Monday, October 25, 2010

Lankenau Hospital to start big expansion

"One of the region's largest suburban hospitals, Lankenau Hospital is set to embark on a half-billion-dollar expansion it says will position it to attract more patients and operate more efficiently.

Groundbreaking is set for later this week on work that will include renovation of the existing 331-bed hospital and construction of a five-story, $208 million, 96-bed pavilion and a 1,308-car parking garage and central utility plant. The hospital has already revamped two cardiac-catheterization labs and two inpatient units and begun roadwork on Lancaster Avenue.

Jack Lynch, president and chief executive officer of Main Line Health, which owns Lankenau and four other hospitals, said the work was fueling a "renaissance" on Lankenau's 92-acre campus. He said the current building was aging and needed to be upgraded to include private rooms and newer technology. Because Lankenau is converting some double rooms into singles, it will have a net increase of only 55 beds, for a total of 386.

Lynch said he believed a revamped Lankenau could attract more patients from throughout the region, particularly those going to other community hospitals. Paoli Hospital, which is also owned by Main Line Health Inc., saw more patients after it opened a $124 million pavilion last year.

"We also understand that with health-care reform, there's going to likely be a decrease in demand for inpatient beds," Lynch said, "but we believe there's an opportunity to capture increased market share."

To put the $529 million project in perspective, an entirely new community hospital being built outside Norristown is expected to cost $355 million. Work on that facility, which is a joint project of Albert Einstein Healthcare Network and Montgomery Hospital Medical Center, began in September. That hospital will have 146 beds.

Lankenau is building at a time when a tough economy has flattened admissions at many hospitals - including Lankenau - and health-care reform threatens to put serious pressure on prices.

"Before the economy changed, projects like this were a dime a dozen," said Alan Zuckerman, president of Health Strategies & Solutions, of Philadelphia. "Then the economy changed, and everything just about was put on hold."

In the last three to six months, he said, bigger hospital building projects started "bubbling up again."

Hospitals sometimes have to invest in new technology, and private rooms are almost a requirement now because of concerns about privacy and dangerous germs that could spread between patients, Zuckerman said.

But he said he thought it was risky to spend millions now because big employers would demand lower prices from hospitals even if the government did not. Hospitals will have to pay more attention to lowering costs, not just attracting more patients. "It's all changing," he said. "It just hasn't changed yet."

Consultant Gerald Katz agreed that reimbursements will go down, but he said that Lankenau needed to make improvements to continue attracting suburban patients. "It needs to be upgraded, without question," he said, "and parking's a problem."

Lynch said Main Line Health leaders debated whether to go ahead with the project, but they decided the work had to be done and "the construction environment was never going to be any better than it is today."

Main Line Health will pay for most of the work with reserves and cash flow, Lynch said. A capital campaign will account for less than 10 percent, and the project will require only $30 million in debt.

Lynch said he worried that health-care reform would tighten bottom lines so severely that many hospitals would not be able to reinvest in their buildings. Even if reform reduces the number of patients staying overnight, he said he thought the region's aging population would need Lankenau enough to support this investment.

The new pavilion will focus on cardiac care, starting with diagnostic tests. Patient rooms were designed to be comfortable and safe for patients and family members, efficient for employees, and big enough - 325 square feet - for teaching new doctors and housing in-room computers. Equipment is laid out identically in each room so nurses and doctors can easily figure out where things are. Patients should need to travel less between various tests and procedures.

Lynch said he thought the new rooms would reduce infections and increase efficiency, both of which will reduce costs.

The entire campus, which includes research and medical-training facilities, will be called Lankenau Medical Center."

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