Inpatient Projects (June 2007)

Post-Katrina building boom in Louisiana



By John Mugford


Following Hurricane Katrina in 2005, Louisiana has been marked by difficult financial times, a redistribution of the New Orleans’ populace, and a somewhat surprising boom in hospital projects.

As LSU Healthcare Services officials debate how to proceed with replacing Charity Hospital in the heart of New Orleans, health systems throughout the metro area and the state have moved forward with hundreds of millions of dollars worth of repair and expansion projects. Some of the projects had been planned for years but were accelerated when Hurricane Katrina wiped out Charity Hospital and changed local demographic trends.

An example can be found at North Oaks Hospital, just outside of New Orleans in Hammond, where a planned 15-year capital plan has been shifted into high gear. Officials say the expansion project should be completed by 2011, a full 10 years ahead of schedule.

Baton Rouge General Hospital is wrapping up an $87 million expansion that doubles the number of beds, bringing the total to 400. Prior to Katrina, the expansion was considered a long-term project, but the plan was accelerated shortly after Katrina hit and thousands of displaced New Orleans residents headed inland to settle in the capital city.

St. Tammany Parish Hospital is currently in the midst of a $60 million expansion that calls for adding two floors. And Ochsner Medical Center in New Orleans is planning a $50 million, six-story cancer center across Jefferson Highway from its main campus.

In a local newspaper report, Jack Finn, president of the Metropolitan Hospital Council of New Orleans, said: “…  I believe these hospitals are not waiting for government to do something for them. They’re doing it themselves.”
Certainly, much has changed for Louisiana health systems since Katrina. For example, Medicaid payments at the Ochsner system have climbed 40 percent since the hurricane – similar results have been reported by other local hospitals. Prior to Katrina, Charity Hospital provided the bulk of care for uninsured and Medicaid patients.

Other projects continue to be announced in and around New Orleans. A new startup long-term acute-care hospital (LTAC) is under construction on the site of the former St. Theresa Medical Complex in New Orleans. The project is a $60 million, 100,000 square foot facility is being developed by New Orleans-based Liljeberg Enterprises LLC.

Also, West Jefferson Medical Center recently started planning for a $60 million, 200,000 square foot patient pavilion. Hospital offices would be moved into the new pavilion in order to free up hospital space for more beds.

St. Tammany Parish Hospital is in the middle of a $60 million project at its main campus that calls for the conversion of the fourth floor into patient bed space and the addition of fifth and sixth floors. The overall project will add 243 beds to the 223-bed facility. The work is being done in a way that allows for more floors as the St. Tammany population continues to grow, the hospital said.

Also, LSU is planning a new cancer center at the corner of Tulane and Claiborne avenues that will cost an estimated  $80 million.

Even with all of the construction, a recent consultant’s study shows that New Orleans is still in need of about 1,000 beds to meet demand, according to Dr. Larry Hollier, chancellor of the LSU Health Sciences Center.

Sutter Health plans
California city’s

first hospital

ELK GROVE, Calif. – Sacramento, Calif.-based Sutter Health is making plans to build the first hospital in Elk Grove, a town of about 100,000 people 15 miles or so south of Sacramento.

The $200 million community hospital campus would also include expanded medical office buildings (MOBs) and an outpatient surgery center, according to Sutter officials. Initially, the new hospital would have 62 beds and 142,000 square feet when it is scheduled to open in 2011. The hospital structure would have space for an additional 34 beds in the future. Eventually, with a physical expansion at a later date, the hospital could have as many as 120 beds.

City officials are touting the proposal as a catalyst to spur the local economy, as the hospital would bring good-paying jobs to the city and attract other medical services and groups.

As of press time, the Elk Grove City Council was reviewing plans for the hospital, including an environmental impact report (EIR). The proposal also requires the approval of the state’s Office of Statewide Health Planning and Development (OSHPD).

Sutter currently operates two MOBs with a total of 95,000 square feet on a portion of its eventual 43-acre campus in Elk Grove. Work has already begun on the remodeling of one of the MOBs, which would provide expanded outpatient services.

