Hospital defends timing of expansion

Haywood Regional unveiled plans for a $16.5 million expansion two weeks ago on the heels of a workforce reduction designed to stem three months of financial losses.

Hospital officials realize the timing of the expansion announcement following layoffs is “sensitive,” Eileen Lipham, a hospital vice president, said at a community meeting where the plans were unveiled. The expansion has been in the hospital’s long-range plan for years and in the planning stages for 18 months. The financial losses are a new development, and hospital officials are confident it is only a phase, similar to what all businesses occasionally witness, Lipham said.

“I want to tell you that we do not believe our recent financial shortfall is indicative of a future pattern,” Lipham said.

The hospital has lost nearly $700,000 since April. It’s operating margin for the year is still positive, but is far short of where it has been previous years. The operating margin for the year-to-date is half what it was this time last year, at $1.7 million compared to $3.9 million in July 2006.

Nonetheless, hospital officials remain optimistic about the expansion.

“We are pretty much on schedule,” David Rice, president of Haywood Regional, said of the project.

The architect is nearly finished with the plans. Rice hopes to put construction out to bid by the end of the year and break ground in spring. But the eight-member hospital board, which oversees hospital operations, has said it won’t give the project the final green light unless the hospital’s finances turn around.

The hospital board decided it will not let Rice go out to bid on the project until the trend is reversed, said Dr. Nancy Freeman, chair of the hospital board and a family doctor at Midway Medical. The hospital board discussed the issue at its meeting in July.

“We are trying to be fiscally conservative,” Freeman said.

Freeman said the board did not halt the planning process for the expansion — such as design work by the architects, soliciting bids or fund-raising initiatives — as those are not costing the hospital anything. So in that sense, the expansion is on track.

The hospital got a $250,000 federal grant, thanks to former Rep. Charles Taylor, R-Brevard, to fund the planning and design stages for the expansion. That has covered the costs to date, Lipham said.

Hospital officials plan to self-finance the expansion. The hospital has enough savings to cover construction and will then rebuild its reserves over time. The hospital hopes to raise $4 million from the community to help pay for the project.

The Haywood Regional Medical Center Foundation, a non-profit that supports the hospital, is the key to the fund-raising effort. So far, an internal fund-raising campaign among employees and physicians has netted $800,000 in donation pledges. The campaign has not gone public yet.

Meanwhile, the hospital foundation is also raising money for a hospice center, with pledges totaling $1 million. The hospice center was adopted as the Foundation’s top priority. The hospital has not pledged any money toward the hospice project, however.


Ways to save

While the expansion is being called a surgery center, only a third of the additional square footage will be affiliated with surgerical services. It will not have any new operating rooms, but consists of a surgery support wing with patient prep and recovery rooms, a family waiting room and medical equipment storage.

The surgery support wing will be housed on the first floor. The second floor will house an endoscopy center for colonoscopies and other examinations that require scopes. These examinations are currently performed in a special area on the sixth floor of the hospital.

Half the second floor and the entire third floor will be unfinished shell space for future expansion. One way to save money on the project is by cutting the second and third floors and building the surgery support wing only. Building the first floor would cost roughly $7 million, according to hospital officials, which includes the surgery wing as well as a new lobby and main entrance for the hospital.

During the community presentation two weeks ago, hospital officials did not say what the shell space on the second and third floors would be used for. However, during a Power Point presentation to the state in July, hospital officials said the shell space on the third floor was for administrative offices in the future.

The hospital must get a certificate of need from the state before it can move forward with the expansion. As part of that process, the hospital must describe the expansion project and justify why it’s needed. When making this presentation to the state, Lipham said the third floor would be for future administrative office space for a total of 14,000 square feet.

The hospital is spending $1.4 million on footings beneath the expansion that will accommodate up to a seven-story building down the road. Rice said it is the smart thing to do. Once the expansion is built, if it doesn’t include the footings, it would be difficult if not impossible to go back and add them. Since the hospital campus is “land-locked,” the hospital has to think vertical in the future, Rice said.

Another option to save money is to build a stand-alone surgery center. It would not have to be structurally tied to the hospital, nor designed around the hospital’s existing architecture and floor plan. The hospital does not want to go that route at this time, however. (see related article)


Stemming the tide

The expansion could help the hospital attract new patients and new doctors. In the presentation to the state in July, Lipham said the expansion would “enhance community perception” toward the hospital. It could help stem the out-migration of patients to Asheville for surgeries.

The new surgery wing could also help recruit doctors. Doctors are what ultimately bring business to a hospital. Haywood County has seen a net loss of doctors in the past few years, however. The hospital has been unable to recruit new doctors to keep up with those who are retiring or moving on.

When Dr. Bennie Sharpton, a surgeon, was looking for a hospital to start his career 25 years ago, he chose Haywood County because of its fancy new hospital and operating rooms at the time. The expansion will help lure doctors, as well as help patients, Sharpton said.

“I think we need it. It will be a great asset to take this community into the foreseeable future,” Sharpton said.

— Becky Johnson

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