Chicago-area system proposes smaller renovation

NorthShore University HealthSystem in Evanston, Ill., wants to scale back a $157 million renovation at Skokie (Ill.) Hospital as the facility in the Chicago suburb admits fewer patients and shifts to more outpatient care.

The proposal calls for reducing the number of medical-surgery beds, a category that includes most inpatient beds, and renovating more of the outdated hospital rather than building anew. The proposed changes are estimated to cut the project's price tag by about $30 million, to around $127 million.

The changes are “in response to recent and anticipated adjustments to the manner in which hospital services are and will be provided,” the hospital network said in its April 25 application to the Illinois Health Facilities and Services Review Board, which must approve the changes.

The project initially was approved two years ago, and about $20 million has been spent so far. A spokesman for NorthShore declined to comment for this report.

It is becoming increasingly common for health systems to scale back hospital projects or decide not to build big in the first place as private and government insurers financially reward physicians and hospitals for providing better, less expensive care rather than paying them for each service provided. That compensation structure has led to more outpatient care rather than costly overnight stays. The number of days patients spend in hospitals also has declined, prompting facilities to shift resources to outpatient treatment.

“A lot has happened in the last 12 to 18 months in terms of the types of contracts (between providers and payors) that are out there and this continued pressure to reduce the cost of care,” said Dan Marino, president and CEO of Health Directions, an Oakbrook Terrace, Ill.-based consultancy. “Hospitals are scaling down their new investments, focusing on renovations and making themselves a lot more efficient.”

NorthShore, which has three other suburban hospitals, is one of the largest health systems in the Chicago area, with $1.8 billion in total revenue in 2013. This is the second time the hospital network has asked the state board, which regulates health care projects to prevent duplicating services, to revise its project since it was first approved in June 2012.

The original plan called for converting Skokie Hospital to all private rooms by eliminating 39 beds. That would have reduced the total number of beds at the community hospital to 156, of which 138 would be for med-surg patients. The project at the time involved 174,000 square feet of new construction and 148,000 square feet of renovation.

The board unanimously approved the project, with one board member absent, despite a report from the facilities board staff that concluded the bed reduction didn't go far enough. Patients' historical use of med-surg beds at Skokie justified having only 114 beds in that category, the report found.

In February 2013, eight months after the board vote, board Chairman Dale Galassie approved NorthShore's request to increase the cost of the project by nearly $3 million to add four operating rooms and expand recovery and same-day surgery areas, facilities board records show.

NorthShore's latest proposal calls for reducing the number of med-surg beds again, to 111 from 138; combining two intensive care units into one and decreasing ICU beds to 12 from 16; reducing new construction by nearly 50%, to about 88,000 square feet; and increasing renovation by 22%, to 180,430 square feet, according to the application.

The updated plan “places a greater focus on the outpatient delivery of services,” the application said. That includes reducing the need to transfer med-surg patients from one room to another because of gender or patient compatibility issues.

Outpatient operating hours increased nearly 14% from 2012 to 2013, while inpatient admissions dropped by 8%, the application noted.

"NorthShore proposes smaller renovation at Skokie Hospital" originally appeared on the website of Crain's Chicago Business.