Cincinnati area is a healthcare hotbed

CURRENT, FUTURE PROJECTS COULD REACH $1 BILLION; SUBURBS SEE BIG GROWTH

 

By John Mugford

 

In a Page 1 article in USA Today back on Jan. 3, several cities were named as current hotbeds of hospital construction. They included Denver; Austin, Texas; Charleston, S.C.; and Cincinnati.

Yes, Cincinnati, home of Pete Rose, Proctor & Gamble and a unique type of chili served on noodles.

Anyone who considers Cincinnati a sleepy river town in southern Ohio with a declining population should know this: Current and planned healthcare construction is estimated at about $700 million, but it could actually approach $1 billion.

While the city of Cincinnati itself is not necessarily booming – the population has been in a slow decline in recent decades – the suburbs and exurbs, which extend north of the city toward Dayton, Ohio, and south into northern Kentucky, are growing rapidly. Some population experts predict that Cincinnati’s metro area will someday virtually connect with Dayton, which is about an hour to the north.

As of 2004, Cincinnati’s population stood at 317,361, according to the U.S. Census Bureau. That represented a 1.5 percent decrease in population in just two years. Throughout the 1990s, the city of Cincinnati’s population decreased by about 15 percent.

But, as noted earlier, the greater metropolitan area is booming. In fact, the 15-county metro area had an estimated 2,052,372 people in 2004, according to the Census Bureau. Warren County, Ohio, which is north of Cincy, is the 50^th fastest growing county in the country. On the south side of the Ohio River, Boone County is the fastest growing county in Kentucky.

“We’re definitely seeing the move to the suburbs, both of the population and of healthcare systems,” says John Rogers, who leads the healthcare division of Cincinnati-based GBBN Architects. “I wouldn’t say there is a ton of replacement facilities. But, there are projects to upgrade and expand facilities that were originally built 30 years ago and that just can’t provide the technology and the services that are needed today.”

Financial boost

In addition, most of the major hospital systems, which are not-for-profits, are experiencing newfound financial health. For years, many of Cincinnati’s hospitals could not afford to make much needed capital improvements.

“For a half dozen years or so, most of the hospitals were not in the financial position to make the upgrades or expansions that they might have thought were necessary,” says Nancy Strassel, vice president of communications for the Greater Cincinnati Health Council, which has 34 hospitals, including specialty hospitals, as members. “So now, the systems are playing catch-up.”

As part of the return to financial health, the area’s 30 or so acute-care hospitals reduced the total number of beds by a significant amount, going from about 7,400 to 3,800. Since 1997, two major hospitals have closed in the city of Cincinnati. In recent years, some of the area’s hospitals actually faced shortages of beds; healthcare systems responded by adding about 700 beds.

In the meantime, according to health system administrators, hospitals did their best to improve their bottom lines through increased efficiencies and by making sure to maximize the capturing of payments from insurance providers and the federal government.

“There are other factors as well, but it was a combination of things,” says Ms. Strassel.

The result of the hospitals’ efforts has been a rather swift return to financial health for the metro area’s acute-care facilities. In fact, as recently as 2002, Cincinnati’s hospitals had a combined loss of $6.9 million, according to an annual report by Minneapolis-based hospital consultant Allan Baumgarten. But by 2004, the area’s hospitals had a combined profit of $332.7 million, according to Mr. Baumgarten’s report.

“The hospitals are doing better and healthcare development, as opposed to office development, has been very strong,” says Alan Kalb, chief estimator for Danis Construction of Cincinnati.

Danis has worked with several of the large health systems in Cincinnati, including the recent completion of a $50 million project, including a patient tower, at Mercy Hospital Fairfield, in a growing area northeast of Cincinnati. The ongoing project also includes an upgrade and addition of the emergency department.

“That’s an example of what’s happening in the outer suburbs, like out in Warren and Butler counties,” says Mr. Kalb of Danis. “Not too long ago, Mercy Fairfield was a little rural hospital and now it’s very busy.”

Providers head east

 

Mercy Health Partners of Southwest Ohio, which is part of Catholic Health Partners, recently announced plans for an $18 million expansion plan at its Mercy Clermont Hospital in the far eastern metro town of Batavia. Mercy is also planning new medical offices even farther to the east, in the small town of Mt. Orab and at Mercy Hospital Anderson, in Anderson Township, Ohio. Cincinnati-based Champlin-Haupt Architects Inc. is doing much of the design work for Mercy.

“The kind of growth currently taking place north of Cincinnati, in Butler and Warren counties, is expected to take place in later years east of Cincinnati, in areas that are now considered more rural,” says Melissa Lutz, business development director for Champlin-Haupt, long a major healthcare architecture firm in town. 

