Layoffs and furloughs continue in other sectors and executives nationwide have shelved or downscaled capital projects, but Kentucky’s major hospital operations have opened new multimillion-dollar facilities, added staff and unveiled advanced diagnostic and treatment technologies. More than $1.2 billion in capital projects have concluded, are underway or just broken ground involving the state’s seven major hospital systems in the past year.
This doesn’t mean they have endless piles of money or that projects planned pre-recession aren’t under financial scrutiny, hospital leaders caution. Strategic organizational efficiency is being imposed, creative funding options are being utilized and some projects have faced delays.
Other economic sectors, however, have seen their plans simply come to a halt. Despite the financial crisis that began nearly two years ago, demand for healthcare remains bullish, propelling expansion to meet that demand.
“It doesn’t mean we stop making the investments,” University of Louisville Hospital President/CEO Jim Taylor said, “but we are more focused in the investments we make.”
Construction projects underway statewide
In October, UofL opened a $143.1 million, 300,000-s.f. Clinical and Translational Research (CTR) Building. It will allow university life sciences faculty to conduct their groundbreaking research in one facility, with more than 600 medical researchers on seven floors, said David McArthur, UofL Health Care community and media relations manager.
“The CTR building is the strategic result of growth in biomedical research funding from the National Institutes of Health,” McArthur said. “While searching for critical medical answers, the CTR building is also expected to lead to more economic development for the city.”
(Every UofL research technology licensed for commercialization in the past year was biomedical.)
Meanwhile, UofL consolidated adult clinical services by 450 of its physicians – plus some specialty practices – in a single location a year ago at the UofL Health Care Outpatient Center in downtown Louisville, McArthur said. It includes diagnostic imaging, outpatient surgery, lab and rehabilitation, pharmacy and infusion services, ample parking, a restaurant, even concierge service for patients.
“While multidisciplinary care has been a core part of UofL Health Care for years,” McArthur said, “the central location improves communication, collaboration and ultimately gets superior results for the patient.”
And as of last April, the outpatient facility also includes the UofL Depression Center, part of a new dozen-member national depression network.
Baptist Healthcare System beefed up its Louisville presence last January, opening the $63 million Baptist Eastpointe outpatient service center, a complement to its Baptist East Diagnostic Imaging Center.
Baptist operates hospitals statewide: 519-bed Baptist Hospital East in Louisville, 371-bed Central Baptist Hospital in Lexington and another combined 800 beds in Paducah, LaGrange and Corbin. Baptist manages 300-bed Hardin Memorial Hospital in Elizabethtown, and owns Bluegrass Family Health not-for-profit health plan and Baptist Community Health Services’ clinics, a surgery center and physicians’ offices.
The $63 million Baptist Eastpoint outpatient center opened last January with four surgical suites and two endoscopy procedure rooms, said Kit Fullenlove, public relations manager at Baptist Hospital East. Eastpoint has physicians’ offices, an urgent care center and cardiovascular, radiology and physical therapy services, and will add a $6.6 million, 7,000-s.f. radiation center by early 2010.
In southern Jefferson County, there are plans for Baptist Fern Creek, a $31 million project slated for a 2012 opening, with similar services to those at Eastpoint.
Baptist Hospital Northeast in La Grange will open an off-campus outpatient center in spring 2010 called Baptist Crestwood, a $3 million, 12,450-s.f. facility with diagnostic imaging, physical therapy, Baptist Medical Associates offices and other physician office space, Fullenlove said.
Additional projects include those at Central Baptist Hospital-run Heritage Place in Richmond and a facility just south of Lexington in Jessamine County, which will include imaging, diagnostic and urgent care services.
Central Baptist Medical Plaza in Richmond will add a primary-care practice, space for specialists and outpatient diagnostic services. Central Baptist already has expanded Lexington outpatient services at five off-site locations, Fullenlove said.
Looming large, Baptist Healthcare owns a large tract in east Lexington’s growing Hamburg district that is expected to become the site for a major new hospital. Baptist officials would make no comment for now about their plans there.
