Memorial halts plan to expand ER, ICU

Santa Rosa Memorial Hospital has halted a $68 million project to expand its emergency room and intensive care unit, citing the poor economy.

The hospital said destabilization in the credit markets, reduction in Medi-Cal reimbursements and difficulty raising $10 million in donations during tough economic times all prompted the decision.

"This should not be viewed as a cancellation of the project," interim hospital President and CEO Kevin Klockenga said in an statement Wednesday. "It is merely a pause while we wait to get a better picture of where the economy will end up."

The two-story project, which broke ground in August, was supposed to double the size of the ER, from 19 bays to 38, and add 12 new beds to the ICU, said Memorial spokeswoman Katy Hillenmeyer.

The ambulance bay was relocated, and some site preparation has been completed, she said.

But Klockenga, who took over after George Perez stepped down as president in August, halted the project as economic conditions in September and October deteriorated, Hillenmeyer said.

The hospital hopes to re-evaluate the project in 12 months, she said. She didn't know how much money had been spent on the project to date.

It's the second major construction project to be postponed by the hospital this year.

In April, the hospital postponed plans to expand its parking garage and canceled plans for a new urgent care center after rival Sutter Medical Center decided not to close its Chanate Road hospital.

Memorial had been negotiating with Sutter to take over Sutter's patient load if Sutter closed, but the Sonoma County Board of Supervisors refused to sign off on the deal, forcing Sutter to remain open despite steep losses.

But halting the ER and ICU expansion have nothing to do with Sutter, Hillenmeyer said.

The project was planned long before discussions began about Sutter, and ground was broken months after Sutter announced in March that it would remain open.

It made sense for Memorial to move forward with the project even without the influx of Sutter patients because the hospital needs to prepare to meet the needs of aging baby boomers, Hillenmeyer said.

"I think most people know that meeting the health care needs of an aging population that is growing is an issue that any health care provider is trying at the moment to prepare for," Hillenmeyer said. "That need has not gone away."

But plenty has happened since the hospital broke ground.

The credit crunch has increased the cost of borrowing on the bond market. State budget cuts are expected to lower Medi-Cal reimbursements by $6.2 million per year to Santa Rosa Memorial and Petaluma Valley hospitals, both of which are operated by St. Joseph Health System.

The hospital also predicted that the soft economy might make its $10 million fund-raising goal harder to meet.

And as people lose their jobs, the number of uninsured people could increase, adding further unreimbursed care costs to the hospitals, Hillen-meyer said.

While the project is on hold, the hospital has decided to move forward with some ER renovations that were planned for the third phase of the project, Hillenmeyer said.

And the number of patients the ICU can handle has recently been increased through the use of a remote monitoring program called eICU that has reduced the length of hospital stays, she said.

Hospital staff took the news Wednesday with "a mixture of pragmatism and disappointment," she said.

"I hope everyone will agree this is the prudent thing to do at this time," Klockenga said in his statement.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.