By Annie Goeller, Daily Journal of Johnson County staff writer
A southside hospital plans to stop work on a multimillion-dollar expansion to conserve its resources in a declining economy that has left more people in need of free medical care and others putting off some procedures.
St. Francis Hospital and Health Centers will stop construction on a six-story, $265 million tower this summer once workers finish building the outer walls.
The project was meant to be the hospital system's only capital project of 2009, an expansion that would have made room to consolidate services from St. Francis' Beech Grove facility, which is set to close.
But hospital officials watched the economy continue to decline and stock markets slide with the start of 2009.
With that decline has come an increase in the number of people who are unable to pay for health services, have lost their insurance coverage or are putting off some procedures and tests because they can't pay for them, St. Francis president and chief executive officer Robert J. Brody said.
Those factors led to the postponement, since officials wanted to dedicate the millions that would have been spent on the expansion this year to continuing the care needed in the community, he said.
"Generally speaking, it's not a very good time to be in business. And in a business that requires our 24/7 attention in order to protect our ability to deliver those core services the community depends on us for, we've decided to conserve resources where we can," he said.
Instead, the Beech Grove facility will stay open longer until the 432,000-square-foot, 221-bed expansion at the southside location can be completed, Brody said.
He said he didn't know how long the project would be postponed.
Once the exterior walls and roof are complete, the project will be about 40 percent finished.
So far, the hospital has spent about $100 million on the expansion, funded through cash and borrowed money, Brody said.
His hope is that work won't have to stop and can continue after the summer, when workers enclose the addition. But with the current situation, the postponement is necessary, he said.
"We're confident we'll get to where we need to be. It's a matter of making the decisions that are necessary to assure that, and that's what we're doing here," he said.
The hospital system is financially sound and is exceeding its 2009 expectations, Brody said.
"We've been through tough times before. We will weather this storm and come back strong," he said.
Hospital officials also are looking at ways to save money and operate more efficiently, he said.
Certain, non-clinical positions have not been filled as they have come open recently, Brody said.
And the system is starting more than 100 cost-saving measures that are expected to save $8 million to $9 million per year.
Among those ideas: renegotiating contracts to get items in bulk, leasing equipment instead of purchasing and re-sterilizing and using equipment that is not used in operating rooms, he said.
Those changes will help the entire hospital system but also could help get the expansion project back on track more quickly, he said.
"We've tempered our expectations for 2009, but we are exceeding those expectations and that should position us well for completing our project at some point in the future," Brody said.
Other local hospitals have been making changes in light of the economy as well.
Johnson Memorial Hospital made a change to help with cost cutting this summer when officials decided to close the skilled nursing unit at the Todd-Aikens Health Center.
Hospital officials decided to close the unit because it had been losing money, totaling a deficit between $400,000 and $500,000 in recent years.
The hospital also decided to close the unit because the Franklin United Methodist Community was willing to take on the 25-bed facility.
All staff members except one found work elsewhere, hospital director of business development Bill Oakes said.
At Community Hospital locations, which include a hospital on County Line Road, they are trying to reduce costs in supply purchases and reducing staff levels during slow times, hospital spokeswoman Lynda de Widt said.
Both local hospitals are continuing with or starting new construction projects.
At Community Hospital South, construction of a $130 million, 194,000-square-foot expansion is continuing on schedule. The project will include a five-story tower with private patient rooms and six operating rooms and will nearly double the size of the hospital.
Officials will commemorate setting the final beam on the project, a milestone in construction, next week; and work is expected to be complete in 2010, she said.
At Johnson Memorial Hospital, work is set to start this month on renovations to the hospital's main entrance and lobby area, Oakes said.
The project, set to cost $150,000, will create a new reception area and a larger lobby, which will be able to seat up to 40. That work is set to be complete this summer, Oakes said.
Neither hospital has had or is expecting any layoffs, Oakes and de Widt said.
Brody said he also does not expect any mass layoffs at St. Francis.