Hoag Memorial Presbyterian Hospital is putting on hold an expansion in Newport Beach as it readies to take over Irvine Regional Hospital and Medical Center.
The Newport Beach hospital has frozen plans for a $390 million, 364,000-square-foot tower with 100 hospital beds on the south part of its campus, according to Chief Executive Richard Afable. It does plan to go ahead with a smaller building to provide heart and vessel care.
“We are essentially on a 90-day moratorium to look at all of our capital projects,” Afable said. “We just need to know where the economy’s going.”
Putting projects on hold is “good stewardship and good finan-
cial management,” Af-able said.
Hoag later could de-cide to go forward with the Newport Beach ex-pansion, Afable said.
Another factor in the decision: Hoag’s pending takeover of what’s now Irvine Regional Hospital and Medical Center.
The hospital is taking over the lease of the 18-year-old Irvine Regional from longtime Dallas operator Tenet Healthcare Corp., which has been downsizing in Orange County.
Tenet decided to shutter Irvine Regional in July after coming to a legal settlement with landlord HCP Inc., a healthcare real estate investor based in Long Beach.
Hoag is adding 175 beds with Irvine Regional in a move that makes much of the Newport Beach expansion unnecessary, Afable said.
“There was no need for us to spend what was then a $390 million investment,” he said.
Instead, Hoag is looking at erecting a 150,000-square-foot building that would house its heart and vascular institute for providing outpatient heart and vessel disease care, including new operating rooms and an area for heart and vessel lab work.
Hoag had planned to start work on the heart and vascular institute in 2009. Original plans called for the institute to take patients by 2012 or 2013.
Hoag will continue with the Irvine Re-gional project with an eye on reopening it in 2010, Afable said.
Tenet is going to close Irvine Regional, including its emergency unit, on Jan. 15. Hoag will then take over and close it for renovations, which are estimated to take up to two years.
Costs Unknown
Hoag doesn’t yet have a cost figure for the Irvine Regional redo.
But Afable said there were “significant improvements” that need to be made to the facility.
“Unfortunately, the facility has not been kept functionally modern. It is, in my view, other than the walls, a complete redo,” Afable said.
Hoag will have to put information systems into the facility, according to Afable.
“Hospitals, just like a bank or just like an airport, are absolutely dependent upon electronic transfer of information,” he said.
Even though Afable said the Irvine Regional work will be extensive, it won’t have anything to do with seismic retrofitting because the hospital’s building already is able to withstand a major earthquake. Many hospitals in OC and throughout California have centered their renovation projects on seismic retrofits in order to meet state law.
A number of Hoag’s patients already come from Irvine, making the regional medical center a good fit into its network.
Hoag also is continuing work on its Hoag Health Center, a 125,000-square-foot am-bulatory outpatient building near Pacific Coast Highway and Newport Boulevard, up the street from its main campus.
“Those two big projects, the Hoag Hospital Irvine and the Hoag Health Center-Newport Beach will continue on schedule and will spend the capital we have already committed,” Afable said.
When it comes time to pay for the work, Afable said that Hoag will use a mix of retained earnings, borrowing and philanthropy, although he said a capital campaign for the heart and vascular institute needs to be developed.
Hoag used a good chunk of donation money to help build its $200 million Sue and Bill Gross Women’s Pavilion, which opened in 2005.
Hoag, which has room for more than 508 overnight patients, consistently ranks among OC’s largest hospitals. Hoag ranked No. 1 on the Business Journal’s most recent list of OC hospitals with $573.9 million in net patient revenue for the 12 months ending September 2007.
Hoag will be operating Newport Beach and Irvine with one license and both are considered acute-care general facilities, although each will have certain specialty offerings, such as maternal and child health in Newport Beach and orthopedics and sports medicine in Irvine.
It doesn’t expect the additional hospital campuses to turn it into a hospital operating system or give it leverage with insurance providers, according to Afable.
Large hospital systems often are seen as helpful in negotiating with health insurers for covered treatments and drugs.
“We do not envision (ourselves) as a system at this time,” Afable said.
