CHW plans $9 billion in capital spending
CATHOLIC HEALTHCARE WEST TO INVEST HEAVILY IN NEW HOSPITALS, UPGRADES
By John Mugford
Catholic Healthcare West (CHW), the massive health provider with 42 hospitals in California, Arizona and Nevada, is no slouch when it comes to investing in its facilities. For example, the system spent $593 million on capital expenditures during its last fiscal year.
Over the next decade, however, that figure will look somewhat small in comparison. That’s because CHW recently announced that it plans to spend about $9 billion on capital projects in the coming decade – for an average of about $900 million a year. The spending plan was disclosed in a recent ratings report by Standard & Poor’s.
According to the plan, the bulk of the $9 billion is to be spent on building new hospitals, constructing replacement hospitals or making upgrades to conform with California’s seismic requirements, and adding information technology and new equipment.
CHW officials have said in news reports that the system is ready for growth – albeit “cautious” growth. An example is the system’s recent acquisition of the 380-bed Saint Mary’s Regional Medical Center in Reno, Nev.
CHW says it, as well as other West Coast providers, face some serious challenges in the next decade, such as sky-high California construction costs, increasing numbers of uninsured patients, and shortages of nurses and other healthcare professionals. Even so, Standard & Poor’s gives CHW an “A” rating on a pending bond issue.
For the first half of fiscal 2007, which ended Dec. 31, CHW posted net patient revenue of $3.3 billion, up from $3.04 billion a year earlier. Net income also increased 29 percent during that period to about $259 million.
Work under way
on Johns Hopkins
BALTIMORE − The Johns Hopkins Hospital in Baltimore recently began construction of a $573 million, 1.5 million square foot facility that will contain two towers – one for adult cardiovascular and critical care and one for children’s care. It is currently the largest healthcare project under way in the country.
The project is the centerpiece of Johns Hopkins’ overall $1.2 billion redevelopment plan to increase research and clinical space and to replace outdated hospital buildings. The new building will connect with the Harry and Jeanette Weinberg Building and the Nelson/Harvey Tower.
The cardiovascular and critical care tower will have 355 beds and about 960,000 square feet in size; it will be home to the new Johns Hopkins Heart Institute. The other tower, which is to house the new Johns Hopkins Children’s Center, is to have 205 beds and about 540,000 square feet of space. In addition, the new facility will have 33 operating rooms; 42 radiological suites; 13 non-invasive treatment areas; 16 gastrointestinal and pulmonary diagnostic and treatment areas; and 96 emergency treatment areas (67 for adults and 29 for children).
The project is scheduled for completion in 2010.
Johns Hopkins has awarded the construction contract to Clark/Banks, A Joint Venture, which is composed of Bethesda, Md.-based Clark Construction Group LLC and Baltimore-based Banks Contracting Co. Inc.
The design team is led by the Los Angeles office of Perkins+Will. The consulting engineer is Boston-based Bard, Rao + Athanas Consulting Engineers LLC.
Santa Clarita, Calif.,
master plan expansion
SANTA CLARITA, Calif. – City officials in Santa Clarita are in the process of reviewing a master plan for a significant expansion over the next 25 years at Henry Mayo Newhall Memorial Hospital, currently the only hospital in the growing town north of Los Angeles.
The hospital is developing the master plan in conjunction with Beverly Hills, Calif.-based G&L Realty Corp., an owner and developer of medical office buildings. G&L has one MOB on the campus and owns addition property for the future construction of additional MOBs that would be part of the 30-acre campus.
The first phase of the plan calls for building a 120-bed, 125,000 square foot inpatient addition, a three-story, 80,000 square foot medical office building (MOB), and an underground parking garage with 750 spaces. These projects could get started in 2007.
Future phases call for two more MOBs with a total of about 120,000 square feet, more parking structures with more than 900 spaces, another inpatient addition with 74,000 square feet, a five-story, 113,000 square foot administration building, as well as new energy plants and other infrastructure.
On its Web site, Newhall Memorial indicates that it plans to integrate its healthcare services in both inpatient and outpatient facilities, increasing cost-efficiency.