The next phase would entail building a new 60,000 square foot MOB – the third such building on the campus – as well as a 33,000 square foot outpatient center that would offer surgery, imaging and rehabilitation services. The third phase would entail constructing the new hospital.

Other systems are eyeing Elk Grove as well. Oakland, Calif.-based Kaiser Permanente is looking into increasing its presence in Elk Grove, where the provider currently runs a 102,000 square foot MOB. Kaiser is reportedly in talks that could lead to the acquisition of land where it would build a 75,000 square foot primary care center. The system is looking for about 15 acres.

Also, Methodist Health, which is owned by San Francisco-based Catholic Healthcare West, is considering developing a new MOB of hospital in Elk Grove, according to local news reports.


hospital under way

in Southern Indiana

CLARKSVILLE, IND. – After a lengthy battle, a controversial $42.8 million physician-owned hospital in Southern Indiana is moving forward and is slated for completion in late summer 2008.

The Kentuckiana Medical Center, the brainchild of doctors Chris S. Stavens, a cardiologist, and Eli R. Hallal, a family practitioner, is currently under construction in Clarksville, Ind., not far across the Ohio River from Louisville, Ky.

About 30 physicians are investing in the general hospital, which will have 75,000 square feet and be built on an initial 10-acre site that cost $4.3 million. The hospital is slated for anywhere from 40 to 60 beds. The physician-investors also are planning an MOB on the site with up to 60,000 square feet.

Kentuckiana Medical Center LLC also has an option on an additional, adjacent 15 acres for a potential future expansion of facilities.

When the physicians first began planning the hospital more than three years ago, they were considering building a small specialty hospital with limited services. But those plans have certainly changed and the general hospital is expected to offer, among other services, emergency care, radiology, general surgery, cardiology, cardiovascular surgery, family practice, pulmonary, neurology, oncology, internal medicine, and plastic surgery.

Since the two doctors first proposed the medical center, their plans have been stalled by zoning battles in two separate Indiana counties as well as a federal moratorium on the construction of specialty hospitals, which ended in 2005. A short time after than, Floyd and Clark counties in Indiana imposed separate moratoriums to prevent private operators from establishing healthcare facilities. A federal judge in January 2006 struck down those moratoriums. The investors in the hospital reportedly spent $600,000 on legal fees to fight the bans.

The Kentuckiana Medical Center will be operated by a partnership of the local physicians and Wichita, Kan.-based Cardiovascular Hospitals of American LLC.

According to local news reports, the 30 investors have added mortgages to their houses and secured loans to make the hospital a reality. Drs. Stavens and Hallal were quoted as saying that they believe in physician-owned hospitals, which the doctors better control of how they provide healthcare services and an ability to better control costs.

The general contractor on the project is Floyds Knobs, Ind.-based Koetter Construction Co. Financing was arranged by a local office of Winston-Salem, N.C.-based BB&T Corp.

CAH project

in Minnesota

deemed feasible

WALKER, Minn. – Minneapolis-based Frauenshuh Health Care Real Estate Solutions recently concluded that a proposed critical access hospital and healthcare campus at a former tuberculosis treatment center near Walker, Minn., should be pursued. Frauenshuh conducted a feasibility study and determined that such a project has strong support and would be in demand if built.
 Frauenshuh, which is the lead developer, was selected last year to assist the provider, Benedictine Health Systems (BHS), in assessing whether a proposed hospital and healthcare campus are feasible on the site of what has long been known as Ah-Gwah-Ching. The study was commissioned by Cass County.

In its report, Frauenshuh determined that obtaining federal critical access hospital (CAH) designation (which brings in higher Medicare reimbursement) is crucial to the project. In fact, Frauenshuh states that the project “will most likely not be able to survive economically” without the designation.

As a result, Minnesota’s congressional delegation was making an effort to pass legislation for the CAH designation and to waive a rule that states that a CAH must be at least 35 miles from the nearest hospital. St. Josephs Hospital in Park Rapids, Minn., is 31.9 miles from the Ah-Gwah-Ching site.

Ah-Gwah-Ching is current being used as a state-run psychiatric nursing home and is set for closure in 2008. As part of the development deal, the site would be acquired from the state of Minnesota for just $1. The hospital would initially have 12 beds and be licensed for 25.

