Given the tremendous strains that the average community hospital faces today, a successful not-for-profit health care facility in the 21st century is almost an oxymoron.
Due to the growing service demands, spiraling technology costs, ongoing worker shortages, pressure for pricing transparency and the heightened sensitivity around physician relationships—there isn’t a hospital left standing today that has not been challenged from its loftiest rafter down to its foundation cornerstone.
Privately-operated institutions are having hard times as well.
“It is a very difficult environment,” admits Dr. Bruce Van Cleave, president and CEO of Carondelet Health, which operates St. Joseph and St Mary’s medical centers. “The pressures are intense, and I don’t think that is too strong a word. We have no elasticity in our business.”
It is curious, then, that a majority of hospitals throughout Kansas City—and across the country—are building multi-million-dollar new facilities or are renovating existing structures. Even as the American healthcare system inches closer and closer to breaking point, the wave of hospital expansion and modernization is everywhere—including urban, suburban and rural areas.
Jim Miller, senior vice president for healthcare projects at J.E. Dunn Construction Co., affirms that the hospital sector nationwide is midway through a construction boom. “We’ve got three to five years behind us, and we think we’ve got another five years in front of us,” he quips. In fact, healthcare construction today accounts for nearly 40 percent of the total project portfolio at J.E. Dunn, up from a reported 25 percent earlier in the company’s history.
Specifically, the large-scale construction projects that hospitals are currently financing typically fall into one of three categories: 1) new additions to old buildings, 2) renovations of old infrastructure to meet today’s standards, and 3) building new facilities from the ground up.
The Local Overview
In the metro area, between privately-operated hospitals and the large not-for-profits, the new $130-million Saint Luke’s East hospital, the new $137-million addition at North Kansas City Hospital and the $270 million CenterPoint Medical Center under construction in eastern Jackson County are three of the largest healthcare construction projects in recent memory.
In the heart of Kansas City, Research Medical Center is currently spending $100 million on renovations and upgraded services. At the University of Kansas Hospital, $77 million was spent to build the newly opened Center for Advanced Heart Care. On the same day it opened, Saint Luke’s Health System announced plans for a similar stand-alone heart clinic.
Elsewhere, Shawnee Mission Medical Center is undergoing an $84 million renovation/expansion, and farther south Menorah Medical Center is underway with a $45 million, five-phase expansion plan that by 2010 could double the size of the existing campus. Overland Park Regional and Saint Luke’s South are carrying on with smaller-size renovations.
Of all areas, Lee’s Summit appears to be the hotbed of activity. Beyond the new Saint Luke’s East and Centerpoint Medical Center, Truman Medical Center Lakewood is wrapping up a $36 million expansion and considerable design improvements. Furthermore, HCA is building a new 64-bed hospital to replace the old Lee's Summit Hospital at a projected cost of $89 million. The new hospital will be located on the northeast corner of U.S. Highway 50 and Todd George Road, with completion set for mid-2007. Finally, Kansas City Cardiology Associates is building a 22,000-square-foot outpatient heart and vascular center there as well.
Chances are local hospitals that are not currently tearing down old walls or raising new ones are contemplating it. Carondelet Health, for example, is in the early stages of planning a new hospital that would be located on the northeast corner of 179th Street and 69 Highway, in southern-most reaches of Overland Park.
The pattern is not limited to large institutions from the urban center expanding into the suburbs, as Saint Luke’s and Menorah have. The trend includes smaller healthcare facilities from outside the metro area marching inward. The Excelsior Springs Medical Center and the Heartland Regional Medical Center in St. Joseph are both planning to open clinics in the Northland.
“Competition among area hospitals provides consumers with choice and stimulates all healthcare providers to constantly improve and to meet the needs of the communities they serve,” states Dr. Michael Dunaway, senior vice president of the Kansas City Metropolitan Healthcare Council (KCMHC). The Council represents some 40 hospitals from both the Missouri Hospital Association and the Kansas Hospital Association.
Some observers have publicly criticized the growth. For instance, Jack Kennedy, executive vice president and COO of Blue Cross and Blue Shield of Kansas City, has argued against hospital growth carried out purely for competitive reasons.
