Industry Pulse (August 2006)

COLUMBUS, Ohio – Now that the long-anticipated $121.7 million Novant Health medical office building (MOB) portfolio sale has finally closed (please see “M&O nabs Novant portfolio” article to the right), does that bring the era of $100 million-plus MOB portfolio sales to an end? Not quite, according to industry sources. Healthcare Real Estate Insights^™ has learned that Shattuck Hammond Partners LLC, which also marketed the Novant portfolio, is now marketing a portfolio for Columbus-based OhioHealth that could also fetch upwards of $100 million. The sources, who requested anonymity, said prospective buyers were sent a confidentiality agreement in mid- to late July, and that the portfolio consists of about 10 properties totaling about 500,000 square feet. OhioHealth operates eight acute care hospitals, is affiliated with seven others, and operates outpatient centers, long-term care facilities, rehabilitation centers, diagnostic imaging centers and other facilities. Officials of OhioHealth and Shattuck Hammond could not be reached for comment before this edition of HREI^™ went to press.

BOCA RATON, Fla. – In addition to planning a future 144-bed hospital on its own campus in Miami, the University of Miami Miller School of Medicine plans to be affiliated with a future 530-bed, $638 million teaching hospital in Boca Raton. In separate meetings in recent weeks, Florida Atlantic University’s Board of Trustees and Boca Raton Community Hospital’s Board of Directors recently approved an agreement to implement a land lease for the development and operation of the future teaching hospital, which would be called the University of Miami Miller School of Medicine at Florida Atlantic University (FAU). According to the plan, the hospital would be built on 38 acres of land owned by FAU on the campus of Boca Raton Community Hospital, a 398-bed acute-care hospital that serves an area north of Ft. Lauderdale. Construction on the future teaching hospital is expected to begin in 2008 with completion scheduled for 2011. The latest announcement comes on the heels of a recent announcement by the University of Miami that it is planning its own 144-bed, $460 million hospital next to its Sylvester Comprehensive Cancer Center on the university campus. Construction is slated to begin on that project in mid-2007. The Miller School of Medicine has never had its own teaching hospital. Instead, it has relied on affiliations with other area hospitals, including Jackson County Memorial. Boca Raton Community Hospital does not plan to tap state funding for the teaching hospital. Instead, officials plan to utilize existing assets, operational funds and community contributions.

SALEM, Ore. – Oregon Gov. Ted Kulongoski and legislative leaders recently unveiled plans for two new hospitals to replace the 123-year-old Oregon State Hospital in Salem. Officials have declared the current facility as overcrowded and unsafe. After receiving recommendations from state-hired consultants, Oregon officials announced plans for a 620-bed hospital in the north Willamette Valley as well as a 360-bed hospital south of Linn County. In addition, state officials are calling for the building of two 16-bed secure residential-treatment facilities east of the Cascades. The estimated cost for the four new facilities: $324 million to $334 million. A legislative panel is planning a public hearing considering the plan this month. Officials hope to make final decisions about design, location and financing by the end of the 2007 legislative session. The proposal was developed by San Francisco-based KMD Architects.

GIG HARBOR, Wash. – A planned 80-bed hospital in Gig Harbor, near Tacoma, was expected to clear its biggest hurdle in recent weeks. The Gig Harbor City Council had indicated that it was likely to approve changes to its comprehensive plan, including zoning changes, that would pave the way for the construction of St. Anthony Hospital, part of the Franciscan Health System. Hospital officials say construction could start later this year, with the opening slated for 2008 or 2009. The state had given its approval for the hospital back in 2004, but the project has faced delays since then. For example, local officials decided that traffic problems in Gig Harbor needed to be fixed before the hospital could proceed. A hospital administrator told city officials that the delays have added about $15 million to the total cost of the project.
ARLINGTON HEIGHTS, Ill. – Northwest Community Hospital in the Chicago suburb of Arlington Heights has received the necessary local approvals to embark on a $250 million expansion. The project – a response to a growing population and demand –will add an eight-story patient tower and a five-story parking deck. It will also include an extensive remodeling of the hospital’s main building and an expansion of the emergency room. In all, Northwest will add about 330,000 square feet of space, including an addition of 78 beds to its current total of 410. The Illinois Health and Facilities Planning Board had approved the project in April, leaving the final say up to the Arlington Heights City Council, which gave its stamp of approval in late June. Construction is expected to kick off this month and last about four years.

WILKES-BARRE, Pa. – In an effort to keep patients from leaving town for better hospital amenities, Wilkes-Barre General Hospital announced that it plans to start a $100 million upgrade of its facilities and services. The plan calls for nearly tripling the size of the emergency care department and expanding the cancer treatment, cardiac, surgery and other medical and related services during the next three years. In all, about 160,000 square feet of space and three floors will be added to various sections of the hospital. Officials with Wilkes-Barre General say that an estimated $200 million worth of inpatient care is lost annually to out-of-town hospitals. For example, the current emergency care department has only 13,000 square feet of space but treats about 50,000 people annually, according to officials. The cancer center across the street from the hospital will have 40,000 square feet of space for radiologists, radiation oncologists and other specialists.

RICHMOND, Va. – Henrico Doctors’ Hospital in Richmond is planning a five-year, $80 million expansion of its Forest campus that would add 96 private patient rooms and more parking. The 340-bed hospital, part of Nashville, Tenn.-based HCA Inc. (NYSE: HCA), will not add new beds, but will privatize 96 patient rooms. The project also calls for expanding the emergency department and building a medical office building (MOB) on the campus. The hospital acquired land needed for the project from a nearby apartment complex. The Forest campus has 340 licensed beds – a number that will not increase. However, the ratio of private rooms to semiprivate rooms will increase with the opening of the new patient wing, which will be built over an underground parking deck. Hospital officials say the project is in response to patient demand for private rooms.q