New technology and service advances
Back in Louisville, Norton Healthcare, which has the largest share of that market, opened its fifth Louisville hospital in August, the $146 million Norton Brownsboro Hospital in northeast Jefferson County. Encompassing 298,000 s.f. on five floors, the 127-bed hospital includes emergency, inpatient, outpatient, diagnostic, orthopaedic, cardiovascular, intensive care, cancer care and other services.
It joins Kosair Children’s Hospital, Norton Audubon Hospital, Norton Hospital and Norton Suburban Hospital. The system plans a new radiation center, with construction to begin in January, said Vice President of Public Relations and Communications Steven Menaugh. Meanwhile, the Kosair Children’s Medical Center-Brownsboro will open late May 2010.
By far the biggest hospital project in the commonwealth is University of Kentucky HealthCare’s $700 million, 1.2 million-s.f. UK Albert B. Chandler Hospital under construction in Lexington. A replacement for the teaching medical center cobbled together in stages over decades, the new state-of-the-art facility will open in phases: the $530 milion Phase 1 will be the Emergency Department in summer 2010 and the first two patient floors in late spring 2011 – another six floors will be shelled in to be finished out by 2020 in Phase 2.
Meanwhile, UK HealthCare’s Brain and Body Radiosurgery Program at the Markey Cancer Center now offers a Gamma Knife Perfexion system to kill diseased cells, and a Tomo-Therapy Hi-Art Treatment system that uses high-powered X-rays against tumors.
A new pediatric emergency center with a separate waiting and treatment areas opened in 2008 in the hospital’s existing emergency department, and the Kentucky Children’s Heart Center opened in 2008 in the Kentucky Children’s Hospital.
Plans for the Barnstable Brown Kentucky Diabetes and Obesity Center at UK were announced late last year to provide diabetes and obesity research and clinical care to confront Kentucky’s seventh national rank for both conditions, according to federal government data.
At The Kentucky Clinic at UK, the university’s Neuroscience Institute Clinic opened in summer 2009 for advanced treatment of neurological problems.
University of Louisville Hospital this year renovated and opened an advanced surgical bed unit – private rooms with wireless Internet access and electronic bedside charting and medical records technology, McArthur said.
A new critical-care stroke unit also opened at UofL, and the university entered a pilot program for standardizing stroke patient care and improving outcomes statewide with the aid of Western Baptist Hospital in Paducah and the Purchase District Health Department.
Through a new telemedicine network, the UofL Stroke Team placed medical robots in 11 hospitals, including Western Baptist, offering instant access to Louisville-area specialists’ diagnostic and treatment expertise. Plans to expand the program to other areas of the state are being considered.
“With a secure video connection, the UofL stroke specialist can beam in to assist in evaluations and provide real-time consultations when needed,” McArthur said. “Since the inception of the telemedicine network in late 2007, University of Louisville Hospital has seen an increase in cases outside of Jefferson County by more than 46 percent.”
UofL Hospital invested in technology to implement Computerized Physician Order Entries, toward implementation of electronic medical records, McArthur added. It invested in a high-definition, 3D da Vinci Si surgical robot with enhanced visualization for its surgeons and those at the Brown Cancer Center.
“Because it is one of only a few such devices in the country to feature dual controls, it allows two surgeons to work simultaneously to complete complex cases,” McArthur said. “This capability also supports our mission to train the next generation of surgical specialists and has already attracted national attention from surgeons interested in visiting Louisville to learn first-hand from our experts.”
Baptist Health Care also has access to minimally invasive 3D DaVinci robot technology at Baptist East, Western Baptist and Central Baptist, Fullenlove said.
Some new amenities are driven by patients’ preferences, such as the desire to stay in a private room. At Baptist Hospital East, nursing units renovations in the 34-year-old original hospital tower are creating more private rooms along with other cosmetic updates and will be completed by year’s end.
More private rooms were created within the 144-bed Park Tower, which opened in August 2008. Also, BHE gained state approval to go from 407 to 519 licensed beds; two added nursing units will push the percentage of private rooms higher.
