Robin Rombach, Post-Gazette Carpenter Paula Przybilinski signs the last beam before it was placed in June to top off the new $575 million Children's Hospital project in Lawrenceville.

By Christopher Snowbeck
Pittsburgh Post-Gazette The region's hospitals are trying to add nearly 1 million square feet of clinical space between 2006 and 2009 -- a construction boom that is raising questions about a potential oversupply of costly hospital resources.

More than half of the additional space comes with the new Children's Hospital in Lawrenceville, which includes 600,000 square feet of new hospital construction combined with the renovation of a 300,000-square-foot remnant of the old St. Francis Medical Center.

But in Allegheny and four surrounding counties, another nine hospitals are engaged in or planning construction projects that involve expanding their footprints. An additional dozen either are in the midst of or preparing for significant construction within their existing confines.

		MAP & CHART Nine hospitals are scheduled to complete construction projects between 2006 and 2009 that add nearly 1 million square feet. Major construction projects Another 13 hospitals in the five-county area are spending $88.8 million to renovate existing hospital space. Renovation projects

The tab for all 22 projects: somewhere in the neighborhood of a half billion dollars. Add in construction costs for nonclinical projects such as parking garages and research buildings -- Jefferson Regional Medical Center soon will finish a $9 million garage, while the Magee-Womens Research Institute is spending $31 million to expand a building in Oakland -- and the total exceeds $900 million.

"The only way I can describe it is an explosion of bricks and mortar," said Marc P. Volavka, executive director of the Pennsylvania Health Care Cost Containment Council, added that the hospital construction burst could be seen across the state.

Big bucks for bricks and mortar is a cause for concern, Mr. Volavka said, because it comes at a time when more people are losing health insurance because of the rising cost of health care. Construction costs work their way into that overall health care bill, he said, even though premium payers -- including those who are priced out of the health insurance market -- aren't at the table when hospitals decide to build.

At the same time, it's somewhat difficult to pinpoint precisely which building projects raise capacity concerns. Most of the new construction doesn't significantly add to the supply of hospital beds. The new Children's, for example, simply is replacing beds at the existing pediatric hospital in Oakland that will be closed.

Instead of adding beds, many of the new projects are adding space by expanding emergency rooms, cancer centers and operating rooms -- services that drive the utilization of health- care resources but don't add to the bed count.

"These are expenses that don't add beds, but they add to your capacity to fill beds," Mr. Volavka said.

Why all the construction?

For one, medical centers are getting older and are lacking the latest technology. Much of the construction simply allows hospitals to reconfigure their existing service lines, said Debra Riefner, senior vice president for corporate banking at National City Bank.

"There happens to be a lot of construction going on, but most of it deals with aging plants and the need to stay current with advances in technology," said Ms. Riefner, who helps hospitals obtain financing for capital projects. "It's not a matter of just spending money for the sake of spending money -- they truly want to deliver the best possible care that they can."

Roughly half of the 22 local projects involve emergency room renovations that are, at least in part, driven by the rising number of patients who use ERs. Between fiscal 2001 and fiscal 2005, the number of annual ER visits to hospitals in Allegheny, Beaver, Butler, Washington and Westmoreland counties rose 7.4 percent to just above 1 million.

Whereas managed care companies during the 1990s tried to limit patient access to the emergency room, patients now face relatively few barriers and are often directed to the ER by their physicians. ERs also are changing in response to the government's emphasis on being prepared in case of bio-security incidents.

Some of the construction is simply making up for what was lost. Since 2001, three hospitals have closed in the five-county area -- the St. Francis Medical Center; Mercy Providence Hospital on the North Side, which was folded into Mercy Hospital's main facility in Uptown; and Monsour Medical Center in Westmoreland County, which closed early this year.

But a major driver of the current construction boom is the integration of suburban hospitals into the health systems operated by the University of Pittsburgh Medical Center and West Penn Allegheny, said Jeff Burd, a consultant who follows hospital construction with Tall Timber Group in Ross. Mr. Burd said hospital construction contracts totaled $300 million in the first seven months of 2006 -- a pretty big number, he said, since $200 million in new construction might be the total tab during more typical years.

While the population of the Pittsburgh region isn't growing, hospitals say they are responding to demographic trends that has baby boomers on the verge of retirement.

Hospitals are building today in anticipation of "the services that my generation -- people in their 50s and 60s -- are going to need over the next 10 years," said Mr Burd.

As a metropolitan area with one of the highest proportions in the country of people over 65, the region already has a large percentage of elderly people who are more likely to need hospital care, added Dorothy Hufford, spokeswoman for Excela Health, a three-hospital system in Westmoreland County.

Hospitals say there are pockets of growth in the midst of the overall decline. Upon announcing construction projects at their hospitals this summer, officials at both UPMC Passavant in McCandless and West Penn Hospital-Forbes Regional campus in Monroeville said their communities were growing.

As for UPMC, Elizabeth Concordia, the senior vice president for academic and community hospitals, says the health system is building because its occupancy rates consistently top 80 percent -- demand that she contends other hospitals in the region aren't experiencing.

"In Western Pennsylvania there exists significant hospital overcapacity," Ms. Concordia said. "According to the latest data ... more than one third of staffed beds across the region are empty on any given day."

There are other reasons to question the construction trend, experts say.

Paul Ginsburg, president of the Center for Studying Health System Change in Washington, D.C., said that at least part of the reason hospitals are heavily investing in ERs is so that they can compete for patients with good insurance coverage.

Some hospitals also are adding intensive care unit beds because those services bring medical centers the highest reimbursements, added Meegan McAndrew, a researcher with the Dartmouth Atlas of Health Care, which measures hospital capacity issues. "If you've got more ICU beds, you put more people in them," she said.

Some of the hospital construction going on around the country represents "catch-up," Mr. Ginsburg said, since many medical centers put off building projects during the managed care days of the 1990s. But with the drive to catch up comes a danger of overshooting -- especially in a place such as Pittsburgh.

"If a hospital in Phoenix makes a mistake and overbuilds, that capacity will be taken up soon anyway because the population is growing so fast," Mr. Ginsburg said. "Pittsburgh doesn't have that luxury to absorb mistakes."

Cliff Shannon of the SMC Business Councils, a Churchill-based group that helps small businesses buy health insurance, noted that the UPMC Passavant project includes space for a possible trauma center in future years. That proposal adds insult to injury for health insurance subscribers in the region, Mr. Shannon said, because local premium dollars already have subsidized a large fleet of medical helicopters that city hospitals use to ferry trauma patients to Downtown centers.

The current construction frenzy is an argument for some sort of government review of major capital expenditures by hospitals, Mr. Shannon said. But hospital officials say that, for the time being, they are simply doing what makes sense for their medical centers.

"It gets to the larger issue of a competitive model of health care or a social planning model," said Jim Collins, the chief executive officer of St. Clair Hospital in Mt. Lebanon. "Society has always wrestled with that question, but clearly right now we're operating under a competitive model."