Memorial Hospital will break ground this spring on a long-awaited expansion project estimated at $380 million, the largest investment in health care construction that Hamilton County has seen.
The launch of the three-phase expansion, stalled for more than two years by the economic recession, marks the beginning of what could be a decade of renovation and new construction work at the hospital's downtown campus and medical facilities in the burgeoning Ooltewah area, hospital leaders said.
"We're just glad to get started," said Charlie Arant, Memorial's board chairman. "The physical facility that's there now, for the most part, has been there since the 1950s. With the starting of the expansion, we're really working on improving the infrastructure, and then you come along and improve your physical facilities."
The project -- first announced in 2006 with a projected 2012 completion date and $329 million cost estimate -- will proceed in a piecemeal fashion, with each phase requiring approval from Catholic Health Initiatives, Memorial's parent company, hospital leaders said.
Despite a less ambitious timetable than the original, the project is expected eventually to add 500 jobs at Memorial and position the hospital to capitalize on growth in the eastern part of Hamilton County.
The head of the Chattanooga Area Chamber of Commerce said the activity underscores the resilience of the city's economy, even in the aftermath of a devastating national recession.
The expansion, which will break ground in April with construction of a new central utility plant, ultimately could cost upward of $380 million, though estimates for the final phase of the project still are undefined, according to project director Gordon Utgard.
Overall, the project will add more than 400,000 square feet of new space to the hospital's facilities and renovate nearly 100,000 more in anticipation of growing patient volumes, he said.
The hospital's Glenwood campus is 750,000 square feet.
Memorial is on track to record 21,000 hospital discharges in the current fiscal year and, by the end of fiscal year 2016, the hospital anticipates reaching 26,000 discharges, said spokesman Brian Lazenby.
What patients will see
A new 30-bed observation unit set above the hospital's emergency room and a state-of-the-art "hybrid" operating room are among the major changes patients will see at Memorial within the next couple of years, President and CEO Jim Hobson said.
The hybrid operating room allows for both surgical and nonsurgical interventional procedures, such as image-guided cardiac catheterization, he said.
The hybrid OR will bring a new level of minimally invasive treatment options to Chattanooga for conditions such as aortic valve replacement, said Dr. Rob Headrick, local cardiothoracic surgeon.
Hybrid procedures can lessen the cutting required in a surgical procedure when combined with image-guided catheterization procedures, he said. They also allow doctors to switch quickly between noninvasive and surgical treatments if an unexpected complication requires a patient to undergo immediate surgery, he said.
"You can't do that unless you have one of these rooms," he said.
A new tower for patient beds, slated for construction at least two years from now, will be tucked between the hospital's current emergency room and the Chattanooga Heart Institute, which Memorial recently bought, Utgard said.
The new utility plant, with energy-efficient generators and equipment, will update the hospital's aging utilities and likely save Memorial $500,000 annually in energy costs, Utgard said. Memorial North Park also will undergo a major utility upgrade in phase one, Utgard said.
Construction of the central utility plant is dependent upon City Council approval of a zoning change, expected to come this week, Lazenby said.
In phase two, in addition to the new patient tower, outpatient services likely will be expanded in Ooltewah. That includes potential for a new physician office building and the addition of radiation therapy services in the Ooltewah complex, Utgard said.
A still-undefined third phase of the expansion likely will center on the hospital's increased development in the Ooltewah area, where Memorial recently built a medical office complex. Memorial also has a diagnostic imaging center and an extension of the Mary Ellen Locher Breast Center in Ooltewah at the medical plaza on Mountain View Road.
Memorial has 52 acres of property in Ooltewah and is using only four of those acres, Utgard said.
"Health care is local," Utgard said. "Our whole philosophy is looking at a distributive model so that everything is not located at the downtown facility. ... We want to be sure the services are being offered where people are living."
In the early 2000s, Memorial officials had considered building a new free-standing hospital in Ooltewah, which is now one of the fastest-growing areas in Hamilton County. Hospital leaders aren't ruling out resurrecting those plans.
The option may be revisited, Arant said.
"It's just too early to tell," he said.
Over the next three or four years, the expansion will add another 500 health care jobs at Memorial, which currently employs 4,317 people, Hobson said. That doesn't include 200 to 400 new construction-related jobs, he said.
