Hospital revives project
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A more favorable bond market, lower construction costs and a slightly scaled-back project could allow Woman’s Hospital to again seek permanent financing for the new facility at Pecue Lane and Airline Highway.
Woman’s has reduced the number of adult inpatient beds at the new hospital from 176 to 164, spokeswoman Jodi Conachen said. The number of neonatal intensive care unit beds planned has also been cut to 84, from the original 96. Sixty of the neonatal ICU beds will be in single-family rooms, unlike the existing hospital’s bays and multiple beds; Woman’s will also have the ability to quickly add 22 neonatal intensive care unit beds.
“We estimate that we’ll reduce the cost of the project by $35 million to $50 million,” Conachen said. “We’ll know more after we finish working with the subcontractors.”
Woman’s is asking its subcontractors to reprice their work, Conachen said. The hospital hopes to take advantage of the drop in prices during the nationwide recession.
The new facility was originally planned for 520,000 square feet. The facility includes two medical office buildings with a combined 260,000 square feet of space.
Woman’s had originally estimated the cost of the project at around $350 million and would have financed almost the entire amount by selling bonds. The facility was expected to open in 2011.
However, construction came to a halt in January because of uncertainty in the bond market. Woman’s would have had to pay interest rates of 8.5 percent on the bonds instead of the planned rate of less than 7 percent. Woman’s officials said the higher interest rates would have added $5 million to $6 million a year — $150 million to $180 million over the 30-year life of the bonds — to financing costs.
Bond interest rates have fallen since then. Earlier this month, North Oaks Medical Center sold $99 million worth of bonds to finance improvements at its Hammond campus. Those bonds carry an interest rate of 4.7 percent.
Conachen said it is unclear how much money Woman’s will save in interest payments this time around. The hospital is three to four months from being able to establish an interest rate, she said.
“We’re seeing other people go to the market and getting good pricing,” Conachen said.
Conachen said the original design would have given Woman’s the built-in capacity to handle the additional demand from hurricane evacuees.
Woman’s will still be able to handle any surge from hurricane victims, but the hospital will have to make adjustments, she added.
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