The Web site states: “The optimal healthcare experience is provided when a medical campus links these two types of spaces – together these spaces create ‘healthcare centers of excellence.’”
In recent months, Newhall Memorial officials have reduced the size and scope of the plan as both residents and city officials have expressed concern the impact such a large campus would have on the town and traffic. Even after the reduction, the multi-phase project would still triple the size of Newhall Memorial’s current campus, which totals 330,000 square feet. Its current hospital has 217 beds.
Residents have also questioned whether the master plan includes the correct balance of inpatient and outpatient space. The city and hospital were expected to co-hire in recent weeks a consultant, Atlanta-based Kurt Salmon & Associates, to study that issue.
The city is also trying to determine whether other hospital systems might move into the growing area. For example, Providence Holy Cross Medical Center, based in Mission Hills, Calif., recently announced that it is considering the acquisition of 38 acres just outside of Santa Clarita city limits for a potential 200-bed hospital.
Providence Holy Cross officials say they have not made a decision on whether to move forward on the acquisition.
City officials and some residents, especially those on the east side of Santa Clarita, say the city could potentially support two hospitals.
INDIANAPOLIS – The state of Indiana is halfway towards passing a temporary moratorium on new hospital construction. The measure is designed to give state officials and lawmakers time to determine whether boutique and specialty care hospitals are having a negative effect on general acute-care hospitals that provide care for the uninsured, including those in the inner city. The Indiana House in recent weeks voted 52-37 in favor of the moratorium; the Senate has yet to vote on the measure.
The proposed moratorium, if passed in its current form, would run through July 2008. It would put a halt only to projects that were under development after July 2006 – allowing projects that were started before then to continue.
State Rep. Charlie Brown, D-Gary, states in news reports that he would like fellow legislators to examine how hospitals that serve the uninsured are being affected by a rise in specialty care hospitals. According to Mr. Brown, empty beds at Methodist Northlake in Gary and other inner-city hospitals are costing taxpayers’ money.
Gary, Ind.-based Methodist Hospitals, which also operates the Southlake Campus in Merrillville, Ind., has been losing money in Gary because it doesn’t draw enough paying customers to help subsidize the cost of emergency care given to patients who cannot afford pay. State and federal programs reimburse hospitals for only a portion of treating the uninsured.
Lawmakers say specialty hospitals in Indiana typically locate in suburban areas and focus on one area of medicine, such as heart procedures. Several Republican lawmakers indicate they do not want to limit the growth of such facilities.
submits new plan
for Illinois hospital
CRYSTAL LAKE, Ill. – Three years after its proposal for a new hospital in Crystal Lake, Ill., became embroiled in a scandal that led to big changes at the Illinois Health Facilities Planning Board (IHFPB), Janesville, Wis.-based Mercy Health System has submitted another proposal for a hospital in the same town. Crystal Lake is located just northwest of the outer suburbs of Greater Chicago.
This time, Mercy Health has submitted plans for a larger hospital, a $224 million project that would include a 128-bed acute-care hospital and an adjacent MOB.
Back in 2003, Mercy Health had applied for a 70-bed hospital and adjacent MOB at a price tag of $81.4 million. While that proposal was given the green light by the IHFPB, a judge later ruled that the planning board, by then deep in scandal, violated its own rules in approving the hospital. Eventually, the governor made some major changes in the board, naming new board members and reducing the number of members from nine to five.
Mercy officials say Crystal Lake community leaders, local doctors and residents have been asking for more healthcare services and inpatient beds in the growing portion of McHenry County.
in Las Vegas has
$100 million plan
LAS VEGAS – As the Las Vegas area continues to grow at a rapid pace, local hospitals are feeling the pinch of growing demand.
One such hospital is the 10-year-old, 281-bed Summerlin Hospital Medical Center in the northwest part of the city. Summerlin officials recently announced that the system has plans for a $100 million expansion that would add a third patient tower with 170 private patient rooms, as well as a new 400-space parking structure. The plan also calls for upgrading and doubling the size of the hospital’s emergency room, adding 30 new beds and treatment areas.
