Colorado hospitals go through building boom

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Colorado hospitals are on a $3.4 billion building boom.

That’s the total value of some 50 hospital construction projects occurring all over the state, a Colorado Public News examination has found.

This expansion is occurring at a time of great change in the industry, with some factors driving demand up, while others drive it down. The high cost of health care was cited as the second most important issue facing the country in polls during the fall election.

Colorado Public News found five new hospitals underway or opened within the past three years, from Denver to Rangely in northwestern Colorado.

Eleven major additions have been undertaken in Aspen, Boulder, Grand Junction and Pueblo, as well as Denver and its suburbs. They range from new towers full of inpatient beds, to stand-alone emergency rooms, surgery centers and clinics.

Some of the new construction begs the question of just what constitutes a hospital anymore. The $100 million branch Children’s Hospital being built in a southern Denver suburb has surgery, imaging, diagnostics, everything expected in a hospital – but just 12 beds designed to keep people overnight or for longer periods of time. By contrast, the main Children’s has just expanded to 414 inpatient beds.

“We have many, many more patients” being treated in less than a day, explained Jerrod Milton, vice president of operations for Children’s, on a recent cold, windy day at the construction site for the new hospital. In fact, Children’s has seen the number of such outpatients grow by 70 percent in the five years. “This is our goal – it’s to try to keep people out of the hospital,” Milton said.

Increased outpatient care is reducing the need for hospital beds, but other factors complicate the picture. The federal health care law is expected to insure half a million more Coloradans beginning in 2014, raising demand for hospital procedures. At the same time, the state expects a 54 percent rise in the current decade in the number of Coloradans 65 and over, and they will need more care as they age.
CEOs must figure out how all these trends will affect their expensive investments in buildings.

“The future of healthcare is unknown for everybody,” said Bain Farris, CEO of Saint Joseph in central Denver. “But none of us believes there will be more money.”

Nevertheless, Farris is rolling the dice right now on the state’s most expensive current hospital project, a $623 million new hospital.
That’s because he needs a more energy-efficient building as cost pressures mount. The latest equipment – robotic surgery, giant imaging scanners and the like – demands more room, more power, and more cooling. He also needs a hospital designed for inpatients who are more ill than in the past, because the healthier ones go home more quickly.

So how can Colorado patients afford all this? Hospital administrators insist that costs will drop as they reduce the time patients stay.

“Theoretically, there should be less patient demand, but we don’t know when that is going to hit us,” said Bruce Schroffel, CEO of University of Colorado Health. Its University Hospital in Aurora is building the largest inpatient expansion in the state.

Donna Lynne, CEO of Kaiser Permanente, doesn’t envy the hospitals’ positions. “Building today for hospitals is a risky business,” she said. “Everything is being done outpatient.” Her group’s patients don’t even want to go to the doctor’s office, much less a hospital, she said. “People want to take a picture of the mole on their arm, send an email to the doctor and get a message back” letting them know what to do next.

Hospitals also face the likelihood of a major change in the way they are paid, says Colorado Business Group on Health, which promotes lower costs and higher quality. One experiment in Colorado would give certain hospitals a pre-set payment for treatments, leaving any extra cost for avoidable complications on the hospital. A number of the construction projects are switching from two-bed rooms to private rooms, in part to reduce hospital-borne infections.

The wave of hospital construction also is being spurred by low costs.

“The economy has dragged down the cost of capital,” Milton said.

Those low interest rates are joined by low building costs, as construction companies desperate to remain in business through the recession have cut their prices to snag the hospital work.
Hospitals across the state also are building to cope with change.

Aspen Valley Hospital is spending $78 million to triple its size, without changing its total 25 inpatient beds. Given its high-cost location, the hospital is even building 18 apartments for employees.
Many of the new facilities are gorgeous, with fireplaces and atriums replacing cramped lobbies. Children’s Hospital’s Milton said there is quite a bit of research showing the “colors and light and arts and all of that complement the healing process, and help get people out of the hospital quicker.”

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