The original expansion project, dubbed "Mission Forward" by hospital leaders, was sidelined when the credit markets began tightening following the start of an economic recession in 2007.
This go-round, Memorial's expansion is marked by greater caution, despite the continued need for growth, Utgard said.
* Cost: $60 million, including construction and equipment
* Components: 47,000 square feet of new space and 23,000 square feet of renovated space, including:
* Four new operating rooms, including a "hybrid" room with both surgical and imaging capabilities
* A new central utility plant at the Glenwood campus and utility upgrade at Memorial North Park
* A 30-bed observation unit on a second floor to be built above the existing emergency room
* Renovation of existing gastrointestinal lab
* Expansion of endoscopy capabilities
* Addition of radiology next to the ER
* Expected completion: July 2012
* Cost: $220 million
* Components: 370,000 square feet of additional new space and 70,000 square feet of renovated space, including
* Construction of a new patient tower north of main hospital campus
* Replacement of dozens of patient beds
* Possible addition of a physician office building and new outpatient services such as radiation therapy at the Ooltewah medical complex
* Expected completion: Three or four years
* Cost: Undefined, but could reach $100 million
* Components: Likely expansion in the Ooltewah area, where Memorial owns 52 acres.
Source: Memorial Hospital
"Just because we postponed the [project] didn't mean all the needs went away. We were going to have to do this work eventually, but over a long period of time," he said.
A longer timetable allows Memorial to take on a smaller financial risk per year, although the project could end up costing more because of inflation over time, he said.
Under the original plan, "we had a whole lot of projects stacked up so that it would have been completed in a four- to six-year period. This [revamped project] may go on for a decade," he said.
Catholic Health Initiatives has approved $60 million in funding for the two-year initial phase, and hospital executives will seek approval of $220 million in bonds after the first phase is complete.
Some preparation plans have changed since the project first was announced in 2006. A vacant TB hospital just north of the main hospital campus in Glenwood no longer has to be torn down to make way for the new 340,000-square-foot patient tower, which will be located closer to the main hospital structure. The TB hospital eventually will be demolished anyway, but won't affect the new construction.
At $293 million, the original cost estimate, Memorial's initial expansion proposal was the largest health care project, in terms of dollars, to receive state approval in Hamilton County, at least since the certificate of need program began in the 1970s, said Jim Christoffersen of the Tennessee Health Services and Development Agency.
The first phase will be among the largest construction projects this year in the Chattanooga area, including the $1.45 billion Wacker Chemical plant being built in Bradley County, the $91 million Amazon.com distribution center planned at Enterprise South industrial park and Erlanger Health System's construction of a 32,000-square-foot, $6.7 million medical complex next door to the Amazon facility.
The construction activity, including Memorial's project, indicates the underlying strength of Chattanooga's economy, said Tom Edd Wilson, president and CEO of the Chattanooga Area Chamber of Commerce.
In Chattanooga, the one-year job growth rate of 1.41 percent exceeds the state average of 0.64 percent, according to the U.S. Bureau of Labor Statistics. As of November, the unemployment rate in the Chattanooga metropolitan statistical area was 8.5 percent, compared with 9.3 percent nationally.
Wilson said the fact that major expansions are under way at all is notable in such a challenging financial climate with the uncertainty of health care reform on the horizon.
"In most cities, you don't have anywhere near the construction projects going on that's been going on here," he said. "A hospital willing to step out and do something like that now speaks well for what they think their growth's going to be. I think that's the key point."
Hospital leaders worked with Glenwood and Avondale neighborhood leaders as the expansion project rebooted.
When Memorial's expansion first was proposed, Glenwood residents worried about the hospital's growth encroaching on homes in the area. They also feared that a planned utility center would be an eyesore in the historic Glenwood neighborhood.
But Memorial officials have responded to residents' concerns, even altering some plans regarding the central utility plant, said Tommy Diller, president of the Glenwood Neighborhood Association.
The utility center will be designed to resemble local architecture and will include features to protect neighbors from hearing the sounds of a generator switching on and off, he said.
"Memorial has been great at keeping an open dialogue so that we know where they're growing and expanding, and we also know our neighborhood is safe," he said.