With pallets of equipment stacked outside and power tools echoing in the corridors, Century City Doctors Hospital doesn’t look quite ready to begin replacing hips and providing post-op care in a few weeks.
But hospital officials are now confident that, pending state approval, they’ll meet a scheduled Aug. 19 opening date despite being close to a year behind the original schedule and substantially over budget.
Salus Surgical Group, a Beverly Hills-based surgical center chain that took over the building lease from Tenet Healthcare Corp. in the spring of 2004, had hoped to reopen it by last fall.
“Originally this was going to be a paint-and-patch job,” said Dr. Randy Rosen, president of Salus. “But this was a building that hadn’t been upgraded in 15 or 20 years. Once you start opening up walls and upgrading, the government wants everything brought up to code. That’s taken awhile.”
While the hospital kept to its $50 million equipment budget, the construction budget has doubled to at least $24 million. With staffing and other start-up costs, Rosen expects the renovation will total $100 million by completion.
That forced Salus, which operates five surgical centers, into the unpleasant task of going back to original investors and seeking out new ones for additional funds. It also got a $7.5 million cash infusion and a $17.5 million line of credit against receivables from Fortress Investment LLC, a New York-based hedge fund.
The cost overruns are increasingly common for California hospitals, especially those undergoing seismic retrofits required by a state law passed after the Northridge Earthquake.
“Over the last few years hospital construction costs have gone up and caused delays for a variety of reasons,” said Jan Emerson, vice president of external affairs for the California Hospital Association. “These kinds of issues are not uncommon and it adds to the cost of health care.”
Bells and whistles
Century City was one of the first hospitals that Tenet discarded after it was disclosed in 2002 that the company had exploited a regulatory loophole to juice up its Medicare profits. The scandal ultimately caused the resignation of Tenet’s management team and the decision to shed more than two dozen hospitals.
Tenet walked away from its Century City lease after it was unable to reach terms with building owner David Wilstein over a needed seismic retrofit of the high rise. As it turned out, the hospital, like many others, got a reprieve and can now delay completion of the retrofit to at least 2013 instead of 2008. (The seismic upgrade is expected to be accomplished by adding exterior buttresses, so it will not affect the pending renovation.)
Still, the renovation was very costly.
Century City will be among a new breed of hospitals that are all-digital and include amenities reminiscent of hotels.
“We have 175 physician-partners telling us what has and hasn’t worked for them in the past,” Rosen said. “In the past doctors often weren’t involved in the process so they weren’t inclined to embrace it.”
All patient rooms will be private and furnished in designer tones, selected by Rosen’s interior designer wife Maureen. Each bed includes a TV-Internet-gaming console and spa-style toiletries.
Special VIP suites will have large flat-screen televisions and an adjoining guest room for family that can be converted to a patient room.
One of Wolfgang Puck’s companies will run the hospital kitchen and cafeteria, with patients able to set meal times and order from an organic, hormone-free menu. Uniformed waiters will serve meals restaurant-style and Puck hospitality carts will offer morning and afternoon snacks.
“We borrowed from the hotel industry for the amenities and from the surgical center industry for the efficiencies and fast turnarounds,” said Lorraine Auerbach, the hospital’s president.
To increase efficiency and decrease medical errors, everything from lab tests and medications to the patients themselves will carry a bar code. An automated lab should enable faster, more accurate results. Pathologists also will be able to take tissue samples back to their lab and communicate with doctors mid-operation.
Another high-touch priority is ensuring a patient’s family doesn’t get lost in the shuffle. Progress of each surgery will be posted on an electronic monitor in the waiting room.
Electronic patient records, with computer terminals on every floor, also will allow doctors and other authorized personnel to better track patient needs, said Dr. Michael Chaiken, a cardiologist who is also an investor in the facility.
“We’re all looking forward to this experience,” said Chaiken. “This is a hospital that now is completely different on the inside.”