Healthcare: North end hospital bucks economy, continues growth

by ANDREW WINEKE for THE GAZETTE

The north end has not been kind to flashy new projects in recent years, but St. Francis Medical Center seems to be an exception.

The $207 million hospital opened in late summer 2008, just before the financial crisis sparked a worldwide economic meltdown. It sits at the southeast corner of Powers Boulevard and Woodmen Road — pretty much at the epicenter of the toll the economic slump has taken on the Pikes Peak region.

From its hilltop vantage, you can see Banning Lewis Ranch, whose developer declared bankruptcy in October. A few miles to the north is the site for Sanctuary in the Pines, a housing project that was 2009’s biggest foreclosure in the county. And to the northwest lies Colorado Crossing, a half-built retail and residential complex whose developer filed for bankruptcy early in 2010.

St. Francis replaced Penrose Community Hospital and was intended to serve the city’s fast-growing north end. That north end isn’t growing nearly as fast these days, but St. Francis is doing just fine, said CEO Nate Olson.

“We continue to see the growth,” Olson said. “We have pretty much expanded every service.”

St. Francis has added 16 beds since it opened, up to 172, baby deliveries were up 10 percent last year compared to 2009, neonatal intensive care unit admissions were up 13 percent, and overall admissions were up 10 percent — and 29 percent higher than they were at Penrose Community. St. Francis’ emergency department sees nearly as many patients as its big brother downtown, Penrose Hospital, and is laying plans to upgrade from a level 4 trauma facility to a level 3 (Penrose Hospital and Memorial Central are both level 2 facilities). The hospital employs 750 people and has added more than 100 full-time-equivalent positions compared to Penrose Community. Net revenue has risen from $62 million in Penrose Community’s final year to more than $100 million at St. Francis.

“We don’t see that slowing down, even with the economy,” Olson said. “We’ve hit every target they’ve projected for us.”

That’s a brighter financial picture than most hospitals can paint. Statewide, overall hospital admissions are down slightly, while emergency room visits and bad debt are up, said Ron Zwerin, vice president of communications for the Colorado Hospital Association.

The 99-bed, city-owned Memorial Hospital North, which opened in 2007 a couple miles away from St. Francis on Briargate Parkway, is also beating its goals, said Memorial spokesman Brian Newsome. Newsome couldn’t provide specific statistics on Memorial North’s performance.

“Memorial Hospital North has exceeded our expectations in the past two fiscal years, both in terms of its financial performance and patient volumes,” Newsome said.

And the NorthCare medical office building attached to St. Francis via a sky bridge boasts 95 percent occupancy and was sold last month for $19.4 million — the year’s largest private real estate transaction. It hasn’t been all smooth sailing, said Mike Heritage, owner of the London Real Estate Group, which developed NorthCare — 2009 was a little rough, but 2010 saw strong growth.

“We were nervous in 2009, but we knew we could get through it,” he said. “I think you’ll see that grow into the (region’s) largest medical campus. It’s going to take 5-10 years to see that, but I think Penrose-St. Francis is in it for the long haul.”

Some of the growth at St. Francis and NorthCare is coming from elsewhere in the city, such as Select Long Term Care Hospital, which moved from the old St. Francis Health Center near downtown to the new St. Francis’ sixth floor. However, Heritage said, a number of tenants are physicians moving from elsewhere in the country or local practices that are expanding or adding a second location. Although there is a great deal of vacant medical office space in the Springs, NorthCare is able to generate above-market rates because of its location, Heritage said.

“Physicians whose leases are coming up in the next year or two are saying, ‘Maybe we should be on that campus,’” Heritage said.

Part of what’s gone right at St. Francis is leaving a little growing room. The hospital’s sixth floor, for instance, was left empty when it opened. Select Long Term Care took half the space and Penrose-St. Francis is discussing how quickly it will need the other half. The hospital was also built with the capability of having a seventh floor, which would allow it to bring its bed count up to 300.

“We built the hospital with a 20- to 50-year plan in mind,” Olson said. “We built this to be a hospital for the community as it grows.”

Memorial North and St. Francis get a boost by being expansions of existing systems — they aren’t newcomers competing against the area’s existing hospitals. Many doctors in both systems work at both locations. That allows Penrose-St. Francis to optimize what services are offered at each hospital, said Penrose-St. Francis CEO Margaret Sabin.

“Some people say health care is recession-proof, but it’s absolutely not,” she said. “The differentiation between the two campuses is what’s driving our growth.”

St. Francis Medical Center

New hospital by the numbers:

Opened: August 2008

Cost: $207 million

Size: 350,000 square feet

Beds: 172

Emergency room visits: 37,000

Employees: 750

[gazette.com]

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