Judge tosses out zoning that blocked Aurora hospital

Health system quickly files papers to build in Oconomowoc

Milwaukee Journal Sentinel, May 26, 2006

By AMY RINARD
arinard@journalsentinel.com

A Waukesha County judge ruled Thursday that the City of Oconomowoc illegally rezoned land to block construction of a hospital by Aurora Health Care.

In response to the ruling, Aurora - the largest and, critics contend, most expensive health care system in southeastern Wisconsin - immediately moved to extend its reach into affluent western Waukesha County.

Within hours of Thursday's court decision, Aurora's construction firm submitted an application to the city for a special use permit to begin development of an 88-bed hospital on 43 acres on the north side of I-94, just east of the interchange with Highway 67 in the Pabst Farms development.

Aurora's proposed site is about three miles south of the existing Oconomowoc Memorial Hospital.

"We think this really clears the path for us," Sue Ela, senior vice president for Aurora and president of its Kettle Moraine region, said of Thursday's court ruling.

"For the judge to rule the action by the city was illegal is a victory and very important to us."

Advocates of the new hospital said that in rezoning the proposed site, city officials were simply trying to protect Oconomowoc Memorial, begun in the early 1950s by community leaders, whose board of directors still includes many prominent local residents.

Although they recently announced an expansion and renovation of Oconomowoc Memorial, officials of ProHealth Care Inc., which owns Oconomowoc Memorial and Waukesha Memorial hospitals, continue to argue that building a duplicative hospital in western Waukesha County would only raise health care costs throughout the Milwaukee area, where such costs already are among the highest in the nation.

In a lawsuit filed this year against Aurora, Wisconsin Physicians Service Insurance Corp. blamed Aurora's longstanding dominance of the Milwaukee hospital market for driving up health insurance premiums throughout eastern Wisconsin.

Including the cost of land and equipment, construction of the hospital now is estimated at $166 million, according to a recent filing in Aurora's lawsuit against the city. That figure does not include any projected losses expected in the initial years of operation. An Aurora hospital in Oshkosh, opened in October 2003, has yet to make a profit.

Aurora owns 13 hospitals and more than 100 clinics stretching from Kenosha to Green Bay. Its flagship hospital is Aurora St. Luke's Medical Center in Milwaukee. It is the state's largest network of health facilities, with $2.8 billion in 2005 revenue, and, by Aurora's calculations, the state's largest private-sector employer, with nearly 25,000 employees.

Aurora's proposal to build in Oconomowoc generated heated debate and a media blitz by both sides, with the opposition led by ProHealth.

A ProHealth spokeswoman declined Thursday to comment directly on the court ruling, but said it would not affect expansion and renovation plans at Oconomowoc Memorial, now the city's only hospital.

"We don't base our planning on what Aurora may or may not do," ProHealth's Sandra Peterson said. "According to our stringent planning, these renovations will meet the health care needs of our community for $37 million without the need for a $166 million redundant hospital and its purely duplicative services."

Oconomowoc Mayor Maury Sullivan, who resigned from the board of Oconomowoc Memorial when he was elected mayor two years ago, said city officials had not yet conferred with their attorneys about the impact of Thursday's ruling.

But, he said, the city could redo the 2001 zoning change that prohibited a hospital from being built on the Pabst Farms site, or it could appeal the ruling.

"The city had not expected the decision the way it came down," he said. "We're not going to rush into anything."

Waukesha County Circuit Judge James R. Kieffer, the third judge to preside in the long-running civil case, reversed a decision by a previous judge when he ruled that the city did not follow its own rules and procedures when it voted in favor of the rezoning without first having had an application asking for the action.

"Which means the city should have completed an application and handed it to itself," Sullivan said.

Aurora sued the city in August 2001 after the Common Council rezoned the Pabst Farms parcel so that a hospital could not be built there. In late March of that year, Aurora officials had announced plans to build a new hospital at the site. At the time, the projected price tag was $85 million.

The lawsuit against the city was put on hold in 2004 after Aurora focused its attention on another, nearby hospital site, this one in the Town of Summit south of I-94, and Oconomowoc city officials pledged to not speak out against Aurora's new plans.

But Aurora said at the time that if its plans in Summit did not succeed, the lawsuit against Oconomowoc could resume. In April 2005, the Waukesha County Board refused to endorse the town's approval of a land use change to permit construction.

Aurora and the Town of Summit, which endorsed the hospital plan, then sued the county. In March, that lawsuit was dismissed by Waukesha County Circuit Judge Mark S. Gempeler, who ruled that the county acted within its authority in denying the land use change.

But Aurora officials said they remained committed to building a hospital in western Waukesha County and referred to the lawsuit still pending against Oconomowoc. Aurora is seeking $59 million in damages from the city over delays in construction.

Len Susa, Summit town chairman, said Thursday that he was disappointed in the ruling that seems to clear the way for construction of a new hospital in Oconomowoc.

The Summit site of the proposed hospital is on a triangular-shaped parcel in another part of Pabst Farms, south and west of the city building site.

"I still think that the triangle is a much better spot, and I would hope that calmer, cooler heads will prevail," Susa said.

"I hope that Oconomowoc and Aurora would help make it happen in Summit."