New Cost Estimate Achieved Through Design Modifications and Efficiencies
UTICA, N.Y. – The Mohawk Valley Health System (MVHS) has achieved its next milestone on the path to building the proposed new hospital in downtown Utica. Through facility and operations analysis, MVHS officials have identified potential cost reductions without impacting patient care.
The new hospital, proposed for downtown Utica, was conceived to be approximately 830,000 square feet and estimated to cost $573 million. The new cost projection is approximately $480 million for a 750,000-square-foot facility, which is in alignment with the project funding plan that includes bank financing, donor support, and a grant from New York State.
“Planning a project of this magnitude occurs in several stages over the course of years,” said Scott H. Perra, FACHE, president/CEO of MVHS. “In late 2014, we developed estimates based upon preliminary design concepts. We continue to perform studies and evaluations to further refine the project as we advance through the phases of the development process. This includes continuing to work with the Hammes Company, who manages projects like this one all over the country. Our revised plan includes a reduction in facility square footage, updated inventory of equipment for reuse at the new facility, and additional evaluation of services that could remain in the hospital versus those that could continue at other sites in the system.”
The reevaluated design includes a number of cost-saving adjustments, including a phased approach to inpatient bed space. The original concept included 430 inpatient beds; the revised plan is for 400 beds. Officials have carved out a 24-bed inpatient “shell” that could be finished and used at a later time, if needed. That reduction alone saves more than 15,000 square feet of new construction and adds to the overall savings.
“Our analysis has shown that the need for inpatient beds will continue to decrease,” noted Perra. “We reviewed trends of our inpatient beds for the past five years, as well as trends both statewide and nationally, to help us determine what we will need by 2022 when the new facility opens. Currently our average daily inpatient census for MVHS is 325 to 375 patients.”
Other potential cost-saving strategies include third-party ownership opportunities, such as the parking garage and separate office space for some hospital services. Third-party ownership of a multi-use parking garage provides an estimated cost savings of $27 million and the reduction of the size and construction cost of the facility provides an estimated $20 million savings. Also, additional efficiencies are continuously being identified as the hospital system’s operations plan is further refined.
“As with any construction project, projections and estimates will evolve as we get further along in the development process,” Perra said. “However, this step-by-step analysis has helped us to achieve a further refined cost estimate for this phase of the project. We continue to seek additional cost-saving measures and alternate sources of funding, including grant opportunities and donor support.”
Planning and design for the hospital will begin once the New York State Department of Health (NYSDOH) finalizes the disposition of the $300 million in New York State funding. At that time, MVHS will engage the construction manager and architectural and engineering firms to begin the design of the new facility. The design process is estimated to take 16 to 20 months.
“Once we receive the notification from the NYSDOH, we can begin to fully develop the hospital concept,” commented Perra. “At that time, we will have more information to share with our community and will set up opportunities to meet with area residents about a new medical future for them and their families. Their input will be valuable as we begin to work on the design and layout of the new health care campus.”