Industry Pulse (September 2007)

ELK GROVE, Calif. – As of mid-August, Methodist Hospital of Sacramento and its parent company, San Francisco-based Catholic Healthcare West (CHW), were reportedly talking with a development firm about land for a new hospital in growing Elk Grove, about 20 miles south of Sacramento. CHW was looking for land large enough – in the 25- to 40-acre range – for a hospital and other medical buildings, Methodist Hospital President Tim Moran confirmed to local newspapers. Mr. Moran said CHW had not yet acquired land or reached an agreement, but he added that Methodist and CHW were certainly talking to a developer about a certain property. Mercy Medical Group, a physician group affiliated with CHW, opened its third medical office building (MOB) in south Sacramento County in June to keep pace with the area’s growth. Both CHW and Oakland, Calif.-based Kaiser Permanente are vying for approval to offer Level II trauma services in Elk Grove. A decision by the county Board of Supervisors is expected in early November. CHW has been targeting the area for two years, as its board voted in June 2005 to invest more than $100 million during the next decade in the Elk Grove.

TERRE HAUTE, Ind. – Union Hospital in Terre Haute broke ground in early September on the most extensive hospital building and renovation project in the city’s history. The $178 million hospital expansion project calls for adding a net of 85 new beds, as well as 500,000 square feet of new and renovated hospital space on four stories and a lower level. The hospital expansion is aimed at making Union a major regional player capable of providing services to the residents of Vigo County as well as other counties. In addition to adding about 400,000 square feet of new space, the project includes renovating about 104,000 square feet of existing hospital space. The renovation calls for privatizing all patient rooms and upgrading several departments, such as obstetrics and gynecology, labor and delivery and pediatric. The project is slated for completion in late 2009, when it will have 362 private rooms for acute care, rehabilitation and observation beds.

KINGMAN, Ariz. – Charlotte, N.C.-based MedCath Corp. (NYSE: MDTH) recently announced that it plans to build a $68.5 million, 105-bed hospital in Kingman, located near Arizona’s border with Nevada. Construction of the 200,000 square foot Hualapai Mountain Medical Center is expected to begin early in 2008 and be completed in the fall of 2009. Initially, the hospital will have 72 beds in service, with space for an additional 33 beds in the future. In a press release, MedCath’s CEO stated that the region near Kingman is expected to grow in coming years. Local physicians plan to own about 21.9 percent of a limited liability company (LLC) that would own the hospital while MedCath would own the remaining 78.1 percent stake. MedCath, which focuses on the diagnosis and treatment of cardiovascular disease, owns interests in and operates 11 hospitals with a total of 667 licensed beds. The hospitals are in Arizona, Arkansas, California, Louisiana, New Mexico, Ohio, South Dakota and Texas.

CHARLOTTE, N.C. – It looks as if Charlotte-based Presbyterian Healthcare System will be able to move forward with its plan to build a $90 million hospital in the Mint Hill section of the city – located in the far southern part of Charlotte. In recent weeks, both CMC-NorthEast and Stanly Regional Medical Center of have dropped appeals filed with North Carolina officials regarding the state’s approval of the 50-bed facility. The new hospital is slated for a 21-acre parcel near U.S. Interstate 485 and is part of a 50-acre plot that Presbyterian already owns. Presbyterian officials have not set a groundbreaking date for the Mint Hill hospital, but say they plan to open the facility in fall 2009. The state had previously denied a proposal from CMC-NorthEast to build a $70 million hospital and freestanding emergency room just off I-485 at N.C. Highway 51 in Charlotte. CMC-NorthEast is still hoping to receive approval for the freestanding emergency room. CMC-NorthEast recently completed a merger with Charlotte-based Carolinas HealthCare System, which applied in late 2006 to build a 50-bed hospital in the Charlotte area. Stanly Regional dropped its appeal against the Mint Hill hospital in April, at about the same time that CMC-NorthEast agreed to drop its appeal of Stanly’s proposal to build an imaging center at its $6.9 million Stanly Regional West Campus medical facility in Locust, N.C.

WICHITA, Kan. – A Wichita developer and a group of doctors plan to break ground in December on the only general hospital on the city’s west side. The $37 million hospital, to be called Wichita Family Medical Center, would be a physician-owned facility and the anchor tenant in Lillie Medical Park, an emerging, 17-acre healthcare park with a potential for more than 200,000 square feet. The first phase, a 44,000 square foot skilled-nursing facility (SNF), is slated for completion in January. The second phase is the future 60,000 square foot hospital, which has a tentative opening date of June 2009. The third phase would include medical offices. The hospital could be expanded to 90,000 square feet in the future. Plans call for 24 overnight beds, six ICU beds, three operating rooms and 12 intermediate beds. Matt Lillie, president of Coldwell Banker Commercial Stucky & Associates, is the developer. Gregory Lakin, a physician who owns New Medical Health Care in Wichita, is leading a group of investors that currently includes 20 primary care doctors and 35 specialists. Mr. Lillie indicated in local news reports that he expects to eventually have more than 70 investors. The eventual owners indicate that the hospital will not be a profit-driven surgery center. Instead, the facility would be “a smaller, efficient hospital,” according to Mr. Lakin. Officers say the hospital would not only attract residents from the west side of Wichita but from underserved areas of western Kansas as well. Even though the west side of Wichita continues to grow, the area has been left without an acute-care hospital since Wichita-based Via Christi Health System changed the mission of its Riverside Hospital in 2004. However, Via Christi is reportedly on the verge of acquiring more than 100 acres of land on the west side, which could indicate that the system is planning a new hospital there. q