SoutheastHEALTH recently announced plans for a major expansion at its west campus located on South Mount Auburn Road in Cape Girardeau. Dan Woods spoke with SoutheastHEALTH CEO Ken Bateman to learn more about the expansion.
Woods: Tell us about the expansion and why you're doing it now.
Bateman: Well, the expansion is a three-phase expansion. We actually started design of this expansion back in the early part of 2019, with COVID it got pushed back a little bit but it's a three-phase expansion.
The first phase of the project, which was the $30 million dollar behavioral health hospital that we recently opened in the latter part of March [2021], that facility is now open and we're opening that in sections - in various units. The first unit that opened in the tail-end of March is already running consistently full, so probably sometime this summer we'll go to the second unit of that. So phase one was the behavioral health hospital; phase two includes about at $75 million dollar investment in various construction projects.
One of those projects is a $25 million dollar orthopedic and sports medicine center as well as a women's integrated health service facility. That facility is about 70,000 square feet, and again, that portion is about $25 million dollars. But also in that $75 million dollar phase, we're going to do some major renovations at the hospital main campus. We're going to do a total renovation for our emergency department, as well as some major upgrades to a lot of our in-patient units, our lobby, and several other common areas.
And then the third phase is for an ambulatory surgery center, also out at our west campus out on Mount Auburn Road. That phase, right now, is in the design phase; it's about a $20 million dollar center and that will have various surgical suites [which] would include orthopedics, general surgery, women's health, etc. Phase one is complete, phase two we plan on getting started this summer, and then phase three is still wrapping up the design phase.
The why now? Behavioral health. We saw [an] increase in the need for behavioral health about two to three years ago. We did not anticipate the demand that's come out of COVID, and so, again, as soon as we opened the facility, it's already filling up. There's a great need for behavorial health services. Also, that facility has the ability to admit adolescents. There are very few facilities in the state of Missouri that can accept adolescent children. This is one of those facilities; that's a great asset to this community.
Our orthopedics sports medicine program has just exploded since we started our own orthopedic group back in 2019. And we're actually adding an additional hand surgeon and pediatric orthopedist this summer, and quite honestly we're already out of space, so that facility can't get built fast enough.
And then a lot of our surgeries are moving to an out-patient setting, which is why we're in the design phase for an ambulatory surgery center. That kind of gives you an overview.
Woods: One of the things I wanted to ask you, Ken, is why the explosive growth in orthopedics and sports medicine, as you noted? Why is it getting so big all of a sudden?
Bateman: Well, part of it is the team that we've assembled. Dr. McPherron - who is our chief of orthopedic surgery - is just a phenomenal surgeon. He is a sports medicine fellowship trained in sports medicine and orthopedics. He came out of the North Carolina/Asheville market. He was formally a team physician for Virginia Tech. His background is Sports Medicine, but he has assembled a great team around him. Dr. Baker came out of Mercy Health, a well-regarded surgeon. And Dr. Charity Jacobs - she's one of the few female orthopedic physicians that are in this market south of St. Louis, great pedigree - went to medical school at Dartmouth, did a fellowship in reconstructive surgery at NYU in Manhattan. [McPherron has] assembled a great team and now he's adding a hand surgeon and a pediatric orthopedist. There's a lot of demand for orthopedic care, and our sports medicine program itself has also been well-received in the area.
Woods: How is this expansion being funded?
Bateman: Some of it, the behavorial health, we're partnered with an organization called Universal Health Services. We funded our investment in that out of our cash. Phase two of this project is being funded partially out of bond proceeds, and partially again out of our operating cash. So, we just recently issued $65 million dollars of bonds last week, and that's going to partially fund some of this project as well.
Woods: So, are construction costs a concern right now? We know they're all higher for everything else. Is that something you are worried about or factoring into your planning?
Bateman: It is somewhat concerning, because the cost of material has certainly gone up recently. You know, you can never time these things because, as I mentioned, we started planning in '19. So, a lot of times you just have to take the market that you get, but that being said, we did build some additional financing in to handle some price increases, but also our interest was extremely lower than what we had anticipated on our bonds. We were anticipating being in the 3.75 to 4.00% range, and we ended up at 3.2%, so over the life of those bonds, we'll have a substantial savings on interest rate. To answer your question, we're concerned about costs. But we timed the market great in terms of low interest rates.
Woods: What do you think this means for the local economy? I can't imagine the impact. It's going to be pretty big, I would imagine.
Bateman: It is. The behavioral health center - when its fully opened - that will staff about 200 employees into that facility. And when we open our orthopedic and women's services, that will probably add about another 100 positions or employees for that facility. Most of those positions will be professional level positions, so they'll be higher-paying jobs. But between the construction [and] economic activity - which translates into restaurants and other activity and employees - it will generate quite a bit of sales tax [and] people buying homes. At this point, we've quantified the behavorial health [center] as having about a $20 million dollar impact of building and opening that facility to the local economy. We're anticipating about 100 jobs into this other new facility that we're under construction to build currently.
Woods: So whenever you decide you're going to add on or build and add more services, how do you figure out what services to add? Do you do surveys or look at national data? How do you figure that part of the puzzle out?
Bateman: Well, some of it is just looking at our trends and current volume. For example: orthopedics. Our volume last year, 2020, was up 31% over 2019; that was in the middle of a pandemic, and we're adding surgeons. Some of the projects are basically predicated on just growing volume. Others - like women's services - what we're going to do for that facility and orthopedics is, we're building in what we call "flex suites" and so we're going to survey the community and we're gonna do focus groups in the community to find out what is the community tell[ing] us that they would like to see as a service in that facility as well.
So, we're gonna have some core services such as we're gonna move our OB and GYN services into that building. We'll move our breast center into that facility and we'll move some other programs but then we've also built in some flex space so that if we wanna have certain specialists perhaps for a day or two a week, we don't have to dedicate a total unit entirely to that service if it's not required for a full week of service. But we wanna have the flexibility to bring in different specialists, different providers covering different topics, different areas and so again that's why we're building in flex suites to basically hear from the community through survey and focus groups and then translate that into our -- now we need space to put these physicians to see those patients.
Woods: So as we wrap up here, when do you suspect to have -- what's your timeline to have everything completed -- all the projects completed?
Bateman: Well, phase one is done. Phase two is about a three year, a two to three year window. We anticipate the construction of our west campus orthopedics women's services -- that will start in the probably the middle of the summer and that's about an 18 month construction project. The hospital main campus because you can only take one hospital unit out at a time because you've got to move those patients somewhere else. That will be about a three year window to complete all the renovations our our hospital units. And then the ambulatory surgery center will probably be about four years out, so it will probably take us four years from start to finish.
Woods: Big projects.
Bateman: It's a big project but we think it's exciting. We hope that we can meet the needs of this community and bring services that they don't have and we're just looking forward to getting these continued on their way.