Frauenshuh recommended that BHS work with several nearby providers to create an integrated medical staff and a recruitment plan.
The healthcare campus is expected to cost about $40 million, with about $16 million needed for working capital for the first years of operation.

Lutheran Medical

in Colorado plans

$225 million tower

WHEAT RIDGE, Colo. – Denver-based Exempla Healthcare recently announced plans for a new five-story, $225 million tower on the campus of Lutheran Medical Center in Wheat Ridge, Colo. The project includes razing a portion of the existing hospital, part of which was built in 1923.

The renovation does not include adding more beds – the hospital is licensed for 400. but it would privatize all patient rooms and make them larger. The new tower, which is part of an ongoing five-year capital plan, would have 200,000 square feet of space and 10 new operating rooms, a new obstetrics delivery unit and neonatal intensive-care unit.

Lutheran Medical Center needs to gain the approval of the Wheat Ridge City Council before moving forward. Exempla officials hope to begin demolition of the old portions of the hospital by early 2008 and complete the project by 2010.

County hospital

looks to go private

because of ruling

POCATELLO, Idaho – Portneuf Medical Center in Boise, Idaho, recently set off a fierce debate when its board of governors announced that the Bannock County-owned hospital might need to become a private entity.

Portneuf says the need to go private was instigated by a decision of the Idaho Supreme Court in April 2006. In that decision – in the case of Frazier vs. the City of Boise – the court ruled that cities and counties cannot issue bonds to buy equipment or build infrastructure or buildings without the approval of two-thirds of local voters unless it involves an emergency.

At the time of the decision, Portneuf was in the middle of a $200 million construction project to consolidate its two campuses. The decision applies to Portneuf because it has taxing authority, even though the county-owned hospital has not levied taxes since the 1970s. Portneuf officials plan to use revenues generated by hospital operations to pay back all bonds it uses to finance construction.

At least three private companies, including for-profit, Franklin, Tenn.-based Capella Healthcare, have stepped forward with offers to acquire or lease Portneuf.

According to local news reports, numerous local doctors and residents of the community didn’t like the idea of the hospital becoming a for-profit entity and wrote numerous letters to the editor of the local newspaper, the Idaho State Journal.

The hospital’s Board of Governors recommended that the hospital convert itself into a 501(c)3 nonprofit, like Saint Alphonsus and St. Luke’s hospitals in Boise, Idaho. Bannock County’s commissioners are expected to make a final decision about any changes to Portneuf’s structure or ownership in coming weeks.

The Idaho Hospital Associations says other state hospitals might need to consider converting to for-profit or not-for-profit status as well.

LSU, VA campus

in New Orleans

could be 70 acres
NEW ORLEANS – Louisiana State University announced this month that the downtown New Orleans medical campus it plans to share with the U.S. Department of Veterans Affairs (VA) could be as large as 70 acres. If that is the case, the campus could consume a neighborhood that includes empty buildings, weedy parking lots and a patchwork of viable and neglected homes – part of the ruin wrought by Hurricane Katrina in 2005.

The state of Louisiana is preparing to spend tens of millions to buy the land needed for the projects. In some cases, the state is prepared to use its power of eminent domain.

LSU’s new hospital would be a replacement for the shuttered, 20-story Charity Hospital, a teaching facility that sits on a prime piece of real estate a few blocks from the proposed site of the future LSA-VA facility.

LSU officials recently said in news reports that they have no immediate plans for the idle Charity facility, an art deco icon in the heart of the city. Activist groups in the city have called for the building’s preservation, some even saying it should remain as a hospital.

Donald Smithburg, who leads LSU’s hospital division, told a local newspaper that the state has ruled out the tearing down of Charity to make way for a new teaching hospital.

For one thing, the property on which charity sits is only 11 acres – much too small to accommodate a new teaching hospital, according to Smithburg. He notes that several developers have inquired into converting the former hospital into residential units.

A team of consultants led by Rome, Ga.-based Adams Management Services Corp. reports that it would cost as much as $258 million to repair Charity and $395 million to replace it with a new hospital. The consultants have recommended mothballing the Charity building.

