Riverside Health System Plans $192M in Building Projects

Riverside Health System is tackling about $192 million in building projects. Here, you can see a $107 million project under way at Riverside Regional Medical Center's Newport News campus. The project is building 13 new operating rooms.
Riverside Health System is tackling about $192 million in building projects. Here, you can see a $107 million project under way at Riverside Regional Medical Center's Newport News campus. The project is building 13 new operating rooms.(Courtesy Skyshots.com / December 4, 2010)

By Veronica Chufo, vchufo@dailypress.com, 12.04.2010

 Riverside Health System plans to spend $192 million on three construction projects — and two more building projects are waiting in the wings — while its Riverside Medical Group lost nearly $93 million over the last three years.

A spokesman attributed the losses to "strong investments in physicians" and said the overall Riverside Health System remains profitable. Revenues less expenses added up to nearly $50 million in 2008 and $13 million in 2009, according to Internal Revenue Service filings.

Riverside is undergoing a $107 million construction project on theRiverside Regional Medical Center campus in Newport News and $72.4 million project to build the new Doctors' Hospital of Williamsburg.

Work has yet to begin on a $13 million Isle of Wight Countymedical campus.

Now there are two more projects on the horizon. This summer, Riverside Tappahannock Hospital, in Essex County in the Middle Peninsula, announced a capital campaign for private patient rooms and, on the Eastern Shore, plans are moving forward for a replacement Riverside Shore Memorial Hospital.

Meanwhile, medical group expenses outpaced revenue to a tune of nearly $49 million in 2009, $26 million in 2008 and $18 million in 2007, according to IRS filings. The group is made up of the physician and specialist practices owned by the health system.

Roice Luke, a professor in the department of health administration at Virginia Commonwealth University in Richmond, said he doesn't know Riverside's financial picture enough to know whether the health system can afford the construction projects. But it can't afford not to, with such stiff health-care competition in the region.

"You cannot let your facility get old, or you'll lose your market share," he said. "You have to have good physicians. You have to have people who want to come to your facility. They should not sit still, or they'll be damaged. They would be foolish not to be doing what they're doing."

The losses are operational loses and not losses system-wide, public-relations director Peter Glagola said.

"They have clearly resulted from our strong investments in physicians — a cost that cannot be depreciated over 20 to 30 years," Glagola said. "We know that the value of great doctors is worth the investment and when we started Riverside Medical Group we absolutely knew we were not going to make money the first couple of years as a result of acquisition and start-up costs."

The group is expected to become a more profitable part of the greater system over time and as efficiencies improve, Glagola said. "However, its clinical value to the system and to the community will always be more important than its bottom-line performance."

The Riverside addition and Doctors Hospital of Williamsburg have been planned for years and will be paid for by a combination of accumulated savings and borrowed money. The system's in "strong financial shape to borrow" with a 'A' rating from Standard and Poor's and an A+ rating from Moody's, Glagola said.

Besides, now's a good time to build, with construction costs lower than they were a few years ago, and that won't likely last for long, said Alan Witt, chairman of the Riverside Health System board. And the cost of borrowing today is very low. "That may not be true at some time in the future," he said.

The $107 million project at Riverside will result in 13 new operating rooms and a new patient entrance. The addition next to the emergency department will replace the hospital's original operating rooms, which were built in the 1960s. Operating room size will increase from 450 to 550 square feet to 600 to 800 square feet, making room for today's technology and equipment.

It will also create one entrance for inpatient and outpatient surgeries, cutting down on confusion for patients coming to the hospital. The three-story addition, which can be expanded to five stories, paves the way for a replacement hospital down the road.

In Williamsburg, the two-story, 40-bed Doctors' Hospital will be part of the Quarterpath at Williamsburg development. The campus includes medical offices, ambulatory care and a 24/7 emergency department. Road construction started in September. Construction of the medical campus will begin in April and will be substantially completed by October 2012, Glagola said.

On the Eastern Shore, the governing board of Riverside Shore Memorial Hospital opted to build a new facility north of the existing one, which was built in 1971. A new site has not been determined yet. Some services will still be located at the Nassawadox site. The health system aims to have the hospital built by late 2013.

Riverside anticipates cost-savings in building the Williamsburg hospital followed by the Shore hospital in quick succession.

Also this summer, Riverside launched a fundraising campaign to convert shared patient rooms into private ones at Tappahannock.

In Isle of Wight County, a $13 million, 28-acre medical campus has been in the planning stages since 2005. Plans have stalled since the Virginia Department of Health four times denied Riverside's plans to build an ambulatory surgery center at the intersection of Benns Church and Brewer's Neck boulevards.

The project has taken a back seat to the other projects, Glagola said.
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Posted by ProTech at 12/6/2010 5:57 PM
Categories: Construction News
Tags: Riverside health system construction riverside construction protech web based construction software
 

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