There, according to Mercy officials, the provider has purchased 20 acres and is planning a three-phase development that will start with a freestanding emergency room, add more services, such as maternity, at a later date, and eventually, in four to six years, overnight beds.

As is the case in many growing metropolitan areas, providers in the Cincinnati area often look to gain footholds in growing suburban and exurban areas by developing outpatient facilities, often with urgent care offices, surgery centers and emergency rooms. The provider leaves the door open for the possibility of building a full-scale, acute-care hospital at the site should demand, and the population, continue to grow.

“I think a lot of the growing areas in suburban Cincinnati will not necessarily see full-scale hospitals, at least not at first,” says Russ Sanford, a vice president with the development firm Equity, which has an office in the Cincinnati area. “What I think we’ll see is the development of quite a few healthplexes, which provide a variety of services but are not full hospitals.”

Still on the Hill

For decades, a good share of Cincinnati’s medical community was located on what is known as “Pill Hill,” near the University of Cincinnati and the central business district. But as the population has moved outward, the health systems on Pill Hill have consolidated with other hospitals, moved, or added facilities and hospitals in the outlying suburbs.

“Pill Hill is still quite prominent – it hasn’t gone away,” says Mr. Sanford. “There are still five very prominent hospitals there, including Cincinnati Children’s, which is one of the best in the world.”

According to development and architectural sources, Cincinnati Children’s Hospital Medical Center has provided area architects and construction firms a steady stream of work over the years.

“They always seem to have projects ongoing,” says Mr. Rogers about Cincinnati Children’s Hospital, which is consistently listed as one of the country’s top children’s hospitals by Modern Healthcare magazine. “It’s a campus with 4 million square feet of space, and they’re very progressive in making upgrades and expanding their services.”

In recent years, other systems on Pill Hill have also launched construction projects, such as Bethesda Good Samaritan Hospital. The Tri-Health system hospital is in the midst of a $175 million expansion and upgrade project.

CON or non-CON?

 

Meanwhile, the debate continues in Ohio concerning Certificate of Need (CON) regulations. The state required CON approval for major inpatient and outpatient surgery projects until 1995, when the longstanding law was phased out. (The state still requires CON for long-term care facilities.)

But in January, state Sen. Ray Miller (D-Columbus) was expected to introduce a bill to bring back the state’s CON requirement. Mr. Miller introduced a similar bill back in 2002 that did not win enough support. As of press time, it was not known whether the senator had introduced such a bill.

Mr. Miller and other proponents of CON argue that there has been an explosion of healthcare development since the requirement was phased out. They point to the fact that Columbus has three heart hospitals, and that hospitals in general are having a difficult time finding qualified staff members. They also argue that a number of physician-owned specialty hospitals have cut into the profits of general acute-care hospitals.

Proponents of bringing CON back say the Cincinnati area’s healthcare market is growing too rapidly. For example, on the border of growing Butler and Warren counties, north of Cincinnati, Health Alliance is planning a future $200 million, 160-bed hospital that could eventually grow to the 300 beds.

Within 10 miles of the site is Mercy Fairfield Hospital and Fort Hamilton Hospital, another Health Alliance facility. The future Middletown Regional Hospital replacement facility, planned as $195 million, 250-bed facility, is just 15 miles from the future Health Alliance hospital.

However, critics of bringing back CON say the old law, while it had its positive and negative aspects, was flawed and political. That’s why the Ohio Hospital Association was in favor of getting rid of the law back in the 1990s. The OHA has not necessarily taken a stand this time around, but the association points out that CON applications used to take up to six months of review by the state and typically cost providers upwards of $20,000.

CON opponents point out that the free-market is the best determinant of whether a new hospital, expansion, replacement or surgery center project is needed. By the time Health Alliance’s new hospital is completed in 2008, the populations of Butler and Warren counties will have grown 10 percent, according to health system officials. q

UNDER CONSTRUCTION

 