Baptist Regional Medical Center in Corbin outfitted a new outpatient surgery center with state-of-the-art equipment provided 10 private rooms in its critical care unit. Patients are monitored by cameras at the nurses’ station, and doctors in the four i-Suite Operating Rooms, which are teaching-capable, can track patient data on flat panel displays, she said.
How it’s being done in recession
St. Joseph Health System is building a $60 million Women’s Center adjoining its St. Joseph East hospital in Lexington and has a $150 million hospital under construction in London; they are slated to open in spring and summer 2010, respectively. St. Joe also broke ground Sept. 29 on a $56 million
hospital in Mount Sterling that should open in 2011.
Regional Director of Marketing, Communications and Public Relations Jeff Murphy explained the system’s approach for growth during a recession.
“All of these construction projects and addition of services support our strategy of it not being necessary to leave our community to find quality of care,” he said.
The system, which employs about 5,000 and has approximately 1,000 patient beds in seven communities statewide, is part of Denver-based Catholic Health Initiatives.
Other capital projects concluded this year include major renovations at the main St. Joseph Hospital’s emergency department and cath labs in central Lexington and a Nicholasville facility, Saint Joseph–Jessamine RJ Corman Ambulatory Care Center, that opened last January. With a 24/7 emergency department,
outpatient diagnostic imaging, and occupational medicine and outpatient rehabilitation services, the $25 million Jessamine facility was designed for future conversion to a hospital.
Business has been brisk.
“We have already well exceeded our projections with the number of patients we’ve seen at that facility by about 40 percent,” Murphy said.
St. Joseph London will replace an existing facility off Interstate 75 on a 52-acre campus, with 120 patient beds and all-private rooms, Murphy said, upgrading the environment for the present facility’s well-regarded heart care.
Likewise, St. Joseph Mount Sterling will replace the former Mary Chiles Hospital that St. Joseph Health System acquired in August 2007. It is to open in summer 2011 with 40 beds and private inpatient, maternity and emergency department facilities.
Progress on the three ongoing construction projects was halted for 10 weeks earlier this year, Murphy said, as CHI officials revisited projects’ priorities organizationwide. All three survived scrutiny and got the go-ahead to continue.
Nearby at the University of Kentucky campus, officials revised the financing package for the $532 million Phase I of the UK Chandler Medical Center, which held a topping-out event in September as steel beams went into place 12 stories up.
Initial plans called for $250 million in bonds and $280 million in cash flow to pay for Phase I construction. The recession thwarted that idea after the value of equity market investments declined sharply, said Dr. Michael Karpf, UK executive vice president for health affairs. State officials allowed an additional $100 million in bonds to be sold in November 2009.
However, he said, those in the elective-procedure niche of healthcare have suffered more symptoms of the recession than operations such as UK with strong urgent or emergent care patient bases.
“Trauma occurs whether you have a recession or not,” as do diagnoses like cancer, Karpf said.
‘Ongoing growth’
Jewish Hospital & St. Mary’s HealthCare operates about licensed 1,900 beds and has a growing network of more than 70 facilities in Kentucky and southern Indiana. In August, Jewish opened a four-story 120,000-s.f. Medical Center
Northeast in Louisville with an array of services including cardiac, emergency, imaging, rehabilitation and holistic care.
The Jewish’s Cancer Care Program has grown to now include ambulatory infusion locations at the new medical center, as well as two others.
“We’ve had ongoing growth and I don’t think it would be any faster” if the recession hadn’t occurred, says Tom Gessel, vice president of the system.
Joseph W. Gross is president/CEO of St. Elizabeth Healthcare, which operates hospitals in Edgewood, Covington, Williamstown, Ft. Thomas, Florence and Falmouth along with five free-standing imaging centers and 34 primary care locations. The system’s facilities include nearly 2,000 licensed beds, more than 900 admitting physicians and over 6,000 employees.
St. Elizabeth Medical Center merged with St. Luke Hospitals in late 2008.
