After failed talks with 116-bed Kenosha (Wis.) Hospital and Medical Center about a possible alliance, Milwaukee-based Aurora Health Care is trying to bring its own inpatient beds to the two-hospital town of Kenosha.
Aurora wants to add 98,000 square feet to an outpatient center it owns in Kenosha to house 44 inpatient beds, an emergency room, and pharmacy and other diagnostic services. It will apply to the state to license the new beds at Aurora Health Center.
Before the state can approve the new beds, it must review building plans for the new facility. An initial review of Aurora's plans is under way, and word on final approval should come this summer, said Rita Prigioni, deputy director for the Bureau of Quality Assurance in the state Department of Health and Family Services.
She said about 1,000 beds are left before the state hits its cap of about 22,500 beds.
While Aurora waits for final approval, Prigioni said some initial construction work can begin, such as breaking ground.
Aurora said groundbreaking on the new $17.9 million facility is slated for next month. It hopes to open the facility in early 1999 and plans to hire as many as 200 employees to staff its new inpatient services.
The health system said it is expanding, in part, in case managed-care contracts it has with Kenosha's only two hospitals aren't renewed when they expire at year-end.
Aurora is in partnership with an HMO and local Kenosha employers to provide managed-care services. It has contracts with Kenosha Hospital and 148-bed St. Catherine's Hospital to provide some of that care, said Diane De La Santos, Aurora's vice president of public affairs.
"The competitive forces in the community are such that it might not be in the interest of the providers to contract with us," De La Santos said.
She also said that adding the inpatient beds in the rapidly growing area is a good business opportunity for Aurora, which owns 11 hospitals in Wisconsin.
But Robert Lovell, president and chief executive officer of St. Catherine's, wonders what effect Aurora's inpatient beds will have on local healthcare costs.
Competition can drive down prices, but it also can create higher costs by creating excess capacity in the market.
As for St. Catherine's managed-care contract with Aurora, he said he expects it to be renewed. "We've had a long-standing relationship with Aurora," Lovell said.
Aurora said it believes adding beds in Kenosha will drive down costs, as well as offer residents more choice.
Hospital spokeswoman Tami Rakow said she couldn't comment on Kenosha's managed-care contract with Aurora. "We wish Aurora the best in its new business endeavor," Rakow said. "We appreciate Aurora's presence in the community and look forward to an amiable relationship as we continue to provide high-quality healthcare to the residents of southeastern Wisconsin."
Late last year a letter of intent Kenosha Hospital signed with Aurora expired without the two putting together an alliance. Kenosha Hospital entered talks with
Aurora after the collapse of plans for a mergerlike partnership with St. Catherine's.
When the deal with Kenosha Hospital broke down, St. Catherine's, which had been sponsored by Denver-based Catholic Health Initiatives, was sold to Wheaton (Ill.) Franciscan Services (Oct. 6, 1997, p. 80).