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Mercy circles its wagons

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Mercy Medical Center unveiled an aggressive and ambitious $186 million plan last week that would significantly expand its central campus and complete a ring of medical facilities around Greater Des Moines.

The blueprint, dubbed Mercy Momentum, is the culmination of three years of study and preparation, and it represents the hospital operator’s most costly and comprehensive construction and renovation in 30 years.

It also provides a far clearer look into how Mercy, led by Chief Executive David Vellinga, intends to position itself to care for a Central Iowa population that is growing quickly and aging just as fast.

“It’s a lot of development and it’s a lot of development simultaneously,” said Steve Chapman, who last week was named chairman of Mercy’s board of directors, succeeding Steve Kirke. “People initially might think about the cost, but they need to think beyond this. This is a 20-year decision. This is about quality, and making sure we have what we need to continue to serve Des Moines.”

The plan, if completed in its entirety, leaves few areas in Greater Des Moines that would not be close to a Mercy facility of some kind. It closes gaps in its coverage that currently exist on the north and east sides and adds dramatically to its capabilities downtown and in West Des Moines.

For whatever gaps that do remain, or that are created by unforeseen future population growth, Mercy left room for further expansion, saying that future clinics in Waukee and other quickly growing areas are possible.

“We see this as marrying the north, south, east and west,” said Vellinga. “This plan lets us retool our facilities and invest in those facilities to make sure we’re here now, tomorrow and in the future.”

The plan does, however, reveal biases in its coverage. For example, Mercy intends to spend $15 million on an 80,000-square-foot ambulatory center in Ankeny. The Mercy North facility would include an outpatient surgery center and is extensive enough that Mercy has applied for approval from state regulators to build it.

In Pleasant Hill, just east of Des Moines, Mercy intends to build an ambulatory center that is one-fifth the size and one-third as costly. Construction on the $5 million, 15,000-square-foot Mercy East is expected to begin early next year.

Both centers will house primary-care and specialist physicians and offer radiology, imaging and laboratory services. Both will also provide urgent-care services.

“Ambulatory centers are a very important part of our strategy,” Vellinga said.

Demand for the increasing services is driven largely by population growth. Mercy, which hired consultant PricewaterhouseCoopers to help it with population projections, expects the number of people in Greater Des Moines to swell by 130,000, or 30 percent, by 2025.

The hospital predicts that the number of Iowa residents who are 65 years old or older will increase by 72 percent over the same period. People in that age group, on average, use four times as many health care services as younger individuals, Mercy said.

To pay for the project, Mercy intends to use financing from a variety of sources, including donations, the federal government and Catholic Health Initiatives, a not-for-profit organization comprising 68 hospitals and other health-care facilities. Vellinga doesn’t expect to have to sell bonds.

At this time, Vellinga expects philanthropy, grants from the federal government and other private sources to provide about $45 million. Borrowing from Catholic Health Initiatives would make up the remainder.

Vellinga declined to reveal how many jobs the spending and construction would create, saying only that “the number of jobs we have to add is relative to the growth of our services.”

There are parts of the plan that involve cutting costs, reducing services in some areas and transferring them to other areas.

At the Mercy Franklin Center in Beaverdale, the hospital group intends to close the 30 beds in its mental illness and behavioral disorders program and shift those services to either its downtown campus or Mercy Capitol. The Franklin Center requires renovation that would be too costly, Mercy said.

It also plans to exit an unidentified number of other buildings throughout Greater Des Moines that it considers outdated.

Mercy developed the plan with help from an array of experts. Health Care Futures L.P., a Chicago-based consulting firm run by former KPMG Peat Marwick partners, estimated the future demands for health care. KaufmanHall, which specializes in financial services for the health-care industry, was hired to complete financial projections.

Mercy hired Hammes Co. of Brookfield, Wis., to assess Mercy’s current facilities and project what the hospital group would need in the coming years.

Specifically, Mercy expects to spend about $120 million renovating and expanding its flagship downtown campus. The plans call for spending $92 million to add a five-story, 178,000-square-foot acute-care wing on the east side that will house 134 beds.

It will also be home to an expanded birth center that will include a nursery and new facilities for labor and delivery, post-partum care and neonatal intensive care. Mercy plans to consolidate three critical-care units into one within the new wing.

Coupled with the new wing, Mercy plans to renovate 98,000 square feet of existing space in its downtown campus that will let it add services to its cancer center, including a new linear accelerator, and its surgery department.

The changes in the cancer center, which will cost $6 million, will let the hospital expand the space provided for chemotherapy and for an oncology group that practices there.

“Demands have been huge and caused us to need to expand that space,” Vellinga said. “This will let us create a much stronger, very important healing center.”

A new neuroscience center will be financed by a gift from the John Ruan family. Mercy plans to spend $7 million on its emergency department, the busiest in the state, to renovate and provide more space for managing pediatric patients. New waiting rooms will be constructed and work areas will be redesigned to be more efficient.

