Monday, May 13, 2013

New Cox South tower is key to the future

CoxHealth CEO Steve Edwards and board chair Jim Hutcheson spoke to reporters and staff members during the press conference announcing the planned expansion on the Cox South campus. 

A 310,000-square-foot addition to Cox South will provide advanced care and position us for growth. 

In 1983, when administrators at Cox were making plans for a women’s and children’s hospital in south Springfield, outside consultants from Chicago urged them to consider building a full-service facility. It would be a gamble to create a nine-story hospital in a field beyond where National Avenue ended, but the board and hospital leadership took the advice and expanded their plans.

When the hospital opened in 1985, patient stays were getting shorter and reimbursements were going down. Cox South’s first year of operation is the only time the health system has lost money in the last 50 years. The project was off to a shaky start, but leaders weren’t looking at what was best for that moment – they were looking toward the future.

“People thought it was a bad idea, and if you look at that first year, it looks like a mistake to build Cox South,” says Steve Edwards, CoxHealth president and CEO. “Now, in hindsight, it’s the best mistake we ever made – our whole future was dependent on that success.”

Just as our current success hinged on the decisions made 30 years ago, leaders say the key to CoxHealth’s future lies in a 310,000-square-foot addition now planned for Cox Medical Center South. When ground is broken on the nine-story tower, it will kick off the final major expansion on the Cox South campus. When the project is complete, likely in the fall of 2014, it will be home to a Women’s and Children’s Hospital, a Neuroscience Hospital and additional floors ready for future expansion.

“This is similar to the creation of Cox South in that this is not a two-year project, but a part of our plan for the next 25-30 years,” Edwards says.

Adding a second tower on the Cox South campus has been a possibility for years, but a combination of demographic and financial factors make now the ideal time.

“We know that to continue to provide the absolute best patient care and meet the needs of our growing and aging population, we must have facilities designed for the highest standards of care and efficiency,” Edwards says. “This new patient tower places us securely at the forefront of health care in the Midwest.”

Between regional growth, an aging population and health care reform leading to more patients covered and seeking out care, the need to build is obvious. Right now, interest rates are at historic lows, which means it’s the best time to borrow.

“We’ve thought about building a new tower and new patient space for a long time and we, prudently, pushed it off multiple times in the past decade,” says Jake McWay, CoxHealth’s chief financial officer. “We’ve solved inefficiencies and maximized what we can with our current infrastructure. There may never be another chance in my career to borrow money at this level. If we miss the opportunity, we may lose it for 20 years.”

The construction is funded by the sale of roughly $200 million in bonds in early April. The bonds, which all sold within their first hour on the market, have an average interest rate of roughly 4.5 percent. Edwards and McWay point out that if interest rates had risen just 1.5 percentage points – a very real possibility – a project like the new tower would cost an additional $43 million in interest alone.

“The value in going to the bond market when we did is measured in that savings,” Edwards says.

In addition to meeting the needs of a growing patient population, the new tower will improve the care CoxHealth offers in a variety of ways, beginning by offering all private rooms. Patients are increasingly expecting private rooms and leaders say making the switch is simply the right thing to do.

The private bed model offers therapeutic benefits for patients and it improves outcomes. Studies show that when a hospital adopts private beds, nosocomial infection rates drop, patient falls go down and satisfaction scores improve.

Rooms in the current Cox South tower will be made private simply by removing a bed. Hookups for electricity and medical gases will remain, allowing the rooms to become semi-private again in the event of abnormally high volumes or an emergency.

The private rooms also allow for more efficient use of space and better throughput. With Cox South’s current semi-private rooms, there may be 20-30 beds blocked out at any given time, due to isolation precautions or gender issues.

Dr. John Duff, senior vice president and chief hospital officer, says we can see plenty of evidence of the benefits of private rooms in new units at the Meyer Orthopedic and Rehabilitation Hospital. Even though the care is the same as in the past, patients are rating their experiences more positively, simply because of the comfort and privacy.

With value-based purchasing tying the patient experience to reimbursement and with a future environment where patients have more choice of hospitals, making the patient experience an outstanding one is key to CoxHealth’s success.

The new tower will expand the care we offer by creating a new home for CoxHealth’s women’s and children’s services and neurosciences.

The Women’s and Children’s Hospital will occupy three floors of the addition. The hospital will include a new Neonatal Intensive Care Unit, Pediatric Intensive Care Unit, Pediatric Unit and Post-Partum Unit, all with easy access to CoxHealth’s existing Labor and Delivery area and women’s and children’s physician offices.

The new Neuroscience Hospital will also utilize three floors of space and will include inpatient care units, plus clinic space for Springfield Neurological and Spine Institute physicians and Ferrell-Duncan Clinic neurologists.

“Our neuroscience and women’s and children’s teams are an absolute strength of this organization. We deliver more than 3,000 babies a year, and our neuroscience team has been rated number one in the nation for spinal fusion by CareChex,” Edwards says. “We want to complement first-rate care with first-rate facilities, and this expansion allows us to do that.”

All of the new floors will incorporate modern design standards, as seen in recent projects such as the Emergency Department and the Meyer Orthopedic and Rehabilitation Hospital. Those designs will allow for increased efficiency and fewer steps for staff members.

The remaining space will include a dedicated mechanical floor and two floors built as empty shells, poised for future growth. That design decision maintains the integrity of the original structure, by attaching the same number of floors, and it is another example of investing wisely for the future. Each shelled floor adds about $5 million in cost while gaining 31,000 square feet of space. With current low interest rates, it makes sense to build space to grow into.

McWay says the financial picture for hospitals, and the nation in general, is currently challenging, but our long-term success depends on our ability to evolve with the health care climate.

“We owe it to the community to provide the care they need and the facilities to do that,” he says. “We need to be able to care for new patients who are uninsured today and we need to be positioned to attract new customers. This investment will help us offer an appealing platform for people to access health care.”

Edwards says investing now is key to growth – in the coming decades, we’ll be glad we did.

“If reimbursements are cut, and you can cover your costs and bring in revenue by growing, we want to do that,” he says. “We have to have quality facilities so we can care for our patients and this expansion will allow our health care professionals to provide this outstanding care in the area’s best facility, bar none.”

Project details 
A groundbreaking ceremony will be held at 9 a.m., May 15 for the new Cox South patient tower. The ceremony will be held in the parking lot between Cox South and the Turner Center.

The new tower at Cox South will be built in an 18-24 month construction period. The goal is to have a dedication on Thanksgiving Day, 2014 - the 108th anniversary of Ellen Burge’s donation of her home for a hospital on what is now the Cox North campus. The project has a $130 million budget, financed by an April bond issuance combined with donor support. The bond issuance totals approximately $200 million, allocated as follows:

• $115 million for the new Cox South tower

• $50 million for Cox Medical Center Branson ($25 million for acquisition and $25 million in initial capital commitments, including an expanded ER)

• $35 million in refinanced debt for Cox Branson

While the focus is on the Cox South campus for this project, leaders point out that our commitment to fulfill our mission at our other facilities continues – there are no expected changes in the services we provide at Cox North or Cox Monett.