DaVinci robotic surgical technology is available here as well as cutting-edge
320-slice CT scanning.
The healthcare organization has applied to the state to open a new level III nursery and neonatal intensive unit at its Edgewood campus for the tiniest patients, who otherwise must transfer to Cincinnati.
St. Elizabeth Healthcare’s bond rating was recently upgraded to AA- from A+ on existing 2003 bonds, Gross said. The upgrade, a feat managed by fewer than 4 percent of hospitals these days, was due to the merger, a light debt load, the operating performance of the health system and lower interest rates.
A few major capital projects were delayed as the value of St. Elizabeth’s auction rate security-funded bonds was hit hard by the economic downturn, Gross said, and the system had to turn to bank-based financing instead. Yet it was able to launch a new $29.2 million St. Elizabeth Covington facility project.
“The way we were able to do that without a bond issue,” Gross said, “is we got a real estate investment trust to help us.”
St. Elizabeth is keeping overhead and expenses low with a sharp focus on efficiencies systemwide, Gross said, and has shaved $30 million from annual operating expenses without layoffs.
Plans can and do change with a financial downturn. “That being said,” according to Baptist Healthcare System’s Chief Financial Officer Carl Herde, “most of these projects we’ve had have been on the drawing board for a long period of time, and we’ve put money aside for them for a long period of time also.”
In the turbulent economic climate of the past 18 months and with changes from the nationwide healthcare reform initiative still uncertain, he said, prioritization is key.
“Believe me, our list is probably four times as big as what we’re spending,” Herde said.
From a capital and development standpoint, said Mary Jo Bean, vice president of planning and business analysis for Norton Healthcare, bonds are the primary financing source, augmented by internal operating funds, for projects such as a new pediatric ambulatory care building on its Brownsboro campus and a new downtown radiation treatment center.
At UofL Hospital, Taylor said, community needs and available medical advances are considered in making investments “in a prudent way,” with strategic plans serving as fluid documents that are revisited and reshaped as necessary.
Employment trends
St. Elizabeth’s Gross said in this economy healthcare is
becoming an attractive career field for its stability.
“Every time you have a recession, people go into nursing and healthcare professions like that,” he said. “Healthcare is a little more resilient.”
Gessel at JHSMH chairs a consortium of area healthcare professionals. There are jobs available in nursing, pharmacy and laboratory specialties in particular, he said, as well as scholarship opportunities available for people interested in pursuing them.
“Healthcare is a wonderful opportunity for employment for folks who may have been displaced from other industries,” he said.
Norton Healthcare Vice President of Human Resources Tony Bohn said the healthcare system continuously invests in its employees, with $250,000-$300,000 in college loans forgiven annually for those who make employment agreements there.
There also are workforce development partnership initiatives with area postsecondary institutions and organizations such as Kentuckiana Works, which retrain displaced workers for new professions, including healthcare, Bohn said.
They allow Norton to anticipate and fill vacancies for retiring employees while still managing growth, he said. From January to November, Norton hired 905 employees – 600 at the new Brownsboro facility and the rest through of physicians practice acquisitions. There’s been a decrease in turnover, he said, and vacancies are being quickly filled.
As added incentive, Norton offers 75 percent of its employees $30 million annually in market adjustments to salaries, plus $13 million in “pay for performance” incentives to 3 percent of employees.
New facilities and technologies are fine, but people are also true assets, according to Bohn.
“Yes, we’ve built buildings,” he said. “…We’ve also invested in the staff.”
$1.2 Billion in Projects
Among the major projects upcoming and unveiled within the past year or so at healthcare facilities statewide are:
Jewish Hospital & St. Mary’s HealthCare Inc.
Medical Center Northeast: long-term lease-option agreement to occupy.
