Aurora's new western Summit

Balance shifts in western Waukesha County health care industry

Milwaukee Business Journal, August 18, 2006

By Ben Fischer

The construction of Aurora Health Care's hotly contested hospital in the town of Summit is likely to dramatically shift the competitive balance of health care in western Waukesha County.

After the rapid approval of a secretly negotiated, four-way deal this week, Aurora Health Care will finally fulfill a long-held vision - to keep all of its Waukesha County patients underneath its banner. The $166 million, 88-bed Aurora Medical Center planned for the town of Summit is on the fast track nearly six years after it was first proposed.

The new hospital will result in a near-immediate shift in medical market share toward the Milwaukee health system when it opens, industry observers and health care experts said.

ProHealth Care, Waukesha, which fought the Aurora proposal, figures to bear the brunt of Aurora's improved position. ProHealth-owned Oconomowoc Memorial Hospital relies on referrals from Aurora-affiliated physicians at the nearby Wilkinson Clinic, for 50 percent of all patients, according to some estimates.

Those physicians have wanted to send patients to an Aurora hospital for years, said Aurora spokesman Jeff Squire.

"They're going to lose half of their hospitalizations potentially overnight," Dirk Carson, local president of Patient Choice, a Brookfield health plan, said of Oconomowoc Memorial.

Oconomowoc Memorial will need to spread its fixed costs over a smaller base of patients, he said.

Despite vigorously opposing the Aurora project for much of the past six years, ProHealth representatives said little after the approval. Ford Titus, ProHealth's chief executive officer, declined interview requests through spokeswoman Sandra Peterson.

"We're confident we will remain the provider of choice in the communities we serve," Peterson said in a written statement.

The developments will not alter ProHealth's timing for its $37 million expansion and renovation project at Oconomowoc Memorial, which was announced in May, she said.

Jim Mueller, president of the insurance broker Frank F. Haack & Associates, Wauwatosa, said the financial impact of the new hospital will not be limited to ProHealth's hospital. The new medical center will compete, at least to some degree, with facilities outside of Waukesha County, such as Fort Memorial Hospital, Fort Atkinson, or Froedtert Hospital, Wauwatosa.

"There will be many hospitals affected in admissions," Mueller said.

Approval for Aurora's 14th acute-care hospital means the system is done expanding for now, said Sue Ela, president of Aurora's Kettle Moraine region.

"We feel pretty solid about the footprint Aurora will have with the addition of this medical center," she said.

Aurora adds one of the state's fastest-growing counties to its portfolio, and that means all major Aurora-owned facilities will be within a reasonable distance of at least one of its general hospitals.

Ground could be broken before the end of this year, Aurora officials said after the agreement was finalized Aug. 15. Under the deal, the city of Oconomowoc will use its "extra-territorial zoning powers" to re-classify land in the southeast quadrant of the Pabst Farms development, which lies in the town of Summit.

Rich Eggleston, spokesman for the Wisconsin Alliance of Cities, Madison, said it was the first time he knows of that a city and an unincorporated town agreed to such a plan without an underlying dispute. The deal is essentially an end-run around oversight by the Waukesha County Board, which had blocked the project.

Once that zoning re-classification occurs - anticipated within four months, according to Oconomowoc Mayor Maury Sullivan - Aurora can finalize building permits and begin construction.

Ela said the system will have to revise its cost projections for the project. The estimated cost of $166 million does not completely reflect sharp increases in the cost of construction materials and medical equipment.

"We've had these plans on the back burner while we worked on this," she said. "We'll have to revisit those."

A general contractor has not been named, she said, but Ela said Aurora will continue to consult closely with Hammes Co., Brookfield.

The project's cost was at the core of many opponents' arguments. They believe Aurora's new hospital will unnecessarily duplicate already-existing services and bleed through to health insurance costs.

The deal that finally broke the five-year dispute was brokered privately during a series of meetings involving leaders of Oconomowoc, the town of Summit, Pabst Farms and Aurora.

Sullivan, who served on the Oconomowoc Memorial board before being elected in 2004, said his decision to negotiate instead of continuing a legal fight was driven by necessity.

If the legal challenges failed, the city of Oconomowoc could have been ordered to pay damages to Aurora that may have bankrupted the city. Also, other development within Pabst Farms - including a $200-million plus shopping mall proposed by General Growth Properties Inc., Chicago - was stalled as long as legal disputes continued.

"It just seems to me Aurora wasn't going to stop until it was done," said Carson. "They were just going to figure out a way."