families alike.

If you have any questions or would like more information pediatric hospital developments, please contact:

• Carla Johnson at (317) 977-1482 or csjohnson@hallrender.com;
• Addison Bradford at (317) 977-1403 or abradford@hallrender.com; or
• Your primary Hall Render contact.

Special thanks to Summer Associate Landon McCall for his assistance in the preparation of this article.

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