Industry Pulse: May 2009

SILICON VALLEY, Calif. – Silicon Valley has long been known as a hotbed of high-tech. Now it is looked upon as a place where hospital beds are being built despite the recession. A recent study by the California Hospital Association indicates that 41 percent of the state’s hospitals have halted construction projects or major equipment purchases. About 25 percent of those hospitals indicate that they have been unable to secure financing for such projects or major purchases. Despite this news, at least three hospitals in and near Silicon Valley have continued to move forward with expansion and rebuilding plans. An example is El Camino Hospital, which is in the midst of building a 450,000 square foot, 300-bed replacement hospital in El Camino. Two medical office buildings (MOBs) are already open on the new campus, with the hospital slated for completion later this year. Also, Stanford Hospital & Clinics continues to move forward with its plan for a $3.5 billion construction project to replace and build new space at its campus in Palo Alto. And finally, the Regional Medical Center of San Jose continues to move forward with a campus expansion in growing East San Jose. That project includes a 120,000 square foot MOB, which has opened, a two-story patient wing slated for completion in April 2010, as well as other projects. The only hospital project to be halted so far is Palo Alto Medical Foundation’s planned $550 million, 97-bed hospital in San Carlos. The project was put on hold when the Palo Alto’s parent company, Sacramento, Calif.-based Sutter Health, put a freeze on capital projects. Officials say they hope the delay is temporary. Many of the hospital projects in California are driven by the need to rebuild in order to comply with the state’s seismic safety guidelines, which require healthcare facilities to be able to withstand earthquakes. State officials are not sure how many hospitals are in danger of not being able to meet the various deadlines for compliance. Those deadlines vary, with some hospitals being required to comply starting in 2013.