By the time Children's Healthcare of Atlanta completes the ambitious expansion of its two pediatric facilities in 2007, the total cost will approach $350 million, making it the single most expensive healthcare construction project in the state's history.
Meanwhile, the University of Pittsburgh Medical Center is pushing ahead with plans to spend as much as $473 million on a new 235-bed children's hospital and research center in a booming neighborhood just north of its downtown campus. And in Colorado's capital city of Denver, Children's Hospital will build a 275-bed facility that will serve as the centerpiece of a 1.2-million square-foot complex that includes office buildings, an outpatient-care center and parking lots. The price tag: about $458 million.
If children are the future, there aren't many trends in healthcare that highlight this maxim more emphatically than the fevered pace of construction at pediatric hospitals across the nation. Although the entire healthcare sector is experiencing a building boom of historic proportions, children's hospitals are helping to lead the parade, popping up like a jack-in-the-box everywhere from downtown Los Angeles to Charlotte, N.C., and points in between.
Two of the biggest projects-Denver's hospital and another in Austin, Texas-broke ground within days of one another last month.
"I'm not surprised at the growth nationwide," says Dori Beister, president and chief executive officer of Children's Hospital in Denver and the immediate past chair of the National Association of Children's Hospitals and Related Institutions, or NACHRI. "Much of the growth is due to increases in population. There's also a need for programmatic growth and space requirements for the change in the level of severity of illness."
Up until recent years, she says, most children's hospitals planned for about 100 square feet of space for each pediatric patient. Now, that number has increased "several times" as highly specialized facilities with the newest and most-expensive equipment take on the toughest cases and the sickest kids.
The new Denver hospital, which broke ground June 10, is expected to open in 2007 on about 42 acres of the sprawling University of Colorado Health Sciences Center at Fitzsimons, a former Army base about six miles east of downtown Denver in the suburb of Aurora. The hospital will cost about $250 million, or almost half of the total cost of the entire complex, and will be about 41% larger than the current 850,000-square-foot facility.
Building at a `remarkable rate'
Last year, a survey by the NACHRI underscored what it described as a "remarkable rate" of development, identifying 119 "significant" projects at 41 children's hospitals that were either completed in 2001 or will be wrapped up by 2005. The average hospital was involved in nearly three separate construction projects. That study pegged the total costs of those projects at more than $2 billion, including developments under way or newly completed at children's hospitals across the nation-in such cities as Chicago, Nashville, Pittsburgh and St. Petersburg, Fla.
Of those projects included in the group's survey, 32% involved expansion of a current hospital, 36% were renovations, 25% were new facilities and about 7% were replacement hospitals. The scope of these projects added an average of about 227,000 square feet of new space per hospital.
In many ways, Beister adds, the evolution of the huge replacement facility in Colorado's largest metropolitan area is typical of the growth of pediatric services around the country. More and more community hospitals, lacking the specialized personnel and equipment needed to tackle complicated pediatric cases, are funneling patients to children's hospitals. As pediatric admissions fall at general, acute-care hospitals, pediatric facilities need to ramp up their levels of specialization, experts say.
Inpatient admissions at Denver's only pediatric specialty facility, for instance, have risen in each of the past five years, increasing by about 27% from 1997 to 2003 to nearly 10,000. Outpatient visits jumped by 24% over that same period, to nearly 342,000 last year.
"Pediatric healthcare has changed dramatically over the past 20 years," Beister says. "Kids who were previously hospitalized (in a community facility) would be seen on an ambulatory basis today. And those who are hospitalized are sicker than we would have seen 20 years ago. Kids are living today who wouldn't have (survived) before-transplants, bone marrows, oncology patients.
"Because of these requirements, we need more space, more technology, more skilled personnel."
Between 1995 and 2000, the number of community hospitals offering pediatric services fell by about 3% as this trend toward specialization took root. At the same time, admissions at the nation's 175 children's hospitals-including 47 free-standing facilities-increased by nearly 11%, according to the NACHRI.
"We've got sicker patients, higher lengths of stay, and increased demand," says Lawrence McAndrews, president and CEO of the NACHRI, which represents all but a handful of the nation's pediatric hospitals. "Overall, there's been a decrease in the number of pediatric admissions nationwide. Children's hospitals are getting a larger share of a shrinking market. If you eliminate all of the routine admissions, the only patients left are those who are really sick. And you can't put those sick patients in a place that doesn't have concentrated resources."
Even the association of children's hospitals, McAndrews concedes, doesn't know precisely how many construction projects are under way and what they will cost. Several of these larger projects, in addition to those in Atlanta, Denver and Pittsburgh, include:
* Childrens Hospital of Los Angeles: The facility is planning to spend as much as $336 million on a 280-bed replacement facility scheduled to open in the first quarter of 2008. The seven-story, 438,000-square-foot hospital will nearly double the existing inpatient space of approximately 252,000 square feet. About 80% of the new beds will be in private rooms featuring a long list of amenities, including space for parents and intranet access at each bed that provides access to television programming and an extensive library of games, movies and learning resources.
* Carolinas Medical Center, Charlotte, N.C.: The new Levine Children's Hospital, part of the not-for-profit Carolinas HealthCare System, is scheduled to open in 2007. The 230-bed hospital, which will include a 53-bed neonatal intensive-care unit, will cost about $85 million, the largest single capital expenditure in the system's history. Ground will be broken on the project in the fall.
