Hospitals Keep on Building in Silicon Valley

April 3rd, 2009

By Cathy Weselby — Silicon Valley/San Jose Business Journal,

Silicon Valley is showing little evidence of the slowdown in hospital construction reported in other parts of the Golden State. With the exception of Sutter Health’s plan for a hospital in San Carlos, millions of dollars in projects are going full-steam ahead.

A California Hospital Association study shows 41 percent of the state’s hospitals have halted planned construction or major equipment purchases. One-fourth reportedly have been unable to secure financing for projects.

Local hospital officials say that while they remain mindful of the current fundraising climate, they are pressing ahead with many of their plans.

The push for seismic upgrades is driving construction projects at El Camino Hospital and Stanford Hospital & Clinics, while the need to expand with the growing community in East San Jose is the impetus for the new patient wing at Regional Medical Center of San Jose.

Stanford Hospital & Clinics has the largest expansion project, with plans for a new 600-bed hospital that meets seismic safety standards and an expanded emergency department at a cost of $2.5 billion. The hospital expansion in Palo Alto has become embroiled in debate, along with plans to expand Stanford Shopping Center and Lucile Packard Children’s Hospital, over concerns that the projects will increase traffic and the need for municipal services.

“The city has a lengthy list of items that they would like to get in relation to this process that have nothing to do with health care,” said Shelley Hebert, executive director for public affairs at Stanford Hospital. “We hope that the council and the community will recognize that health care is what’s at stake.

Hebert said the existing emergency room was built for less than half the patient volume it currently processes. The new plans call for tripling the size of the emergency department.

“People should be as concerned about gridlock inside the hospital as they are outside the hospital,” Hebert said.

El Camino Hospital will unveil its new seismically compliant 300-bed hospital this fall. Construction on the $480 million project is 90 percent complete, according to hospital spokeswoman Judy Twitchell.

The project is funded by a combination of voter-approved general obligation bonds, revenue bonds, philanthropic contributions and the hospital’s cash reserves.

Twitchell said the hospital’s board has not put any projects on hold because of economic conditions, and last month it approved the purchase of an Accuray CyberKnife, a device that allows noninvasive removal of tumors, at a cost of $11 million.

The Mountain View-based hospital recently purchased Community Hospital Los Gatos, and with that acquisition comes the added expense of a new IT system at $6 million and estimated seismic retrofit costs at about $22 million.

San Jose hospitals continue to expand

At Regional Medical Center of San Jose, steel girders are in place for the new two-story patient wing. Regional Medical CEO Bill Gilbert said the $47 million wing would have 33 acute care beds on the first floor, with the second floor shelled for future expansion.

“As the community grows, we’ll be able to expand,” Gilbert said.

Other construction projects include expanding an operating room for neurosurgery and the new $8 million electrophysiology lab that opened in February.

Another San Jose hospital, Good Samaritan Hospital, is also moving forward with a $3 million renovation of its clinical lab, said CEO Bill Piché.

“It’s a project we’ve been trying to get capitalized and funded for about eight years,” he said.

Piché said the hospital is moving ahead with modest equipment upgrades in surgical services and with equipment related to patient safety.

In the area of information technology, Good Samaritan is purchasing new systems from AirStrip Technologies that will allow obstetricians to monitor patients in labor through their PDAs.

“We’re not buying equipment anywhere near the pace that we’ve done in the past,” he said. “Instead, we’re focusing on the essentials.”

In West San Jose, Ron Galonsky, interim CEO at O’Connor Hospital, said he received approval March 31 to proceed with the $2.5 million renovation of the Ambulatory Surgery Center.

Galonsky said the hospital would also have a new $1.5 million electronic medical record system from QuadraMed installed this year as well as a surgical information system that monitors surgery and communicates the status of patients to family members in the waiting room.

Galonsky said the unfavorable bond market has caused the executive team to delay the development of a new medical office building that would replace the existing 50-year-old structure.

Sutter Health recently announced it would delay breaking ground for a new Palo Alto Medical Foundation facility in San Carlos because of the shortage of capital funding. PAMF spokesman Ben Drew said design work and environmental cleanup of the site would proceed in the interim.

Drew said the delay in construction wouldn’t affect implementation of an electronic health record under way in its Mountain View, Sunnyvale, Santa Clara and West Valley sites.

Planned projects

Stanford Hospital & Clinics
New hospital – $2.5 billion Targeted completion: 2015-2016 Expansion of Lucille Packard Children’s Hospital – $1 billion Targeted completion: 2015-2016

El Camino Hospital
ew hospital – $480 million Scheduled completion: 2009 Cyberknife – $11 million Scheduled completion: 2009

Regional Medical Center of San Jose
New patient wing – $47 million Scheduled completion: 2010 Electrophysiology lab – $8 million Scheduled completion: 2009

Good Samaritan Hospital
Clinical lab remodel – $3 million Scheduled completion: 2010 North tower expansion – $40 million Scheduled completion: 2011

Community Hospital Los Gatos
IT system – $6 million Scheduled completion: 2009 Seismic upgrade – $22 million Scheduled completion: 2013

O’Connor Hospital
Ambulatory surgery center remodel – $2.5 million Scheduled completion: 2010 Electronic medical records – $1.5 million Scheduled completion: 2009 Hyperbaric oxygen chambers for wound care – $500,000 Scheduled completion: 2009