HCA opens new

257-bed hospital in

Independence, Mo.

INDEPENDENCE, Mo. – After 30 months of construction, the $250 million, 257-bed Centerpoint Medical Center opened in May in Independence, Mo. The 420,000 square foot hospital, which is part of Nashville, Tenn.-based HCA Inc., replaces two local hospitals: Independence Regional Health Center and Medical Center of Independence.

The two hospitals had been acquired by HCA four years as part of the system’s $1.13 billion acquisition of the 12-hospital system, Midwest Health. The new Centerpointe hospital is part of HCA Midwest Health System.

The new hospital is certified as a Level II trauma center and offers such services as cardiac catheterization and open-heart surgery. The cardiology staff numbers about 20, and the hospital has 12 orthopedic surgeons.

On the Centerpointe campus is a 200,000 square foot MOB that includes an outpatient rehabilitation center and the Centerpointe Ambulatory Surgery Center, a joint venture of physicians and Medical Care America, HCA’s ambulatory surgery division.

TriHealth in Cincy

adding capacity

in $270 million plan

CINCINNATI – TriHealth Inc. of Cincinnati is in the midst of a $270 million building plan that will add plenty of capacity at two hospitals – one in the city and one in the growing suburbs.

The first project planned for completion is a $150 million expansion at Bethesda North Hospital in the Cincinnati suburb of Montgomery. The project is slated to open in coming months and will add 135 beds, a seven-story tower and 300,000 square feet of patient-care space.

The next biggest TriHealth project is at Good Samaritan Hospital in downtown Cincinnati, where $122 million is being spent during the next three years on a 10-story, 165,000 square foot tower. Included will be 21 new patient rooms, a 32-bed surgical care unit, 20 intensive-care rooms, 12 delivery rooms, a 21-bed dialysis unit and two new open-heart operating rooms. The project also will add 400 new parking spaces. For both projects, the general is Turner Construction Co. and the architect is HDR Architects.

TriHealth in Cincy

adding capacity

in $270 million plan

SAN ANTONIO, Texas – Military personnel returning from Iraq and Afghanistan with severe injuries now have a new place in which to rehabilitate.

The $50 million Center for Intrepid – National Armed Forces Physical Rehabilitation Center, a four-story, 60,000 square foot facility, has opened in the Brooke Army Medical Center in San Antonio.

The project was funded by donations to the New York-based Intrepid Fallen Heroes Fund and the Fisher Foundation. It includes clinical space, labs, a computer-assisted rehabilitation environment, gait lab, natatorium, athletic facilities and a prosthetic manufacturing facility. The construction manager was Parsippany, N.J.-based Skanska USA Building Inc. and the designer was the SmithGroup.

