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Mohawk Valley Health System reduces proposed hospital size, cost

By Eric Reinhardt

Date:

UTICA, N.Y. — Mohawk Valley Health System (MVHS) has decided to pursue a smaller hospital with a reduced cost compared to the original proposal.

The upcoming facility, which is proposed for downtown Utica, will be a 750,000-square-foot building with a projected cost of $480 million. The original plan called for a 830,000-square-foot hospital at a projected cost of $573 million.

The new cost projection of $480 million is “in alignment with the project funding plan that includes bank financing, donor support, and a grant from New York State,” MVHS said in a news release issued Thursday.

MVHS officials arrived at the adjusted figures using a facility and operations analysis to identify “potential cost reductions without impacting patient care,” the organization contended.

MVHS is an affiliation of Faxton St. Luke’s Healthcare and St. Elizabeth Medical Center (SEMC), both of Utica. The two organizations teamed up in March 2014.

Planning a project of this magnitude occurs in several stages over the course of years, Scott Perra, president and CEO of MVHS, said in the release. 

“In late 2014, we developed estimates based upon preliminary design concepts. We continue to perform studies and evaluations to further refine the project as we advance through the phases of the development process. This includes continuing to work with the Hammes Company, [which] manages projects like this one all over the country. Our revised plan includes a reduction in facility square footage, updated inventory of equipment for reuse at the new facility, and additional evaluation of services that could remain in the hospital versus those that could continue at other sites in the system.”

Design adjustments
The reevaluated design includes a number of cost-saving adjustments, including a “phased” approach to inpatient bed space. 

The revised plan calls for 400 beds, which is down from the original plan for 430 inpatient beds, according to the release. 

The reduction saves more than 15,000 square feet of new construction and adds to the overall savings, MVHS said.

At the same time, officials have “carved out” a 24-bed inpatient “shell” that could be finished and used at a later time, if needed. 

“Our analysis has shown that the need for inpatient beds will continue to decrease,” said Perra. “We reviewed trends of our inpatient beds for the past five years, as well as trends both statewide and nationally, to help us determine what we will need by 2022 when the new facility opens. Currently our average daily inpatient census for MVHS is 325 to 375 patients.”

Other potential cost-saving strategies include third-party ownership opportunities, targeting the parking garage and separate office space for some hospital services. 

Third-party ownership of a multi-use parking garage provides an estimated cost savings of $27 million and the reduction of the size and construction cost of the facility provides an estimated $20 million savings, MVHS said. 

MVHS is “continuously” identifying additional efficiencies as its operations plan is “further refined.”

“As with any construction project, projections and estimates will evolve as we get further along in the development process,” Perra said. “However, this step-by-step analysis has helped us to achieve a further refined cost estimate for this phase of the project. We continue to seek additional cost-saving measures and alternate sources of funding, including grant opportunities and donor support.”

Planning and design for the hospital will begin once the New York State Department of Health (NYSDOH) “finalizes the disposition” of the $300 million in New York State funding. 

NYSDOH “is still trying to figure out how to award the funding,” according to an Oct. 3 article on the website of Politico New York.

At that time, MVHS will engage the construction manager and architectural and engineering firms to begin the design of the new facility. 

MVHS estimates the design process will continue for 16 to 20 months.

Contact Reinhardt at ereinhardt@cnybj.com

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