Aurora wins approval of Summit hospital

Deal to settle lawsuit between health system and Oconomowoc

Milwaukee Journal Sentinel, August 15, 2006

By AMY RINARD
arinard@journalsentinel.com

Oconomowoc - Aurora Health Care's five-year quest to build a hospital in western Waukesha County, an effort that inflamed intense debate over rising health care costs in southeastern Wisconsin, moved close to success with a vote Tuesday by the Common Council.

Seizing the chance to end a potential multimillion-dollar legal liability for taxpayers, aldermen approved a settlement that would end the city's litigation with Aurora Health Care and bring a new hospital to the affluent Lake Country area of Waukesha County.

"I have great reluctance to roll the dice on a (court) decision that puts taxpayers at risk," Mayor Maury Sullivan said earlier Tuesday of the settlement.

Sue Ela, president of Aurora's Kettle Moraine region, said she was very pleased with the signing of the settlement and said she hoped construction of the hospital could begin in the next six months.

"All the parties to the agreement have committed themselves to the process, and we feel very positive about the next few months," Ela said.

The business community, including the Waukesha County Chamber of Commerce, has opposed the Aurora hospital, and Tuesday was no different.

Several members of a coalition of 100 Waukesha County businesses employing 20,000 people urged aldermen to delay a vote on the settlement and consider the impact of escalating health care costs on residents and employers.

Bill Nantell, co-chairman of Concerned Businesses for Responsible Health Care, said building a hospital within a few miles of Oconomowoc Memorial Hospital would increase health care costs and jeopardize the future of area businesses.

"Tonight you have an opportunity to take a stand on something that is much bigger than the construction of a new hospital," said another coalition member, Kyle C. Stoehr, president of Oconomowoc Manufacturing Corp., who said his company's health insurance costs rose 30% this year.

Health care costs are higher in the Milwaukee area than in many metropolitan areas of the United States, and many fear that an Aurora hospital to be built within a few miles of Oconomowoc Memorial Hospital would drive those costs even higher. Aurora is the state's largest health care system and, some contend, the most expensive.

Aurora disputes that its new hospital would contribute to rising health care costs and has promised to cap price increases.

ProHealth Care, which owns Oconomowoc Memorial and Waukesha Memorial hospitals and waged an expensive public relations campaign against the Aurora proposal, had little to say Tuesday about the settlement.

"ProHealth Care will continue, as we have for almost a century, providing high-quality care at reasonable cost, and we're confident we will remain the provider of choice in the communities we serve," company spokeswoman Sandra Peterson said.

Before the vote to approve the settlement, Ald. John Gross said that while the hospital issue has "been very difficult and torn the community apart," the city was not taking sides in a competitive struggle between ProHealth and Aurora in wanting to settle the matter. "This is and has been strictly a zoning issue," he said.

Under the agreement approved Tuesday night, the city would initiate a process to use expanded zoning powers granted cities by state statute to change the land use designation and zoning for a site in the Town of Summit, at the southeast corner of the I-94/Highway 67 interchange, allowing a hospital to be built there.

If, as is expected, that process facilitates construction of the hospital, Aurora would drop its five-year legal battle with the city.

Aurora gets preferred location

The Town of Summit site, part of the huge Pabst Farms development, is the location now preferred by Aurora and Pabst Farms developer Peter Bell for the proposed $166 million, 88-bed hospital.

Summit Chairman Len Susa said Tuesday that a growing population in the area made construction of another hospital inevitable and that the town welcomes the project.

Aurora turned to the Summit site in 2004 after the city in 2001 rezoned Aurora's first proposed hospital site - north and east of the highway interchange and also in Pabst Farms - so that a hospital could not be built there. Last year, the Waukesha County Board blocked construction at the Summit site by refusing to approve the Town Board's recommendation that the land use and zoning be changed to permit it.

When the city invokes its expanded zoning powers to clear the way for construction of a hospital in Summit, the County Board cannot stop it.

The 2001 Common Council rezoning vote blocking construction of a hospital prompted Aurora to sue the city. Aurora claimed monetary damages of $59 million in its case against the city.

Although the city appealed the decision, a May court ruling declaring the rezoning illegal caused city officials to think they might lose the case and be forced to put a large share of a monetary award to Aurora on the municipal property tax rolls, Sullivan said. He said the city's insurance policy would have covered only $6 million of such an award.

Deal creates four 'winners'

Sullivan called the settlement "a four-win deal" because the city, Aurora, Summit and Pabst Farms all walk away from it with what they want:

Aurora wins by getting to build its long-sought hospital in western Waukesha County, where a growing population of mostly affluent residents with health insurance makes the area a lucrative one for the health care system.

Pabst Farms wins by having the hospital located in an area of the development where, Bell has said, a large medical campus would spring up around the Aurora complex. The settlement also would free up Aurora's original Pabst Farms site in the city, allowing it to become part of a planned 1-million-square-foot shopping mall project announced in June by General Growth Properties Inc.

The city wins under the proposed agreement by ridding itself of a lawsuit that Sullivan said was a distraction and a potential drain on tax revenue.

The city also preserves its preferred use of the Pabst Farms site as a location for a high-value project, such as a shopping mall, in an area where a $24 million city loan used to pay for infrastructure is being paid back with increased property tax revenue.

And Summit wins by having a new hospital and clinic complex built on a high-profile site at the town's northern gateway that will generate at least $26 million a year in property taxes on the clinic portion of the project, which is not tax-exempt, as is the hospital. Aurora also has agreed to make payments to the town in lieu of property taxes.