Healthcare Business News

Regional News/Midwest: Cost of Chicago Rehab Institute's downtown tower shoots up past $520 million, and other news

By Modern Healthcare
Posted: November 24, 2012 - 12:01 am ET

CHICAGO—The estimated cost of the Rehabilitation Institute of Chicago's new tower in downtown Chicago has shot up more than 10% since January, to nearly $523 million, as hospital executives fine-tune their plans, according to an application filed with the Illinois Health Facilities and Services Review Board. To finance the project, the institute has raised nearly half of its goal of $300 million in donations. Founded in 1954, the specialty hospital is well-known for its treatment of patients with complex medical conditions, such as spinal cord injuries. The hospital has scaled back capacity to 242 beds, from 272 beds proposed earlier, the new application said. Despite that, the size of the new 27-story building has increased to 859,000 square feet from about 690,000 square feet. The institute has also pushed back by one year the scheduled completion for the project, to March 2017. The existing facility, built in 1974, has 182 beds, 17 of which were added this year. In January, the hospital asked the health facilities board for permission to conduct extensive planning for the new facility. The application, approved in April, contained rough details about the project, including an estimate that the building would cost $330 million for hard construction expenses and an additional $132 million for services such as architects and engineers, for a total of $462 million. The institute plans to fund the replacement hospital with a combination of $61.4 million in cash, $147.5 million in new debt, $13.8 million in leases and $300 million in gifts and bequests.

—Crain's Chicago Business

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Dr. John Brennan, Beth Israel CEO
Dr. John Brennan has been credited with Beth Israel’s financial turnaround.
CLEVELAND—After a nearly yearlong search, the board of Cleveland's MetroHealth System named Dr. John Brennan, the chief executive at Newark Beth Israel Medical Center in New Jersey, as its next president and CEO, effective Jan. 1. Brennan, an expert in emergency medicine, will replace Mark Moran, who joined the system in 2008 and last winter announced his plans to step down once a successor was named. Brennan will earn an annual salary of $685,000—$135,000 more than his predecessor. The value of Brennan's total compensation package will hover between $750,000 and $1.1 million. Since 2007, Brennan has steered Beth Israel and its children's hospital, an enterprise with an annual budget totaling about $545 million. Like Brennan's new employer, Beth Israel in recent years has faced significant financial hardships due to its role as a safety net provider. Brennan has been credited with Beth Israel's financial turnaround; the hospital stomached $36 million in operating losses in 2008 but posted $28 million in operating income last year. He did so by growing clinical programs and expanding the hospital's outpatient network—an effort MetroHealth also has in the works with the construction of a new health center in Middleburg Heights and three others in the pipeline. MetroHealth, an organization with operating revenue of about $800 million, has seen its finances battered in recent years due to the 35% increase in uncompensated care since 2008 at the Cuyahoga County-subsidized health system. Those financial problems resulted in layoffs and steep budget cuts.

—Crain's Cleveland Business

SPRINGFIELD, Ill.—State investigators who look into complaints against Illinois doctors are being warned that layoffs will start in January unless the Legislature raises doctor licensing fees. A spokeswoman for the Illinois Department of Financial and Professional Regulation said staff members were informed about the layoffs Nov. 15. Eighteen positions are targeted for elimination, including more than half the investigators whose work ultimately protects patients from bad doctors. Investigators review allegations from the public, law enforcement and other states of doctor sexual misconduct, alcoholism and malpractice. They build cases that can lead to fines and reprimands, and sometimes cause doctors to lose their licenses. Department spokeswoman Susan Hofer said doubling the load on staffers would slow down investigations and prosecutions of doctor misconduct. The layoffs would reduce the medical investigations unit from 26 staffed positions to eight, a reduction of about 70%. Salaries in the watchdog unit are funded entirely from the license fees doctors pay. No tax dollars are involved. Doctors now pay what amounts to $100 a year to be licensed. Fees haven't increased since 1987, according to information the department has shared with key lawmakers. The state licensing agency has been seeking an increase in physician licensing fees for five years without result. Meanwhile, new laws have added to the unit's workload, such as a law requiring registered sex offenders to lose their medical licenses and a law requiring a searchable online database where patients can look up doctors' disciplinary records.

CLEVELAND—Case Western Reserve University has landed what it characterized as another “significant” gift to support the construction of a 160,000-square-foot, $50 million building for its medical school on the site of the now-defunct Mount Sinai Medical Center in Cleveland. University officials did not disclose the size of the gift from longtime healthcare philanthropists Constance and James Brown per the donors' wishes, but noted it brings the university halfway toward its $50 million fundraising goal for the new building. James Brown is chairman of Tailwind Technologies—the holding company of Hartzell Propeller in Piqua, Ohio. The Browns, of Chagrin Falls, made the donation in honor of the medical school's dean, Dr. Pamela Davis, who has treated their granddaughter, KC Bryan White, for cystic fibrosis for decades. Per the Browns' wishes, the administrative suite in the new facility will be named in honor of Davis. The Browns' gift follows a donation announced in September by the Cleveland Foundation and Mount Sinai Health Care Foundation, which each pledged $10 million to the effort. This fall, CWRU alumnus Dr. Michael D. Eppig and his wife, Ruth, also made a $1.5 million commitment to the project.

—Crain's Cleveland Business

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