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Questions Over Tulare Hospital Plans For Second Tower – Updated

September 22,2014

Kugler architects 2011 vision

Kluger Architects 2011 vision

Despite a multi-year delay and a $40 to $50 million shortfall to complete their first medical tower project, Tulare Regional Medical Center (TRMC) continues to plan on building a second 111,000sf tower next door with 105 more patient rooms. Or are they?

“We’ve been meeting with hospital officials to go over their plan” says Tulare’s Community Development Director, Rob Hunt. Hunt says the hospital – not the city – is the lead agency and that they are working on a supplemental EIR to their 2011 plan and the document, when completed, will go the city Planning Commission.The district is also filing the plan with the Office of Statewide Health Planning and Development (OSHPD) says Hunt.

But hospital manager Dr Benny Benzeevi of HealthCare Conglomerates Associates (HCCA) when asked about this – acted unfamiliar with any such plan in the works suggesting only that the hospital is continuing to work on adding infrastructure.”It could be a technical thing to keep our options open.”  The logic might be with the last version of this expansion plan dating from 2011,to keep it legal requires an update.It is understood that HCCA’s overall task at TRMC is to manage the day to day financial “turnaround” at the hospital rather than long range planning.

Tower’s Troubled History

Tower 1 has had a troubled history after a strong vote of support by Tulare residents who passed a $85 million bond in 2005 to build the 115,000sf phase-one expansion. The tower was slated to open in October 2012 but never did – embroiled in construction issues and a dispute with the contractor. That dispute has only this summer been resolved – resulting in the district paying out an additional $7.9 million to the contractor – Harris Construction. Still the completion of the work is pending as the hospital looks for some way to fund another $40 to $50 million to complete the work. Officials are understandably hesitant in asking voters to shell out more.

That is why some are surprised the district continues to pursue a new expansion,even the option of a new expansion. The assumption has been the district needs to meet new state seismic standards to plan for the future and so must build or wither away.

Dr Benzeevi adds “we continue to want to build Tulare Regional Medical Center into one of the finest medical centers in the nation.”

Supporter Lynn Dredge,Tulare’s former city manager considers the plan to be part of TRMC effort “to get their ducks in a row for the future” but that for now “nothing is in the works.”

“We’re completely focused on completing Tower 1”even though to date – there are no ideas of how to raise the money to do that, he says.

“It will be done“ Dredge suggests.

Tower 2 had been envisioned to add-on to the first tower back in 2011. But few expected the extent of the delay of the original plan and the depth of the hospital’s financial difficulties in the past few years.

Today the hospital has spent virtually all the $85 million to build Tower 1 (a TRMC report says there was just $240,000 left in August) with, as we said, $40 to $50 million in work to be done – about a years worth of work. Earlier this month a donation was secured to finish the exterior of the building that had been shrink wrapped for what seemed like forever.

The 2011 Draft EIR for Tower 2 pegs the construction cost at $25 million. Kluger Architects who did the 2011 draft is still working for the district.

TRMC Comeback

Earlier this month TRMC got some good news as the bond rating agency Fitch said the district was staging a a come back. Fitch said”TRMC posted a loss of $2.3 million (negative 3.3% operating margin) in fiscal 2014, which is significantly improved from a $3.9 million loss (negative 12% operating margin) through the six months ended Dec. 31, 2013. Similarly, operating EBITDA margin improved from a negative 3.8% to a positive 4.2%. Management’s initial goal was to break even in calendar year 2014. Given the $1.6 million operating income generated in the six months ended June 30, 2014, Fitch believes TRMC is on track to meet its targets.”

Of course it is one thing to break even and another to fund a huge new capital project when the last one has not been paid for and it sits idle.

“We are having to take this one step at a time” admits Dredge.“Things have calmed down politically too” adds Dredge with new management in place focusing on day to day profitability.

But there is the question of future demand.

TRMC is already rated a 112-bed hospital with plans to go to 193 beds – but  despite better management – patient demand appears to be sinking. The latest snapshot for August shows the hospital census at just 38,compared to 49 in August 2013.

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