Industry Pulse (April 2007)

CHESTERTON, Ind. – The healthcare community is abuzz in Porter County, Indiana, located just south of Lake Michigan and about 50 miles east of Chicago. That’s because officials with a massive planned residential and commercial community called Coffee Creek Center recently confirmed that they are in discussions to bring a new hospital to their development. Coffee Creek officials would not name the hospital or provide additional details. The announcement comes at a time when Plano, Texas-based Triad Hospitals Inc. is working to close on its acquisition of Porter Memorial Hospital, a county-owned facility located in Valparaiso, Ind. Part of the pending agreement calls for Triad to build a new replacement hospital in the area, which has reportedly sparked interest in the area from other medical care providers. Coffee Creek officials confirmed that the new hospital they would bring to the area is not the future Porter Memorial replacement.

BATON ROUGE, La. — Louisiana lawmakers in recent weeks approved a $74 million funding plan to allow LSU Healthcare Services to buy land and begin design work for a new Charity Hospital in New Orleans. Up to $226 million could be made available for the eventual construction of the new hospital, after lawmakers approve plans detailing the size and price for the new hospital. The funding would come by way of a pool of federal hurricane relief cash, meaning it would still need the approval of the federal government. As part of a plan to replace Charity Hospital, which was destroyed by Hurricane Katrina, LSU has decided to build a joint medical complex with the U.S. Department of Veterans Affairs (VA). The two entities would build separate hospitals but share operating costs. Louisiana lawmakers had rejected an earlier, $300 million funding proposal. Opponents of that plan, most of whom were Republicans, said they needed to see more details before voting for approval.

DURHAM, N.C. — Duke University Hospital recently announced that is starting the process of seeking state permission for a “major expansion” that would replace a major on-campus facility and add up to 300 acute-care beds. The overall project would entail building about 950,000 square feet of space and add 20 new operating rooms. At this time, the hospital’s application for Certificate of Need does not provide much detail, but asks for the approval to proceed with a $6.3 million planning process. The new proposal comes after Duke broke ground last fall on a $73.2 million, eight-story tower that is to have 77,000 square feet of space for new operating rooms, administrative offices, and a large family waiting area. Duke’s latest plan also calls for the demolition of its Bell Research Building, which houses offices for the surgery department as well as offices for other departments. Those offices would be moved to the new facility, according to the application. Duke’s application indicates that the hospital’s current facilities are undersized for today’s new medical equipment and technology.

BOYNTON BEACH, Fla. – Not-for-profit Bethesda Memorial Hospital recently received the go ahead from an administrative law judge to proceed with its plans for an 80-bed, $80 million hospital west of Boynton Beach in Palm Beach County. The decision concludes a nearly four-year battle between Bethesda and several of its nearby, for-profit competitors. The decision confirms a 2005 decision by the Florida Agency for Health Care Administration (AHCA). The agency will rule on the case again this coming summer. Last year, an administrative law judge had ruled against Bethesda’s proposal, partly because he thought a new hospital would worsen the shortage of emergency room physicians. Competing hospitals such as JFK Medical Center in Atlantis, Fla., Wellington Regional and Delray Medical centers, have argued that there is no need for a new hospital, which would contribute to the well-documented shortage of specialists. West Boynton Community Hospital would be built on the site of a 58-acre herb farm. Palm Beach County, which grew 32 percent in the last decade and currently has 14 hospitals, has not had a new hospital built since 1986.

HOUSTON – Less than a year after its short-lived partnership with St. Luke’s Episcopal Hospital ended, Houston-based Baylor College of Medicine is now planning to break ground in July on its first hospital. Baylor officials recently released details of the first phase of its plan, which calls for a 256-bed, 1.1 million square foot facility slated for completion in 2010. The $568 million project would include faculty offices and a clinic. A planned second phase would increase those figures to 600 beds and 2.7 million square feet. Building and running its own hospital will give the institution “control of its clinical mission,” according to a statement from Baylor President Dr. Peter Traber. He noted that Baylor is the only top-20 medical school in the United States without its own private adult teaching hospital. Baylor had a long-standing relationship with Houston’s Methodist Hospital, but that relationship ended in 2004 when Baylor announced plans to develop its own outpatient clinic. Baylor plans to pay for the new facilities with an existing building fund, bonds and a successful fundraising effort that has garnered $440 million. The hospital is planned for a 35-acre site inside the massive Texas Medical Center.

COLORADO SPRINGS, Colo. – Nashville, Tenn.-based Healthcare Realty Trust Inc. (NYSE:HR), which manages or holds 249 medical properties in 28 states, has officially made its entrée into Colorado. The publicly held real estate investment trust (REIT) broke ground in recent weeks on a 170,000 square foot, two-building complex called Medical Pavilion. It is being built near the nearly complete, 98-bed Memorial Hospital North in Colorado Springs. Healthcare Realty officials say the project could be the start of more activity for the company in Colorado, which is seeing growth in both young families and people in the 55-plus demographic. The REIT’s new project faces plenty of competition, as several for-lease medical projects are either under construction or planned within a three-mile radius. One of them is Memorial North’s future 123,000 square foot, on-campus medical office building (MOB), where pre-leasing activity has resulted in an occupancy rate 70 percent. Memorial officials say HRT’s building is a positive, as it will help grow the new hospital after it opens in coming weeks. While Healthcare Realty will own and manage its new MOB complex, the land underneath the buildings is owned by Denver-based Prime West Development Inc. Completion of the project is scheduled for February 2008. q