Industry Pulse (January 2007)

MEMPHIS, Tenn. – Methodist Le Bonheur Healthcare of Memphis recently submitted applications for two major construction projects to the Tennessee Health Services and Development Agency (HSDA). The first is for the construction of a $327 million replacement hospital for Le Bonheur Children’s Medical Center near downtown Memphis. The second is for a $124 million, 100-bed expansion of Methodist Le Bonheur Germantown Hospital, in Germantown, Tenn. System officials say the replacement children’s hospital would nearly double the size of the current facility, adding more space for patient care, research and teaching. Officials add that the expansion at the Germantown hospital is needed to keep up with increased patient volume and a growing population on the east side of the Memphis metro area. In its application, the system is asking to shift 100 beds from three of its hospitals where demand is not as high.

WASHINGTON – Before adjourning its final session earlier this month, the U.S. Senate passed a VA/Military Construction Bill that included $52 million for a new VA hospital planned at the former Fitzsimons Army Medical Center in Aurora, Colo. Those dollars, combined with a previously authorized $46 million, are to be used to buy land from the Fitzsimons Redevelopment Authority and to fund planning and design work. The 1.4 million square foot facility would be a replacement  for the VA’s 54-year-old, 128-bed hospital in Denver. The VA hospital, which is expected to cost hundreds of millions of dollars, would be one of several medical providers that are relocating to the Fitzsimons site.

CHATTANOOGA, Tenn. — Memorial Hospital in Chattanooga recently received state approval for its proposed $293.3 million expansion and remodeling plan in the Glenwood area of the city. Tennessee’s Health Services and Development Agency unanimously approved the project, which calls for relocating 32 licensed beds from Memorial’s smaller hospital, North Park Hospital in Hixson, Tenn. Currently, Memorial has 337 licensed beds at the main campus. The project would add 397,000 square feet of new space and renovate 137,000 square feet of existing space. Plans also call for replacing and expanding the hospital’s surgical suites with operating rooms and replacing several intensive care units. In addition to the hospital expansion and remodeling, Memorial is planning to add a medical office building and a parking structure, which brings the total cost of the overall project to $320 million. Officials say the final plans will be developed over the next 18 to 24 months, with construction starting at that time. 

SPRINGFIELD, Ill. – It looks as if the State of Illinois is second-guessing its practice of regulating new healthcare construction, a job that has long been overseen by the controversial Illinois Health Facilities Planning Board (IHFPB). In recent weeks, the state’s General Assembly ordered the Illinois Commission on Government Forecasting and Accountability to determine whether the IHFPB is doing its job. Some say the investigation could lead to the eventual elimination of the facilities planning board. Of course there are arguments both pro and con for retaining the facilities planning board, which was riddled with a kick-back scandal in 2004. Some believe the free-market is the best determinant of whether new hospitals and healthcare facilities are needed. Others say that allowing competition to run wild could be detrimental to many of the state’s hospitals, especially those that care for the poor and uninsured. Seventeen institutions recently formed The Campaign to Save Illinois Hospitals to pressure lawmakers to protect the health board. A report by the state commission is expected in mid-February.

LAHAINA, Hawaii – Just two months after the state of Hawaii denied one Certificate of Need proposal for a new hospital in West Maui, a partnership from the mainland has announced plans for an acute-care facility in the area. The proposal comes from Springfield, Pa.-based InnoVative Capital LLC and Ameris Health Systems LLC. InnoVative Capital concentrates on financing hospital construction projects, typically in rural settings. Ameris is a private company that develops, owns and manages four hospitals in the Southeast part of the United States. In November, the State Health Planning and Development Agency denied Malulani Health Systems’ application for a new 150-bed hospital in Kihei – a decision that Malulani has appealed. The island of Maui has just one acute-care hospital, the state-subsidized Maui Memorial in Wailuku. Maui Memorial, which had opposed Malulani’s plans a few months ago, issued a statement of support for the proposal from InnoVative Capital and Ameris, which is proposing a facility with 25 to 40 acute-care beds and about 40 long-term acute-care beds. The companies plan to submit a CON application with the state in February.

SEVIERVILLE, Tenn. – Count country singing star Dolly Parton among those having an impact on healthcare in Tennessee. Sevier County’s best-known native recently announced plans to contribute $500,000 toward the building of a new $90 million, 79-bed hospital and cancer center in Sevierville, about 25 miles southeast of Knoxville, Tenn. Ms. Parton made a surprise appearance at a recent dinner hosted by Knoxville-based Covenant Health, owner of the future hospital. The party was held to celebrate the recent granting of state approval for the future hospital, which is near the singer’s Dollywood theme park in Pigeon Forge. Ms. Parton, who was born in Sevier County in 1946, is the honorary chair of the Dr. Robert F. Thomas Foundation, a not-for-profit group founded in 1983 to improve medical services the county. The foundation has a goal of raising $10 million for the new hospital. Construction is set to begin early next year with a targeted completion of 2009.

WASHINGTON – The District of Columbia Council recently decided to put to good use all of that tobacco money it’s received. The council recently voted to spend up to $245 million in tobacco-settlement funds to build a new healthcare complex, several new ambulatory care centers and other preventive health services throughout the city. The council authorized spending $116 million for constructing the facilities, $80 million to improve to the district’s emergency care system, and about $40 million for smoking cessation and cancer prevention programs. About $6 million will go toward a regional health information network. A study by the Rand Corp., which is due early this year, will help guide the city on where to allocate the funds.

ST. HELENA, Calif. – The St. Helena Hospital Foundation announced that it has launched a $27.5 million capital campaign to support the first phase in a five-phase plan for renovation and expansion at St. Helena Hospital.  Phase one is scheduled to include the development of a new 25,000 square foot facility that houses a cancer center and an expanded outpatient surgery center along with expansion of a birthing center, cardiovascular lab services and an electronic medical records system. The total cost for the project is estimated at $30 million. Construction is scheduled to start in spring 2007 with completion slated for 2008.  Hospital officials indicated that they would like to pursue an additional $30 million in capital improvements in the five years following completion of their first phase. q