Editorial: Aurora should keep its pledge

Milwaukee Journal Sentinel, January 10, 2007

In 2001, when Aurora Health Care first proposed a new hospital in western Waukesha County, the plan was for an 88-bed facility that would cost $85 million. Then it was discovered - through court documents filed during the legal struggle over building the hospital - that it would really cost $166 million. Aurora had not included land and equipment costs in its initial estimate. And now that the hospital is on the drawing boards after a deal reached last summer, Aurora has announced that it is planning to build a 110-bed facility that will cost $189 million.

Cost overruns on construction aren't anything new, but not a single shovel of dirt has been dug for this facility. Citizens in the next community where Aurora wants to expand might be excused if they ask just how much trust they can place in Aurora's initial proposals, although the same could be true of other developments where what's planned changes over time. Officials should, of course, look at all initial proposals with a skeptical eye, including proposals for other hospitals and medical centers.

Aurora has a reasonable defense and points out that few projects have received anywhere near the scrutiny that the planned Summit hospital has received. It continues to argue that a new hospital is needed because of a growing population in western Waukesha County and that the expansion announced last week is driven by projections the company was forced to update because the legal fight to build the hospital delayed its construction for several years. The company also has pledged to keep the cost of its health care in line with other area providers.

Critics believe, though, that the new hospital will contribute to general cost increases. They remain convinced that the hospital is unnecessary. "That's another 22 beds we don't need," said Kyle Stoehr, president of Oconomowoc Manufacturing Corp. and a member of a business group that opposes Aurora's plans. "It's upsetting that it's going to be larger when the argument is that it's not needed anyway."

We suspect the critics are right, although we'd be happy to be proved wrong. Aurora could do that by making sure that it honors its pledge. That may not be easy. Aurora's ambitious expansion in recent years in eastern Wisconsin has left it with $1.2 billion in long-term debt. Its net profit margin in 2005 was 1.5%.

Now it will be spending more to build the larger facility in Summit. At the same time, other costs related to payments in lieu of taxes could be adjusted up or down depending on what deals Aurora reaches with the town and other area officials.

Given all of that, Aurora officials have tough jobs ahead of them both in terms of maintaining a hold on costs and easing the minds of those critics. As one of the key companies in a critical industry in the region, it's important for the company to get both jobs done.