* Vanderbilt Children's Hospital, Nashville: An eight-story, 617,000-square-foot facility with 206 beds opened in early February as a replacement hospital that increased the number of beds by about 20%. The $172 million standalone facility-named the Monroe Carell Jr. Children's Hospital-replaces 21/2 floors devoted to pediatrics at Vanderbilt University Medical Center, also in Nashville.
* All Children's Hospital, St. Petersburg, Fla.: The 240-bed replacement facility will be built at a cost of about $270 million. Each of the rooms-all are private-will be about 80% larger than those in the existing facility, with private bathrooms and showers and enough room for two adults to sleep comfortably. Construction is expected to begin next spring on the facility, which will replace an existing hospital with 230 rooms.
* Children's Medical Center of Central Texas, Austin: The $175 million, 480,000-square-foot replacement hospital, part of Seton Healthcare Network, broke ground on June 6 and is scheduled to open in 2007 with 169 beds, almost twice the patient capacity and three times the size of the current facility. All the rooms will be private and have Internet access.
* Children's Hospital of Philadelphia: In May 2001, the hospital kicked off a $650 million multiyear expansion project that will eventually double the size of the campus. It is the second-largest construction project in the state's history. The recently completed south tower expanded inpatient capacity at the hospital to 430 beds from 381.
* University of Chicago Comer Children's Hospital: The 155-bed, 242,000-square-foot hospital, being built at a cost of about $130 million, is scheduled to open later this year, possibly December. Construction began in August 2001 on the replacement hospital for an existing facility that opened nearly four decades earlier. The new hospital will be more than twice the size of the current, 95,000-square-foot hospital, which has about 140 staffed beds. The new "family friendly" rooms will measure about 308 square feet each, nearly twice the size of the current 177-square-foot rooms, and will include kitchen and laundry facilities.
Not all of the big projects now under way are proceeding smoothly. In Atlanta, Grady Health System, which operates 1,047-bed safety net facility Grady Memorial Hospital, has appealed the state's approval of the massive expansion project at the two facilities operated by its competitor, Children's Healthcare of Atlanta. Grady operates 82-bed Hughes Spalding Children's Hospital in downtown Atlanta. The appeal, filed in early July, is now under review, a spokeswoman for Grady said, adding that there is no projection of when a decision will be made. Officials at Grady have warned that the new facilities might force it to close its children's hospital.
Meanwhile, University of Pittsburgh Medical Center has been wrangling with Children's Hospital of Pittsburgh over the costs of its new pediatric facility. The two organizations merged in 2001, signing an agreement that called for the construction of a new children's hospital and the rapid expansion of research into children's illnesses.
In recent months, UPMC has questioned the costs of the hospital, arguing that the budget should be capped at between $400 million and $450 million. Officials at Children's have estimated costs at about $473 million, which includes about 150,000 square feet of research space.
The dispute remains unresolved, but Ronald Violi, president and CEO of Children's Hospital, likened it to a "family squabble" that will be ironed out soon. He estimates that the hospital will open in late 2007 or early 2008.
Out with the old
While factors like increased specialization and the need for additional capacity have helped feed the brisk pace of construction at pediatric facilities, another reason is far more fundamental: obsolescence. Like many general community hospitals, many children's facilities are so old and outdated they are in desperate need of renovation or replacement. Hospitals of all kinds are bigger and better-and far more expensive-than ever before. For their part, new children's hospitals come loaded not only with the latest medical gadgets but also with such increasingly indispensable amenities as private rooms with sleeping quarters for mom and dad.
"A lot of children's hospitals are just reaching the end of their normal life span," says Herbert Abelson, who helped develop plans for the new University of Chicago children's hospital, where he served as chairman of the pediatrics department for nine years before leaving that post in late June. "And I think that's what happened here. The hospital just had become not up to what we thought was the very best for patients and their families."
The recent surge in construction at children's hospitals comes despite some daunting hurdles. For one, it requires large sums of money to build and outfit a children's hospital, at least in part because of the extra space required and an emphasis on private rooms.
"I'm not totally sold that children's hospitals are outpacing healthcare construction in general," says Jim Eaton, vice president of healthcare business development at McCarthy Building Cos., which is building the new Denver Children's Hospital along with Gerald H. Phipps Inc. "What's driving this is what's driving the rest of the construction boom-going from semi-private to private rooms. The days of semi-private rooms are gone."
All new children's hospitals, includ- ing Denver's, boast rooms ranging from 200 square feet to 300 square feet, he says. Those private rooms are now larger than even the typical universal room being built in most new general acute-care facilities, a luxury that adds to the total price tag, Eaton says. He estimated the cost per square foot at children's hospitals at $220 to $280, or a significant increase from the average of about $200 for general acute-care facilities.
"It's hard to make a blanket statement," Eaton says, "but the costs per square foot in the children's hospital is up at a higher tier."
Violi, head of the children's hospital in Pittsburgh, explains that the added cost involves specialized equipment as well as expansive private rooms and family-centered architecture and amenities. The rooms at Pittsburgh's new facility will average about 250 square feet, he says.
At the same time, children's hospitals typically accept a larger segment of indigent or uninsured patients than general acute-care facilities. A 2002 survey by the NACHRI of 58 children's hospitals showed that nearly half of the patients at these facilities were medically indigent. That average of 47.4% was calculated, officials say, by adding the hospital's Medicaid revenue as a percentage of total gross revenue along with bad debt and charity care as a percentage of total gross revenue.
"I can tell you that people aren't building children's hospitals to make a large amount of money," Abelson says. "You build 'em bigger, grander than before. And every bit of infrastructure costs more money. But I think the point is to provide the very best facilities for kids and their families."
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