Hospitals and health systems that put large capital projects on hold during the pandemic are revisiting them, and in some cases diving back into large brick-and-mortar investments as margins improve ever so slightly.
"Decisions surrounding capital investment and capital capacity will vary by organization and should be informed by a rigorous process of examination that considers market opportunities, strategic priorities, risk, overall mission and values," wrote Erik Swanson, senior vice president of data and analytics with Kaufman Hall in the "National Hospital Flash Report" released Oct. 2.
Cleveland-based University Hospitals is one of the many systems resuming high dollar expansion projects. The Cleveland-based health system had developed a robust strategic plan ahead of the pandemic to address capacity needs and accelerated it last year. The system is completing a $236 million expansion of its UH Ahuja Medical Center and formed a joint venture to expand its urgent care footprint. University Hospitals also launched the Veale Institute for Health Care Innovation to support its transformation.
For the remainder of the year, University Hospitals is focused on enhancing volume and optimizing its cost structure, as well as transitioning to a new EHR.
"Our systems of care model will create volume centers throughout our system," Cliff Megerian, MD, CEO of University Hospitals, told Becker's. "Importantly, this model will help us increase volume and market share in services that are growing and more evenly distribute the volume."
Rady Children's Hospital-San Diego has also embarked on an extensive project to expand services and its brick-and-mortar presence.
"We're focused on several key priorities, including an extensive construction project that will reimagine our main campus over the next decade," Patrick Frias, MD, president and CEO of Rady Children's told Becker's. "The centerpiece of the initiative is a billion-dollar, 500,000-square-foot, seven-story intensive care unit and emergency services pavilion. This year, we're officially breaking ground, beginning demolition and continuing the detailed 'make ready' work necessary to ensure our operations run smoothly during construction."
Rady Children's is also opening a regional behavioral health hub in Hemet, Calif., this year as its fourth hub focused on early detection, intervention and recovery for children and youth with behavioral and mental health needs.
Sarasota (Fla.) Memorial Health Care System is taking a similar path in Florida, opening a new behavioral health pavilion before the year's end, and planning for a new cancer pavilion as part of the Brian D. Jellison Cancer Center to offer outpatient services. Sarasota Memorial will also expand capacity in Venice, Fla., through multiple projects to double the capacity to treat patients.
"Our 110-bed SMH-Venice campus has operated at full capacity since it opened in November 2021," David Verinder, president and CEO of Sarasota Memorial, told Becker's. "Our team continues to manage extremely high patient volumes, especially since the privately owned ShorePoint Health-Venice hospital abruptly closed last fall. We are building a new tower that will add more than 100 new patient care suites and also expanding our emergency care center and surgical center."
The health system aims to complete the expansion next year. And there is more to come from a few of the largest and most recognizable brands in healthcare.Mayo Clinic in Rochester, Minn., recently revealed details of plans to add 1.9 million square feet to the main building. The project will increase parking space, medical care buildings and more. Construction will begin in 2024 and take around five years.
Cleveland Clinic will also expand its physical footprint in the next few years. The system invested $300 million of new bonds for a future expansion.
Finally, the University of Nebraska Medical Center received approval on Oct. 5 to construct a new $2.19 billion academic medical center. The health system plans to build a new medical center, with additional bricks and mortar as well as training for other roles to support research and surge capacity.
Hospital income and margins are still below pre-pandemic levels for most institutions, but continuing to be fiscally conservative may do more harm than good in the future, according to Fitch.
"While deferring capital investment may have been prudent in the face of recent financial pressures, waiting too long to re-engage in a strategic financial and capital planning process could threaten the long-term relevance and viability of organizations and they fall behind the needs of their communities and actions of their companies," the report states.
Jupiter (Fla.) Medical Center has embodied this philosophy. The hospital plans to open a new 90,000-square-foot surgical institute with smart operating rooms for complex surgeries and two hybrid suites. The hospital als plans to break ground on a new five-story, 92-bed patient care tower as part of a $110 million project to add inpatient capacity and expand orthopedics and cardiovascular services. The tower is expected to open in 2025.
"As the area’s only independent, not-for-profit health system that has been anchored in the community for nearly 45 years, Jupiter Medical Center is keenly aware of the current and future needs of our community, and we are launching innovative strategies that expand access to the highest level of care for our region and beyond," Amit Rastogi, MD, president and CEO of Jupiter Medical Center, told Becker's.