Hospital unveils $57 million expansion

COEUR d'ALENE - Kootenai Health is outgrowing its hospital.

That's why hospital trustees have authorized the first phase of construction in what could become a bigger five-year project, with phase I providing a $57 million, three-story addition and new main hospital entryway on the north side of the existing facility.

Construction on the first phase - the first patient-care expansion in 30 years - is scheduled to start late this summer or early fall, with a target completion date of late next year, Kootenai Health CEO Jon Ness said Tuesday. And he's not complaining about the growing pains.

"I think what's uncommon about this is that many hospitals now are experiencing decreases in their inpatient census and we are experiencing increases," Ness said. "Over 18 months, we've increased our confidence that this is the right thing for the hospital, the right thing for patients and it's the right thing for this community.

"In fact, it's a really nice shot in the arm for the local economy."

That local economic boost won't come with additional expense to taxpayers, either, Ness said.

"We have no plans to use our hospital district taxing authority for this project or any project going forward," said Ness, adding that the hospital hasn't collected property taxes - as it legally can - since 1995.

Phase I will be built on the hospital's east lawn, next to U.S. 95, and adjoin the existing building. Its three stories will consist of:

* A family birthing center and neonatal intensive care unit, lobby and registration area, and expanded waiting area on the first floor.

* Rooms to serve medical and surgical patients on the second floor.

* Space for future growth on the third floor.

Each floor will add about 100,000 square feet to the hospital, not including an easily accessed, prominent hospital entryway on the north side of the building. Patient rooms will be larger, and all of the new ones will be private, not shared.

Ness said 100 to 150 new staff positions will come directly from the expansion over the next few years. Chief Financial Officer Kimberly Webb said that will equate to additional payroll of $6.8 million to $10 million annually. In 2013, the hospital's payroll was right at $150 million, or about $175 million with benefits, Webb said.

In addition, hospital officials estimate 400 to 450 construction workers will be employed during phase I, with a payroll impact of $10 million to $12 million.

Webb said the first phase will be financed by three sources: Cash, debt and donations. Donations will be by far the smallest slice of the funding pie, she said.

"We have a very strong balance sheet and that's why we are a good investment when we go out to the debt market," said Webb. "We do have reserves on our balance sheet but we are trying to keep A-rated metrics so we can get the lowest interest rate possible on our debt."

Webb said the hospital maintains roughly 180 days' cash on hand - a standard that Kootenai Health has long maintained.

"That means if something catastrophic happened, we could continue funding our expenses for 180 days," Webb said.

Jeremy Evans, vice president of operations, said the hospital will run full-steam ahead during the construction. But that doesn't mean it will be easy.

"The beauty of this project is that we're adding on," he said. "It's going to be in the lawn area - a new footprint. Having said that, the site work will be a challenge," with short-term concerns about parking and traffic flow.

Further out on the Kootenai Health horizon, hospital officials say, is potentially more growth.

"There is a second phase of the project that might occur in 2016-17, but no final decisions have been made about that phase," Ness said. "This sets us up for the future growth that we expect. This is a phase 1 expansion. Behind the phase 1 are two additional phases. In order to get to phase 2, which is a major expansion of our main operating room, phase 1 has to occur first."

Ness said reaction among hospital employees has been extremely positive, and he believes the community will see it that way, too. After all, it's the community's hospital.

"This isn't a hospital that's owned by some large national corporation," he said. "It's owned by the people who live here. This is their project."