For the Record

Construction is complete on a 190,000 square foot, 60-bed patient tower addition at Glendale Adventist Medical Center in the Los Angeles suburb of Glendale, Calif. The $125 million, five-story facility is slated to open this coming summer and includes a 12-bed ICU, a new emergency room and six operating rooms. With the expansion, the hospital’s capacity increases to 457 beds. The hospital is also planning for a new ambulatory surgery center and MOB nearby… MedCath Corp. (Nasdaq: MDTH) of Charlotte, N.C., said it plans to spend $4.8 million to add 28 inpatient beds to its Arkansas Heart Hospital in Little Rock, Ark. MedCath owns the facility in conjunction with physician investors. An additional $2.7 million would be spent to build a 130-space parking garage and renovate an annex to the hospital for non-clinical services. The project would bring the hospital to 112 inpatient beds, 10 short-stay beds, six catheterization laboratories and three operating rooms. The new beds would be in service by early 2008… South Lake Hospital in Clermont, Fla., recently announced plans to add a five-story tower with 36 bed and space for additional outpatient services. The Orlando, Fla., office of HKS Architects Inc. is the architect on the project… Miami Valley Hospital in Dayton, Ohio, is planning a $19 million overhaul of its neonatal intensive care unit. The unit will be transformed from a 49-bed space with an open design to a 60-bed space with private rooms. The expansion would nearly double the size of the neonatal ICU to 51,000 square feet. The neonatal area is within the Berry Women’s Health Center. Construction started in recent weeks and is slated for completion in spring 2009… Winter Haven (Fla.) Hospital, part of Mid-Florida Medical Services Inc., broke ground in recent weeks on the last phase of its $40 million expansion and renovation. The 60,000 square foot project is scheduled for completion in June 2009 and includes new surgical facilities, a new cardiac step-down unit and a cardiac rehabilitation center, as well as a University of Florida/Shands-affiliated cancer center. The contractor is Doster Construction of Birmingham, Ala., which recently completed the hospital’s 117,000 square foot parking garage. The architect is Tampa, Fla.-based Harvard Jolly Inc…. Sisters of Charity of Leavenworth (Kan.) Health System recently announced plans for a $65 million addition to Saint John Hospital in Leavenworth. The expansion will increase the hospital’s inpatient capacity by about 50 percent and privatize all patient rooms. Completion is scheduled for 2010… Arrowhead Regional Medical Center in Colton, Calif., is set to begin an expansion that would add 84 new beds and an $18 million, 60,000 square foot administrative office building. Construction on the office building, which could also house some doctors and outpatient services, is slated to start by October. The new inpatient beds would be added to the hospital’s sixth floor, which would be renovated at a cost of about $30 million. The sixth floor has been home to administrative offices, which will be moved to the new building… Gilbert (Ariz.) Hospital in suburban Phoenix recently broke ground on an expansion that will add 16 patient rooms and nearly 8,200 square feet of space to the existing hospital. Construction is scheduled for completion in the late 2007. Upon completion, Gilbert Hospital will have a total of 24 inpatient beds, 24 emergency rooms and a total of about 40,000 square feet. A four-story patient tower with an additional 108 beds for Gilbert Hospital is slated to begin construction late this year. The architect for the latest expansion project is Phoenix-based HKS/The Stein-Cox Group. A general contractor had yet to be chosen at press time… Griffin Hospital in Derby, Conn., recently broke ground on a 49,000 square foot, $33 million ambulatory care pavilion and community cancer center. The new facility is being built on a 4-acre site across the street from the hospital’s main campus. The project, which will add 100 new parking spaces, is slated to open in October 2008. Following completion, Griffin plans to move its physical therapy center, cardiac rehabilitation center and special procedures into the building. The move will allow the hospital to expand its emergency department from 8,600 square feet to 12,000 square feet, create a new, 14-bed medical-surgical or telemetry unit on the East Wing; expand its existing surgical suite and radiology department, and relocate its laboratory department… The Waukesha (Wis.) Plan Commission recently approved preliminary architectural plans for the proposed $13 million Rehabilitation Hospital of Wisconsin. The project would be a joint venture of Waukesha-based ProHealth Care, which owns two local hospitals, and St. Louis-based Centerre Healthcare. The facility would have 40 beds and 55,000 square feet of space. Appleton, Wis.-based Oscar J. Boldt Construction is the general contractor. The project is the third healthcare facility approved in growing Waukesha, west of Milwaukee, in the last year. The other projects are the 60-bed LifeCare Hospital for complex acute-care patients and the Midwest Kidney Care dialysis center, which was approved in early May… The Health Care District of Palm Beach County, Fla., recently decided to commit an additional $10 million to build a new $73.4 million, 70-bed replacement facility for Glades General Hospital in Belle Glade, Fla. The health district is now planning to spend $50 million to build the replacement for the 63-year-old, 73-bed hospital. District officials had hoped to have another $12 million available for the project – money left over from the 2001 sale of Good Samaritan and St. Mary’s medical centers in West Palm Beach, Fla., to Tenet Healthcare Corp. (NYSE: THC) But Pennsylvania-based Catholic Health East, which formerly owned the two hospitals, has not released the money… Columbus Regional Hospital in Columbus, Ind., recently announced that it would like to add 120 new private patient rooms and a new emergency department in a $101 million, five-story pavilion. The plan is expected to go before the hospital’s board of directors in spring 2008, with construction taking up to three years. A less-expensive option under consideration is to build the five-story tower, leaving the top two floors unfinished. That proposal would cost $89 million and would initially add 62 new rooms and the emergency department. q

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