Aurora adds to hospital plans

Milwaukee Journal Sentinel, January 3, 2007

By AMY RINARD

Summit - Aurora Health Care released plans Tuesday for a 110-bed, $189 million hospital and clinic facility in western Waukesha County, adding 22 beds and $23 million to construction plans proposed two years ago for the same site.

The new 792,000-square-foot, four-story hospital and Aurora Wilkinson Medical Clinic complex is expected to open in the summer of 2009, Aurora officials said.

The increase in size and cost sparked concern over the new hospital's impact on health care costs in the region, a question that has followed the project over nearly six years of debate. One employer described the increase as "another 22 beds we don't need."

But David Ulery, an Oconomowoc doctor and president of the clinic, said the number of beds in the proposed hospital was increased as a result of the time that had elapsed since the proposal first was announced, more detailed population growth and market demand projections, and a desire to avoid inconveniencing patients by building an addition a few years after opening.

"Our original proposal was for 2004, and we're looking now at something that's not going to open until five years from then," Ulery said.

"We're trying to use a little more foresight and not open something that within a few years we'll want to do something different."

In addition to spending more money to build a larger hospital, Aurora is prepared to incur financial losses in the hospital's first few years of operation, Aurora spokesman Jeff Squire said.

"It takes some time for a brand-new facility to reach a level where it's breaking even," Squire said.

Aurora, which has 13 hospitals, has built new hospitals in Kenosha, Two Rivers, Green Bay and Oshkosh since 1999.

But the expansion efforts have yet to yield huge profits. Aurora had net income in 2005 of $42.5 million on revenue of $2.8 billion, up from $31.8 million on revenue of $2.6 billion in 2004. This gave Aurora a net profit margin of 1.5% in 2005.

Expansion also has saddled Aurora with $1.2 billion in long-term debt.
The new hospital project comes as Oconomowoc Memorial Hospital, located about three miles north of the Aurora site, is undertaking a $37 million renovation and expansion project that will increase the number of staffed patient beds there from 79 to as many as 90.

ProHealth Care Inc., which owns Oconomowoc and Waukesha memorial hospitals, has fiercely opposed Aurora's plans, arguing that the new facility would drive up the cost of health care for everyone in the area.

"Their new proposal calls for a hospital that will be exponentially larger than the one originally proposed and thoroughly debated," ProHealth spokeswoman Sandra Peterson said Tuesday.

"It will be interesting now to see how Aurora attempts to justify their new proposal to the business community and others who foot the bill for health care costs."

Aurora officials have said a second hospital is justified because of the area's growing population and have pledged to keep the cost of care in line with other area providers.

Kyle C. Stoehr, president of Oconomowoc Manufacturing Corp. and a member of a business group that opposes Aurora's plan, said Tuesday that the facility - especially an expanded one - still is unnecessary.

"That's another 22 beds we don't need," he said of Aurora's revised proposal. "It's upsetting that it's going to be larger when the argument is that it's not needed anyway."

Stoehr, whose company offers health insurance to its 55 employees, said the new hospital will "absolutely" drive up the cost of health care for businesses in the area by building and staffing a facility that will be used little.

After five years of legal battles and intense public debate over the need for another hospital in western Waukesha County, Aurora got the green light last summer in a legal settlement to build on a 53-acre site at the southeast corner of I-94 and Highway 67 in the Pabst Farms development.

When it was first proposed in 2001 for a nearby site in Oconomowoc, the new Aurora hospital was planned to be an 88-bed facility with a price tag of $85 million. But in court documents filed during the long legal battle between Aurora and the city, it was revealed that the total cost of the proposed project, including land acquisition and equipment, was estimated at $166 million. The $85 million estimate did not include land and equipment costs.

Aurora sued the City of Oconomowoc after the Common Council rezoned its planned hospital site so that a hospital could not be built there. Aurora then turned its focus on the Town of Summit location and proposed a hospital there in 2004. But that plan was thwarted when the Waukesha County Board refused to change the zoning of the site to allow construction of the hospital.

The legal settlement signed in August by Aurora, Oconomowoc, Summit and Pabst Farms officials cleared the way for hospital construction in Summit.

The city agreed to use its broad zoning authority to rezone the Summit site, an action that did not require County Board approval.

Summit's Plan Commission is set to give the new plans an initial review Jan. 18.

Town Chairman Len Susa said Tuesday that he expects Aurora's plans to move smoothly through the approval process.

"I think Aurora is one of the higher-quality developers," he said.