Surge in hospital construction on horizon

Elmhurst Memorial Hospital’s $450 million main campus opening Saturday is one of the first — and biggest — health care projects completed since the economic downtown.

Construction already was under way in 2008 when financing for many such projects dried up due to the crisis in the bond market.

Similarly, Sherman Hospital’s 255-bed replacement hospital in Elgin, which opened in December 2009, was ahead of the bad economic curve.

So, too, was the $1 billion Ann & Robert H. Lurie Children’s Hospital in Chicago, which broke ground in 2008. The 23-floor replacement for Children’s Memorial is scheduled to open in June 2012.

Such high-profile projects with long timelines make it seem as though hospitals are immune to the recession’s effects.

In fact, except for projects already in the pipeline, health care construction slowed considerably in 2009 and 2010, experts say.

Now that money is loosening up again, pent-up demand is likely to lead to a surge in hospital building, experts say.

“All the bond markets came to a halt, and some of that paint was splattered on hospitals ... but the underlying hospital sector has remained strong,” said health care consultant James Unland, president of Health Capital Group in Chicago.

Next week, for example, the Illinois Health Facilities and Services Review Board is slated to vote on proposals for two new hospitals in McHenry County.

Centegra Health Systems wants to build a $233 million, 128-bed facility in Huntley. Mercy Health Systems proposes a $199 million, 128-bed hospital in Crystal Lake.

The board meets on June 28. Illinois Department of Public Health staff reviewers said the proposals would provide more beds than needed in the area, but the board is not mandated to follow the findings.

Down the road, Edward Hospital in Naperville is likely to come back with plans to build a new hospital in Plainfield.

In January 2009, the planning board rejected Edward’s proposal to build a $241 million, 130-bed facility in Plainfield.

“When the time is right, we plan to bring a hospital to Plainfield,” said Keith Hartenberger, public relations specialist for Edward Hospital & Health Services.

“We’re committed to developing Edward Plainfield Hospital and are keeping a watchful eye on the economy and hospital utilization, so we’ll be ready to go when those factors are favorable and the regulatory situation is more clearly defined,” he said.

The Centegra and Mercy proposals aside, however, some expert say huge projects like new hospitals will be less common than renovations.

“Most hospitals and health care systems are in a wait-and-see mode,” said Albert Manshum, vice president of facilities & construction for Advocate Health Care.

Hospitals are looking at where their money is best spent, he said, “and a lot of it is going to be in renovations and in ambulatory (outpatient) buildings.”

The wild card is how health care reform will affect hospitals.

One school holds that hospitals will benefit from having a bigger pool of patients with insurance. “(But) there’s a group of analysts, including myself, who are not totally convinced health reform will help hospitals,” Unland said.

In the meantime, suburban facilities are focusing on additions and some comparatively smaller projects that reflect industry trends.

타 Private patient rooms. Central DuPage Hospital in Winfield opens its new $235 million Bed Pavilion in August — ahead of schedule — with 202 private rooms. In April, Advocate Condell Hospital in Libertyville opened its $87 million bed tower, becoming the only hospital in Lake County with all private rooms for adult patients.

타 Outpatient clinics. Elmhurst Memorial Health Care recently broke ground for a 55,000-square-foot outpatient clinic and immediate care center on Lake Street in Addison. The Loyola Center for Health at Burr Ridge opened in March, the largest academic medical center outpatient facility in the Chicago suburbs.

타 Green construction. Northwest Community Health Care in Arlington Heights opened its LEED-certified South Pavilion in 2010. The $250 million addition has 200 private patient rooms. Sherman Hospital has a geothermal lake that saves an estimated $1 million in heating and cooling costs.

타 Specialized centers. A year ago, Central DuPage Hospital opened the first proton therapy center in Illinois adjacent its new cancer center in Warrenville.

With the uncertainty surrounding health care reform, hospitals will be evaluating new projects for value and whether they improve clinical quality, said York Chan, administrator of facilities for Advocate Health Care.

“That’s going to be the driver moving forward in any construction,” Chan said.

Private rooms, for example, make patients and families more comfortable. Patients are believed to heal better if they have a family support system, and studies show private rooms reduce infection rates.

But there may be other factors influencing the trend, some experts say.

“I think the whole private room craze is basically an amenity by hospitals to ratchet up the perception of the hospital campus as being a high-end place, especially in well-off suburbs,” said Unland.

“When they build these expensive hospitals, they are banking on capturing the insured patients and the high profit margin. But again, health care reform could (mess) that up.”