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Lawrence General Hospital Surgical Services Addition

Developer: Lawrence General Hospital

Type of Development: Healthcare

Owner: Lawrence General Hospital

Cty and State: Lawrence, MA

Contact Person: Barbara Cleary

Phone: 978.239.8437

Contact Email: [email protected]

Allocation Amount Requested: $25,000,000

Brief Description of Development:

Project Overview
Lawrence General Hospital (LGH) is proposing to develop a new Surgical Services Addition attached to and integrated with the existing hospital facility at One General Street in Lawrence MA. The proposed new addition is approximately 45,000 SF, of which 32,000 SF will accommodate the operating rooms and associated facilities, with the remaining space built as shell space for future fit-out. The total cost of this project including all components is $55 million.

LGH is an independent, non-government, non-religiously affiliated, not-for-profit hospital serving the greater Lawrence, MA community and surrounding areas.  LGH serves nearly 300,000 patients annually and is the sole remaining not-for-profit hospital serving the immediate Lawrence area

With close to 1,800 employees, LGH is the largest private employer in the City of Lawrence. It is a Level III Trauma Center and is clinically affiliated with Beth Israel Deaconess Medical Center for adult tertiary care and Floating Hospital for Children at Tufts Medical Center for pediatrics.  LGH is a  Disproportionate Share Hospital ; indicating a high level of Medicaid patients, and the important role the hospital plays in serving the low-income and underserved community.  The hospital has been widely recognized for the high quality of its care.

The hospital s presence in the city of Lawrence has ensured that the indigent, minorities, and working poor have access to quality primary care. Of the city s roughly 77,000 residents, almost 30% of households live below the Federal poverty rate and the city s 8.6% unemployment rate is among the highest in the state.  Nearly seventy three percent of the city s population is Latino, the largest proportion of Hispanics of any Massachusetts community.

This project represents a critical step in implementing the Hospital s strategic plan to expand its clinical services, and create facilities that match the exceptional care provided. Replacement of the Surgical Suite is a highest priority project in the hospital s overall master facility plan.

The existing Surgical Suite is outdated and undersized.  To remain competitive and meet the expectations of surgeons and patients, LGH must replace this facility.  The new Surgical Suite will allow essential clinical services to be provided locally, and will also allow surgeons to perform a larger range of procedures in the state-of-the-art operating rooms.  LGH is losing valuable surgical revenue to competing hospitals, and retention of these cases will significantly impact the hospital s long term financial performance as an operating enterprise. Maintaining in-patient surgical services is a key element in the strategy for the Hospital to remain a viable, healthy, long term community asset.

Employment
Lawrence General Hospital is an important employer in the Lawrence community, and is the largest private employer in the city. The medical staff is comprised of over 500 physicians representing 40 specialties.  Employment as of 2013:
   Total                1743
   Minority            462 (26.5%)
   Female                1371 (78.6%)
   Lawrence Residents        317 (18.1%)


Hospital Strategic Planning
In the past decade, under new leadership, LGH has undertaken several important strategic initiatives to strengthen the Hospital as a community institution. These initiatives include expansion of in-patient and out-patient services, affiliations with Boston tertiary care hospitals, alignment of physician groups, and expansion of regional health care services.
The strategic planning has also encompassed a complete facilities review and creation of a Facilities Master Plan. The two top priority components of the Master Facility Plan are renovations of patient rooms and construction of the Surgical Services Addition.  
The patient room renovations are being phased through the patient wings, and these renovations are currently underway. The objective of these renovations is to create single occupancy rooms and upgrade facilities that have not been renovated in more than 40 years. The Hospital is funding those renovations through recently issued tax-exempt bonds.
The replacement of the surgical suite is the other critical element in this Master Facilities Plan.

The Surgical Services Addition Project
The existing Surgical Suite is over 49 years old, an aging facility that no longer meets MA Department of Public Health (DPH) and other requirements, including fire alarm and sprinkler systems, air changes and communication systems. The replacement facility will be appropriately sized, including the recovery rooms and recovery space, adequate storage and improved operational efficiency. This will also mean that more sophisticated, technically advanced procedures will be possible.  
The new Surgical Suite will allow essential clinical services to be provided locally, and will also allow surgeons to perform a larger range of procedures in the state-of-the-art operating rooms.   
The proposed new 46,000 SF addition for surgical services includes 32,000 square feet for the surgical suite and associated facilities and 14,000 square feet of shell space for future fit out. The proposed program is as follows:
   Six operating rooms
   One interventional radiology room  
   One  swing  room that can be used for either cardiac catheterization or interventional radiology
   Pre-op holding area
   Post anesthesia care unit
   Clinical work areas
   Family and staff support areas
   Storage areas

But-For Statement:

Replacement of the Surgical Suite is essential to the Hospital s financial health. LGH is losing valuable surgical revenue to competing hospitals, and retention of these cases will significantly impact the hospital s long term financial performance as an operating enterprise. Maintaining in-patient surgical services is a key element in the strategy for the Hospital to remain a viable, healthy, long term community asset.
LGH has been conservative in its financial management, but in previous decades this has meant that the hospital has not committed capital funds required to upgrade its facilities to meet current standards.  
More recently, under new leadership, LGH has undertaken the important strategic initiatives to strengthen the Hospital as a community institution into the future. These initiatives include critical facilities investment. The two top priority components of the Master Facility Plan are renovations of patient rooms and construction of the Surgical Services Addition.  
For the first time in a generation, this past year the Hospital was able to go to the capital markets. In late 2013 LGH went through the rating agency process and issued $43 million of tax exempt debt, which it is using to fund patient room renovations and other capital repairs.
Funding the additional $55 million total costs of the Surgical Services Addition through debt alone is simply not feasible for the hospital. The Hospital has been reserving funds as a component of project financing, and can potentially issue some amount of additional debt.  
The funding gap is estimated at $8 million, and New Markets Equity Investment is the primary strategy to fill that funding gap.


 

 

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