• § Bethesda North Hospital, Montgomery. This TriHealth Inc. hospital located in the northwest suburbs of Cincinnati is undergoing a $150 million expansion that includes a seven-story, 132-bed tower with about 300,000 square feet of space. All of the rooms will be private and are double the size of the hospital’s existing patient rooms. In addition, the hospital is adding a new parking structure with 663 spaces. The project, according to TriHealth officials, is being driven by demand; inpatient admissions at Bethesda North have increased 41 percent in the last five years. The new project will increase the hospital’s bed capacity by 45 percent. The architect on the project is HDR Inc.; the construction manager is Turner Construction’s Cincinnati office.
• § Bethesda Good Samaritan Hospital expansion, Cincinnati. The overall plan at Good Samaritan, a TriHealth facility, calls for spending $122 million to expand or renovate a total of 250,000 square feet of patient care space. Included in the project is a 10-story expansion of the Dixmyth tower that will add 175,000 square feet. Also included in the project will be the renovation of 75,000 square feet of existing space, including cardiology, pulmonology, vascular, OB and several other departments, and an expansion of the Emergency Department. The projects are expected to be completed in early 2007. The architect is HDR Inc., and the construction manager is Turner.
• § Middletown Regional Hospital, Middletown. Last summer, Middletown Regional Hospital announced plans for a $195 million, 750,000 square foot future replacement hospital in Middletown, about a half hour north of Cincinnati. Initial plans call for up to 250 beds, with additional growth a possibility. The completion date is scheduled for 2008. By 2012, the hospital expects to treat 370,000 patients annually, a 33 percent increase over 2004. Included in the hospital complex will be centers for oncology and cardiology, and an outpatient surgery center. The architect is Nashville, Tenn.-based Earl Swenson Associates; construction is being handled by a partnership of Skanska USA and Shook Construction of Dayton, Ohio. In addition to the hospital, the 190-acre campus is slated to have a 141,000 square foot medical office building (MOB) developed by a firm called Equity, which has an office in Cincinnati. Equity is also developing a 38,000 square foot cancer center attached to the hospital. Earl Swenson Associates is the architect on both of the projects, with Equity providing construction management.
• § Cincinnati Children’s Hospital Medical Center research facility, Cincinnati. Work is under way on Cincinnati Children’s Hospital’s 12-story, 415,000 square foot Center for Computational Medicine, which will increase research space at the hospital by 70 percent. The project will bring together scientists from a number of research fields. The timeline calls for a completion in 2007. The architect is GBBN Architects, and the general contractor is Cincinnati-based Messer Construction.
• § Bethesda Medical Center at Arrow Springs, Lebanon. TriHealth is in the midst of building a $33 million dollar, 100,000 square foot medical complex in the fast-growing area of Lebanon, in Warren County. The facility, scheduled for completion in April, will provide doctors’ visits, testing, diagnostics and outpatient treatment, as well as 24-hour emergency care.  Turner Construction’s Cincinnati office is the general contractor and the architect is URS Corp.’s Cincinnati office. The site could eventually be expanded to include a TriHealth acute-care hospital, even though TriHealth officials have not confirmed such information.

 

IN THE PIPELINE

 

• § Health Alliance’s new hospital in West Chester, Ohio. Health Alliance, which currently operates six hospitals in greater Cincinnati, has plans for a seventh facility in the growing suburb of West Chester, in the northern metro area. The hospital, which would be the first new full acute-care hospital in the Cincinnati area in decades, is planned as a $200 million, 160-bed facility that could be expanded to 300 beds in coming years. The hospital is planned for 29 acres of the 75-acre University Pointe campus, where UC Physicians, a 400-doctor group, already operates a surgery center and office building. The architect on the project is Nashville, Tenn.-based RTKL Architects, and the construction manager is a partnership of Minneapolis-based M.A. Mortenson Co. and Cincinnati-based Messer Construction.
• § University Hospital, Cincinnati. University Hospital, which is part of the Health Alliance system and has been in Cincinnati for more than 180 years, is in the early stages of planning for a future $200 million wing for its Neuroscience Institute. To make room for the future wing, the hospital would need to reconfigure about 30 other departments on the campus, which is located on Cincinnati’s “Pill Hill.” Cincinnati-based GBBN Architects is working on the plan.
• § Cincinnati Children’s Hospital Medical Center, Liberty Township. There’s plenty of speculation over what Children’s will do with 65 acres it controls in fast-growing Liberty Township, on the southern edge of Butler County between Cincinnati and Dayton. The possibilities range from a full-blown pediatric regional medical campus to another outpatient facility, of which Children’s currently has 11. Children’s officials say they have not yet determined the range of services to be offered at the future facility, which has been rezoned to accommodate a hospital or other medical facility. According to sources, Children’s could lease some of the land to TriHealth, which might develop an MOB and surgery center on the site.
• § St. Elizabeth Medical Center, Grant County, Ky. St. Elizabeth dominates the healthcare market in the Cincinnati suburbs south of the Ohio River, in northern Kentucky. There, St. E, as it is known, has three locations: St. Elizabeth North, St. Elizabeth South, and St. Elizabeth Grant County. Real estate sources indicate the provider is in the early stages of developing a master plan to expand the Grant County hospital campus, which is currently located in a rural area. Further details were not available.