Hospital will let bids for remodeling project

This article submitted by Michael Jacobson on 2/9/00.

In what was described as the toughest decision the board has ever made, the Paynesville Area Hospital District Board of Directors voted unanimously at their meeting on Wednesday, Feb. 2, to advertise for bids on a scaled-back remodeling project that could cost nearly $5 million.

After lengthy discussion, in which the board heard support for the project from a number of doctors on the medical staff and from the administration concerning the project's financial impact on the system, the board authorized the administration to bid the project as soon as practical, allowing for some last-minute adjustments to the plans.

The goal is to open the bids in early May, which is regarded as a good time to receive competitive bids, with contractors eager to secure work for the upcoming summer construction season. To meet that goal, bids had to be advertised soon. "You don't have to accept the bids," hospital system administrator Willie LaCroix told the board, "but you have to keep moving forward." Otherwise the project might need to wait a year, he warned.

Project history
Plans for the remodeling project started several years ago when the board toured each department of the hospital and learned about the needs of each. By last August, the project had grown to an estimated $4.5 million.

But, remodeling in a health care facility is tricky logistically. Patient care must continue, so the work must be in such a way that each department can function during the remodeling.

As the project continued to grow through the fall, the total price tag reached $7.8 million.

That figure caused alarm from the system's financial advisors for financing and cash flow concerns. The entire project included additions to the hospital, the Paynesville Area Medical Clinic, and the Koronis Manor, as well as remodeling in the hospital and the nursing home.

The hospital portions-an expanded outreach clinic and a second operating room-will pay for themselves, through increased efficiency and consequently increased charges. But the nursing home portion was difficult to fund. Minnesota has an excess of nursing home beds, and as a result, the state imposed a moratorium on construction.

The original plan called for $3.1 million to be spent in the system's nursing home, the Koronis Manor. The system applied for an exception to the moratorium but was denied. Without that exception, the system would be unable to recover the improvements to the Manor through increased reimbursements.

The option they chose was to proceed under another exception to the moratorium, which allows for $750,000 in improvements per year. These improvements will be reimbursed by Medicare and Medicaid payments over the life of the building, and since private pay rates are set by the state rates, these will also increase with the addition.

Plan B, as the scaled-back version is called, reduced the project by $3 million, including $2.5 million in the Manor.

Board decision
LaCroix opened the discussion with a history of the project and suggested any project might have to wait a year if a decision wasn't reached soon. "I'd like to think the hospital board knows there's a need for the entire project at some point," LaCroix said.

The six providers present expressed their support for the project. Several board members wanted to know what the medical staff thought about the project.

"This project does have the physician's support," said Dr. Bob Gardner, the chief of staff this year and as such a new representative on the hospital board. "I'm not sure you want to wait a year."

Several board members expressed preference for the scaled-down project for financial considerations. "It's clear,"Ęsaid Doug Ruhland, who represents the city of Eden Valley on the board, "that the original project, which grew to $8 million, is not viable."

Vickie Ruegemer, a new board member from the city of Richmond, said the growth in St. Cloud seems to be moving in our direction. She works for CentraCare in St. Cloud and felt that growth supported the project.

LaCroix cited a number of factors to reassure the board about the project's financing. The bonds for the 1983 hospital project run out in March, so $21,000 a month will be freed for financing. This project is expected to cost about $40,000 per month, and LaCroix said the difference would be covered by operating revenue.

The system needs the project to deliver competitive health care services, LaCroix said. "You don't want to slip back," he explained. "You want to stay on top. It's too much for the Sauk Centres and Melroses to catch up."

LaCroix told the board that they had other options to fund the project: either by imposing a mill levy, by selling out to a larger health care system like CentraCare, or by fund raising in the community.

Ruhland felt a decision needed to be made that night, and could be made without all the details in place. The board's role was governance, he said, and they should trust the administration with management decisions. He made a motion to let the bids, which passed unanimously.

Hospital, clinic projects
The hospital projects would include remodeling a portion of the administration wing, expanding the outreach clinic, creating a second, larger operating room, making three birthing suites, adding a new emergency entrance and emergency rooms, revamping the nurses' station, and adding a wing for maintenance, materials management, and meeting space.

Doubling the size of the outreach clinic is needed because 53 doctors have office hours in Paynesville. Some come twice a week, and others come once a month. The clinic is cramped for space.

The second operating room would be larger to accommodate more types of surgery. Presently, it takes 45 minutes to prepare the room for another surgery, which causes waiting on busy surgery days. The second operating room, consequently, would allow for more operations.

Other remodeling projects would be caused by necessity. Since the outreach department is located in the center of the hospital, for it to expand requires the areas that are presently occupied by maintenance, materials management, and the laundry. These areas would move to new rooms in the additions.

Similarly, the current meeting rooms are needed in the administration wing. With the expansion of the outreach and satellite clinics (which saw 3,126 patients in December, a system record), more space is needed to store medical records.

Also, the increased volume demands a small remodeling of the reception desk.

The clinic building, built in 1995, would have four exam rooms added to prepare for the four new providers that the system has signed for 2000. Three doctors and a physician's assistant will arrive over the summer.

A room would be built for the Rural Health School students, and the psychiatry department would be shifted to the clinic. Radiology needs their present rooms.

Koronis Manor project
The plans for the nursing home originally were to transform it to a less institutional atmosphere. Those type of changes are deemed necessary to attract the next generation of residents, who will expect private rooms and private bathrooms.

Those plans were eliminated in the scaled-back version approved by the board. A new wing on the east side of the Manor would have added a number of double rooms, and the existing rooms would have been converted to private rooms. Also, a wing would have been added to the south with pods of private rooms and a separate dining room to house residents needing a temporary stay in the nursing home for rehabilitation.

Instead, the plan would address just the most immediate needs. Those other wings now will have to be tackled in a series of later projects, each of which would have to spend less than $750,000 to meet the threshold for the state moratorium exemption.

A new roof would be put on. The existing roof is from 1964. Also, the ceiling through the main corridor and into the patient rooms will be removed to install a sprinkling system, which is required by the state.

As for care, an addition would be added to the dining room. This extra room would allow residents who needed to be fed some privacy. Currently, they are fed in the commons area.

Also, a second tub room will be added, and both would be better designed for wheelchair access. The main bathroom would also be expanded.

To see the proposed addition, click here.

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