Saint Joseph Health System
Saint Joseph: Jessamine RJ Corman Ambulatory
Care Center, $25 million
Women’s Center at Saint Joseph East: $60 million
Saint Joseph London: $150 million (2010)
Saint Joseph Mt. Sterling: $56 million (2011)
University of Louisville Health Care
UofL Health Care Outpatient Center: $45.1 million
Clinical and Transitional Research Building (closely affiliated): $143.1 million
University of Kentucky Healthcare
University of Kentucky Albert B. Chandler Hospital, Phase I: $530 million
Neuroscience Institute Clinic renovation/equipment: $3.3 million
Baptist Healthcare System
Baptist Eastpoint: $63 million
Radiation Center–Eastpoint: $6.6 million
Baptist Fern Creek: $31 million (2012)
Baptist Crestwood: $3 million
St. Elizabeth/St. Luke
St. Elizabeth Covington:?$29.2 million
Norton Healthcare
Norton Brownsboro Hospital:?$146 million
Kentucky’s Major Hospital Healthcare Operations
Norton Healthcare
Louisville’s third-largest private employer, Norton has 90-plus locations throughout Greater Louisville. The not-for-profit system includes five Louisville hospitals with more than 1,850 beds; 11 Norton Immediate Care Centers; 10,700 employees; some 370 employed medical providers; and nearly 2,000 total physicians on its medical staff. It serves patients in Greater Louisville, southern Indiana and throughout Kentucky.
St. Elizabeth Healthcare
After merging with St. Luke in 2008, it operates hospitals in Edgewood, Covington, Williamstown, Ft. Thomas, Florence and Falmouth along with five free-standing imaging centers and 34 primary care sites. The system includes nearly 2,000 licensed beds, more than 900 admitting physicians and over 6,000 employees.
Baptist Healthcare System
A not-for-profit with 12,000 employees, it owns five hospitals with 1,800-plus licensed beds in Louisville, Lexington, Paducah, Corbin and La Grange, and manages a 300-bed hospital in Elizabethtown. It owns Bluegrass Family Health, a not-for-profit health plan. Its Baptist Community Health Services is comprised of Baptist Physicians’ Surgery Center, BaptistWorx occupational medicine clinics, Prime Care and Urgent Care Centers and physician offices. The system provides home health service in 29 Kentucky and six Illinois counties.
Jewish Hospital & St. Mary’s HealthCare
A?regional healthcare network that includes more than 70 facilities and 1,900 patient beds in Kentucky and southern Indiana hospitals, outpatient care, cancer care, occupational health, psychiatric care and rehab medicine, home healthcare in 41 Kentucky and southern Indiana counties, occupational health mobile services to 30 Kentucky counties and employs a network of primary and specialty care physician practices. It employs more than 8,100.
St. Joseph Healthcare System
St. Joseph Healthcare System employs about 5,000 and has approximately 1,000 patient beds in hospitals in Bardstown, Berea, London, Martin, Mount Sterling and two Lexington sites. It includes the Behavior Medicine Network, Saint Joseph-Jessamine RJ Corman Ambulatory Care Center, and in spring 2010 will open a 60,000 s.f. Women’s Center at Saint Joseph East Hospital in Lexington.
University of Kentucky HealthCare
The University of Kentucky HealthCare consists of the UK Chandler Medical Center, UK Good Samaritan Hospital and Kentucky Children’s Hospital with more than 750 licensed beds, UK HealthCare East, Kentucky Clinic, Polk-Dalton Clinic, Kentucky Clinic South, UK Gill Heart Center, UK Markey Cancer Center, 80 specialized clinics, 143 outreach programs and more than 6,000 employees. It also includes the University of Kentucky schools of medicine, nursing, health sciences, public health, dental and pharmacy.
University of Louisville Health Care
The 404-bed University Hospital, the James Graham Brown Cancer Center, the Kentucky Lions Eye Center and University Physicians Associates comprise a full-service academic medical complex. It is an integral part of UofL medical training that includes schools of medicine, nursing and dentistry. The School of Medicine has trained around 65 percent of Kentucky’s doctors. A major teaching and research facility, UofL Hospital has ties to hospitals, clinics and other medical operations in the western half of the state. The $143.1 million, 300,000-s.f. UofL Clinical and Translational Research Building opened in October.
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