A tale of two new hospitals —- and why one costs so much more
ESCONDIDO -- The "hospital of the future" being built in western Escondido is projected to cost $934 million, more than four times as much as a $194 million "hospital of the future" that opened last month in San Diego.
Why such a big difference in costs?
Both hospitals -- the new Palomar Medical Center under construction in Escondido and the new Sharp Memorial Hospital in Kearny Mesa -- are slated to be fully equipped regional trauma centers.
And both have been designed according to a new trend in health care facilities that aims to upgrade the patient experience far beyond what old-fashioned hospitals have provided. That model includes large patient rooms, healing gardens and meditation rooms.
One obvious difference is that the Escondido hospital is projected to be roughly twice as large. The new Palomar center will be 11 stories tall and feature 790,000 square feet of space, while the new Sharp hospital is seven stories tall with 315,000 square feet.
But even taking that difference into account, the construction of Palomar is expected to cost about twice as much per square foot. The Palomar project is slated to cost $1,182 per square foot, while the Sharp project cost $615 per square foot.
In recent interviews, a hospital construction consultant, a veteran hospital architect and officials from Sharp and Palomar said the cost differences are based on dozens of factors. Among those they mentioned were land costs, lucky timing and whether the price tags included a long list of complicated fees and non-construction expenses.
They also warned that comparing the two hospitals is fraught with difficulty.
"I think you have to be very cautious about this kind of comparison," said Derek Parker, a San Francisco architect who has designed dozens of hospitals around the world. "You're not comparing apples to apples."
Tom Chessum, a Los Angeles architect who is helping with the Palomar project, said so many factors and decisions go into building hospitals that they defy comparisons.
"You've got to ask 20 or 30 questions just to get an idea of what it's all about," Chessum said.
Those questions include how much emphasis architects placed on allowing patients and families to connect with each other and focus on healing instead of hassles. Giving patients larger rooms allow them to stay in one place and have health care workers come to them, instead of having them moved around the hospital for various procedures.
Other questions include whether hospital officials chose a more expensive approach to construction in order to significantly reduce long-term operating expenses.
Location and timing
Some obvious cost differences cited by officials include Palomar's need to spend $35 million on land for its new hospital, pay $19 million for nearby road improvements and build a $68 million power plant for the facility. Sharp officials avoided all these costs because their new hospital was built on vacant land the company already owned, right next to an existing Sharp hospital.
Building next to an existing hospital also allowed Sharp to avoid including libraries and some other amenities in the new hospital, because those features were already next door.
The new Palomar hospital, which is being built several miles away from Palomar Medical Center in downtown Escondido, must be totally self-sufficient.
Consequently, the project, which is under construction on Citracado Parkway near Escondido's border with San Marcos, includes many more conference rooms, libraries and other amenities than the Sharp project.
"We had to build a hospital from scratch, while they were just adding on," said Mike Shanahan, chief architect for the Palomar Pomerado Health district.
That difference is one reason why both hospitals have about 300 patient beds, yet the Palomar hospital will have more than twice as many square feet when it opens in 2012.
Another key factor, officials said, was the timing of the two projects. Construction materials were far less expensive during Sharp's project timeline of 2004 to 2009 than they have been during Palomar's project timeline of 2007 to 2012.
"The construction market for hospitals in California has gone up at unprecedented levels since 2004," said Chessum, estimating that the increases have been about 20 percent per year.
Anticipating such a surge, Sharp officials were able to avoid the higher prices by buying and storing many tons of steel, said Dan Gross, executive vice president of hospital operations for Sharp.
Wages, frills and priorities
Officials said another factor could be a state law requiring Palomar Pomerado Health, which is a public hospital district partly funded by local taxes, to pay construction workers the prevailing wage in their field. Sharp, which is entirely private, is not required to pay prevailing wages.
But no one could provide even a vague guess at how much paying prevailing wages might have increased the Palomar price tag, and Chessum said he doubted it was any factor at all because hospital construction workers almost always earn much more than ordinary construction workers.
Some have blamed Palomar's relatively high cost on the so-called "frills" included in that project, such as outdoor playgrounds, terrace gardens and elaborate wood headboards for patient rooms.
Gross said Sharp officials tried to strike a middle ground between frugal and showy.
"We didn't want to be ostentatious," said Gross. "No one walks through here and says, 'Why did they waste their money on that?'"
But Palomar trustees recently eliminated $23 million worth of frills from hospital plans in order to reduce projected costs from $957 million to $934 million. That included eliminating a $3 million drape that would have shown images, a spiral staircase and some water features.
And Chessum said frills are a relatively minor factor in the price tag of a hospital: "Whether you make it upscale or go with no frills is a very minor issue."
Palomar officials also attributed some of the cost differences to their need to buy virtually all new equipment for the new hospital. For example, buying all new operating room equipment can cost as much as $80 million to $100 million, they said.
But much of the equipment for the Sharp hospital was also new. Officials from both hospitals said equipment is so expensive and complicated that it would be extremely difficult to compare the two facilities in that regard.
One other possible factor was that officials planning the two hospitals took different approaches to balancing upfront construction costs against long-term savings on operations.
Palomar officials said they chose a more expensive approach to construction in many instances, because such choices were projected to significantly reduce long-term operating expenses and increase long-term revenues.
An example is Palomar's decision to have 320-square-foot patient rooms, compared with the 289-square-foot patient rooms in the Sharp hospital.
Palomar's larger rooms will allow the families of patients to be more comfortable and stay longer, while also reducing the chances of patient falls and other problems, officials said. Patient falls can lead to expensive lawsuits; enhancing the family experience can increase patient loyalty to a hospital, they said.
"That extra space comes at a cost, but it is an extremely worthwhile cost," Parker said.
The officials and architects who planned the new Palomar Medical Center wanted it to become the "fabled model hospital," said Parker, explaining that those ambitions should be considered when comparing the hospital with others.
"It was decided very early on that they would see if they could make this the leading public hospital in the United States," Parker said.
Contact staff writer David Garrick at (760) 740-5468 or dgarrick@nctimes.com.
Posted in Escondido on Saturday, February 28, 2009 12:00 am Updated: 12:40 pm. | Tags: E.hospitals.final.1, Top, Escondido, Inland, Local, Nct, News, Z.google.escondido, Z.google.local, Health
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