In Iowa and across the nation over the past few years, there has been growing demand for trained nurses. Nurses tend to make less money in Iowa than in more densely populated areas, which has led to a nursing shortage across the state.

Mercy hopes to attract more nurses by spending $5 million to add 35,000 square feet at Mercy College of Health Sciences, a four-year school that trains nurses and other health-care workers. The new space will house distance-learning equipment that will let Mercy extend training and education at the college to any other hospital in Iowa that is part of the Mercy network.

Mercy hired 75 percent of the college’s graduates this year, Vellinga said. The new facilities will also be used for continuing training for Mercy’s existing staff, and the school may hire more professors, he said.

Demand for physicians, too, is strong and growing, Vellinga said. Across the country, there will be a shortage of 200,000 physicians by 2020, Mercy estimates. Iowa, which ranks 47th in doctors per capita, has a particularly difficult time attracting physicians. By adding state-of-the-art facilities and other amenities, including larger operating rooms and more up-to-date equipment, Vellinga hopes to ease those difficulties.

Another perk for physicians is office space.

Construction is already under way on a $9 million project to build a new office building for physicians across the 60th street from Mercy’s downtown campus. The two-story, 50,000-square-foot building will be large enough to house 20 doctors, Vellinga said.

“One of the things we’ve learned is that there’s a growing interest by physicians to have office space on this campus, particularly those who spend a lot of time here, such as specialists,” Vellinga said.

As many as eight obstetricians have already committed to moving into the building and a group of perinatologists may relocate there, he said.

In West Des Moines, Mercy intends to spend $34 million to build the 81,000-square-foot Mercy West Lakes hospital. The hospital, which will be built on 22 acres of land Mercy owns on the east side of 60th Street in West Des Moines, will have 40 beds, an emergency center, physicians’ offices, medical imaging services and outpatient surgery.

The next step: state approval

To a large degree, the fates of plans from Iowa Health-Des Moines and Mercy Medical Center for new hospitals and other health-care facilities rest in the hands of three Democrats and two Republicans.

The five-member, governor-appointed Health Facilities Council will preside over hearings on whether to grant the two licenses to build new facilities in West Des Moines and Ankeny.

Iowa Health-Des Moines expects it will require a so-called certificate of need for its $80 million, 83-bed hospital in West Des Moines. Mercy has applied for a license for its proposed Ankeny ambulatory center, though doesn’t think it needs one for a proposed $36 million, 40-bed hospital in West Des Moines.

The council’s chairman, Edward Nichols, lives in West Des Moines and is a retired science teacher from the Knoxville Community School District. Appointed by Gov. Tom Vilsack, he is a Democrat whose term expires in 2005.

Joseph Ryan Jr., also of West Des Moines, is a Republican and the only council member appointed by former Gov. Terry Branstad. He is a former chief executive of Delavan Inc. and his term expires this year.

Joan Koenigs of St. Ansgar is a non-practicing nurse who has served on the Mitchell County Board of Health and has been a board member of the American Heart Association. She was appointed by Vilsack. Her term expires in 2005.

Gary Butz, a resident of Norway, Iowa, is the business agent for the Cedar Rapids division of the International Brotherhood of Electrical Workers. He is a Democrat and was appointed by Vilsack. He term expires in 2007.

Cynthia Beauman of Spencer is a Republican who was appointed by Vilsack. She is the executive director of the Northwest Aging Association. Her term expires in 2007.

Breakout information:

Downtown campus

Cost: $120 million

Size: 178,000 square feet of new space in five floors, plus 98,000 square feet of renovated space in the existing hospital. Mercy also plans to add 35,000 square feet to the Mercy College of Health Sciences and has already started building a 50,000-square-foot office building for doctors.

Schedule: Work on the office building has already begun and is expected to be finished in December. Mercy plans to hire an architect immediately to design the new acute-care wing. Construction is expected to begin next year and be completed by 2006. It has hired an architect for Mercy College and hopes that Ball Construction can begin work this fall and finish by the fall of 2004. Mercy is hoping for some funding from the federal government and is waiting for it to approve the project.

Mercy North

Cost: $15 million

Size: 80,000 square feet

Schedule: An architect has been hired, as has Ball Construction. Construction is expected to begin this fall and be completed by next year. Mercy will need permission from state regulators to build the facility. It has filed an application for a certificate of need and hopes for a hearing on the issue this month.

Mercy West Lakes

Cost: $36 million

Size: 81,000 square feet

Schedule: Planning is expected to take a year. Mercy hopes to hire an architect this summer or fall. Executives don’t think a certificate of need is required for the facility, but plan to work with state regulators anyway through the summer to keep them informed on Mercy’s plans. If a certificate isn’t required, construction could begin next year. The hospital will take two years to build.

Mercy East

Cost: $5 million

Size: 15,000 square feet

Schedule: Mercy hasn’t picked a site for the center but has narrowed its choices down to two pieces of land. It expects to make a choice this month and begin construction on the one-year project early next year.