The expansion is to take place in phases over the next two years, with completion of the patient tower scheduled for mid-2009. Las Vegas-based SR Construction is the contractor for the parking structure while Dallas-based HKS Inc. is the architect on the patient tower project. A contractor has not been named for the patient tower portion of the project.
Groundbreaking for emergency room expansion is scheduled for coming weeks with a scheduled completion in mid-2008. SR Construction is the general contractor on that project.
Even with the large expansion, Summerlin officials anticipate that they hospital will need to grow even more in coming years. That’s why the hospital plans to build space that, in the future, could accommodate 35 additional private rooms, two new operating suites and a third cardiac-catheterization laboratory.
In addition, officials are planning for the construction of an 80,000 square foot medical office building (MOB) and another parking structure on the hospital campus. Groundbreakings for those projects have not been announced.
Shriners in Hawaii
to begin replacement
costing $73 million
HONOLULU – The Shriners Hospital for Children in Honolulu is preparing to break ground on a $73 million replacement facility with 44 beds – 24 inpatient beds and 20 rooms for patients and their families.
The project entails razing the current 40-bed hospital, which was completed in 1967. The new hospital, which will have 116,000 square feet of space, is slated for completion in mid-2010. In the meantime, Shriners will treat patients in a $1.4 million mobile operating trailer similar to those used by the military. The trailer will allow the hospital to continue to see the same number of patients annually – about 550 – until the new facility is complete.
The Shriners hospital in Honolulu was founded in 1923 and is one of 22 such facilities across the country that provide free care for children. The hospital has embarked on a $15 million fundraising campaign to help pay for the facility.
For the Record
Sinai Hospital in Baltimore recently announced plans for a $30 million expansion of its Herman & Walter Samuelson Children’s Hospital. The project is the first phase of an overall plan that could see $100 million in improvements over the next four to five years at the hospital, which is part of Baltimore-based LifeBridge Health Inc. The first phase of the plan calls for a new pediatric outpatient facility, a new floor of inpatient space on top of an existing building, as well as a renovation of existing space. Construction is expected to begin in 2009, giving the hospital time to embark on a fundraising campaign… Houston Healthcare of Warner Robins, Ga., recently announced a $75 million expansion and renovation at Houston Medical Center in Warner Robins. Work began recently on a $14 million central energy plant and a $1.4 million upgrade to the Houston Heart Institute. The centerpiece of the project is a $60 million, five-story bed tower with 102 private patient rooms. The project will add just 12 new beds, which is all that Georgia state regulators would allow. Hospital officials, however, say the hospital is likely to need additional beds in the future. The patient tower is slated for completion in 2009… Rhode Island Hospital in Providence, R.I., recently began work on a $60 million, three-phase expansion to add three new floors and 49 beds. The first phase includes building a 130-foot freestanding tower that would support a connecting bridge to new patient floors. It is slated for completion in early 2009. Boston-based Shawmut Design and Construction is the construction contractor for the first phase, with architectural design by the New York office of HOK Architecture. When the three-phases are complete, the hospital’s total bed count is expected to be 657, with 414 of them in private rooms… The new BJC Progress West HealthCare Center, a $75 million, 72-bed acute-care hospital in O’Fallon, Mo., recently opened. It’s the first new hospital to open in the St. Louis area since 1986. The 171,000-square-foot facility includes 20,000 square feet of office space. Paric|Barton Malow, a partnership of St. Louis-based Paric Corp. and Southfield, Mich.-based Barton Malow Co., was the construction manager. The architect was Hellmuth Obata & Kassabaum (HOK)… Gwinnett Medical Center in Lawrenceville, Ga., is about to begin a $61 million, 155-bed vertical expansion on top of its existing Support Services Building. The six-story facility is to contain about 175,000 square feet of space and will house surgical and surgical intensive care, progressive care, cardiac intensive care, neuroscience, a spine center, orthopedics, and the joint replacement center. Upgrades will also be made to existing hospital space. The project manager is Macon, Ga.-based Causey Project Management and the architect is the Atlanta office of Perkins + Will. The completion date is slated for 2009. q
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