Population growth, labor availability among top considerations for future sites.
When it comes to suburban growth, there’s a common pattern that development usually follows. It starts with getting as much housing built as possible, followed by quick-service retail and eventually regional retail and mixed-use sites. Only then do companies start putting in factories or dense development, like towers, that serve as job centers.
But there’s another benchmark that Austin’s suburbs are now approaching: the rapid expansion of the health care industry.
Health care systems have increasingly been zeroing in on the areas around the metro for the next places to build hospitals and medical centers. Just last month, Ascension Seton Williamson announced it’s pursuing a $230 million expansion to its hospital in Round Rock. That brings the total capital investment earmarked for projects in Williamson County’s health care sector to at least $1 billion in the last few years.
That’s a good segue into this year’s annual Austin Business Journal hospitals list, which is based on regional hospital admissions. And the need to expand health care resources across the fastest-growing big metro in the country is evident.
Take St. David’s HealthCare, a major force on the list, as an example.
It’s leaders are scouting the region for where the Austin-based hospital and clinic system should invest next. The company is pumping millions and millions of dollars into expansions at all its sites, including in both North Austin and South Austin, to keep up with the city’s fast-paced growth. But more pronounced, St. David’s is also expanding in Leander and Kyle as part of it’s own capital investment plan that is hovering around $1 billion.
CEO David Huffstutler told the ABJ that the company is purposely targeting fast-growing areas where they don’t already have a footprint. That will help his team better service the growth around Central Texas, while addressing any capacity concerns at existing sites.
“We’re trying to make sure that we are accommodating the growth and able to care and service patients as these areas grow,” he said. “Our capital plans include … making sure we are deployed and distributed in the parts of the market where we currently don’t have access.”
Here’s a look at St. David’s recently completed, ongoing or upcoming projects around the region, from north of the metro to south of it:
- The $182 million construction of a Leander hospital on a 52-acre campus with existing medical office buildings. St. David’s will soon have physicians working on site while design and permitting for the expansion continues. The goal is to move forward with the project in the first half of next year.
- A more than $53 million capital expansion is underway at its Round Rock medical center to add two floors, which will include a 34-bed patient care unit and four additional operating rooms. It’s on track to be completed it in mid-January.
- A roughly $34 million addition of a 63,000-square-foot behavioral health hospital is planned at St. David’s North Austin Medical Center. The expansion is set to include indoor and outdoor therapy areas, a separate adolescent area and outpatient services. It’s expected to begin in 2024 and be completed in 2026.
- Also in North Austin, the St. David’s Women’s Center of Texas recently completed the second and final phase of a $121 million renovation and expansion. The first phase included the renovation of more than 28,000 square feet to increase the number of beds in the neonatal intensive care unit. The second phase included four additional floors with four C-section operating rooms, a new obstetric emergency department with private rooms, a 24-bed antepartum unit and a 36-bed labor and delivery unit, including four birthing suites.
- That site also underwent a roughly $20 million addition of 32 medical and surgical rooms in the main tower of the facility, and the hospital system plans to start soon on the construction of a $52 million parking garage that is scheduled to be complete in 2025. A $1.4 million renovation to the hospital’s east entrance lobby is also planned and should be completed by the third quarter of 2024.
- At St. David’s Medical Center, north of downtown Austin, the hospital is undergoing a $26 million renovation of 22 labor and delivery rooms, a newborn nursery and 34 postpartum rooms. The investment will also include a dedicated post-surgical unit for the women’s oncology department. These projects are scheduled to be completed in late 2024.
- At St. David’s South Austin Medical Center, an $18.5 million expansion of its women’s center is underway. The renovation began last year with the addition of new labor and delivery rooms, the expansion of C-section operating rooms and more. The work is scheduled to be completed in August 2024.
- In Kyle, St. David’s is on track to close on a 65-acre tract, where it plans to have a 160,000-square-foot, full-service acute care hospital. Details could shift once the land is purchased, but for now, plans call for a 24-hour emergency department, inpatient and outpatient surgery, critical care capabilities, robotic services and maternity and newborn services. It’s expected to create about 200 full-time jobs and was said to be a capital investment of $300 million.
St. David’s is also looking at other ways to expand its care. That includes the acquisition of 10 Fast Med urgent care sites that it plans to rebrand under its St. David’s Care Now line of urgent care centers. Huffstutler said a lot of the Fast Med centers are in areas where the hospital system hasn’t had urgent care services before.
“We typically see, especially among younger people, they don’t often have a primary care physician, and they really aren’t inclined to establish a relationship with a primary care physician and they pursue their care in a more episodic way,” he said. “They like the idea of urgent care centers. We believe this will provide a service to a population that needs that type of care.”
With so much in the hopper, Hufstuttler said St. David’s is making “great progress” and is generally on schedule, though he admitted permitting timelines, costs of construction and available construction labor have posed as challenges.
“There’s no question that since that time we have continued to see escalation in capital costs … to construct and develop these projects, but maybe even more importantly the labor availability and the timeline around which these projects developed” is difficult, he said. “Some of those things have probably delayed us a little bit, but I would not say not significantly.”
ABJ spoke with Huffstutler about how St. David’s evaluates expansions and new locations, along with what challenges the system typically faces. His answers have been edited for length and clarity.
When you consider moving into areas or expanding your footprint, what are the key indicators you look for?
We look at base population, we look at projected growth, we also look at demographics, obviously, and the projected demand for the types of services that we would consider placing in those communities — whether those be less acute services like urgent care, or maybe even freestanding emergency departments. Or, whether there appears to be a demand there for full hospital services and inpatient services. We look at the age of the population and at the development of the physician community in those areas. Those are among the criteria we consider when we’re when we’re looking at these new sites.
What are the biggest barriers and concerns you are working to overcome right now?
I would say labor would be still the most significant one, although the dynamics of the labor market are clearly improving. Through the pandemic, we talked about the Great Resignation. A lot of people left the workforce, and certainly that was the case for health care and hospitals. But, the pipeline of nurses coming out of nursing school is increasing, and we are facilitating the opening up of that pipeline. Our recruitment this year over the past couple of years is significantly better. Our retention of existing staff is improving over the past couple of years. We, therefore, are needing to use fewer premium rate contract labor nurses than we have been in the past. So we’re seeing both the rate we pay for premium labor go down some, and we’ve seen the number of those personnel declining some in favor of our ability to recruit regular full-time employees and retain them. We’re still paying a lot in premium labor, but there does seem to be an indication that is beginning to turn around. And that gives us confidence that we will be able to recruit and staff these new facilities when they open over the next two to three years.
With all of this growth, where is St. David’s looking next?
We’re always evaluating the community and the growth in the community. We want to make sure that we’re good fiduciaries, good stewards of our resources and the community’s resources. And so we always try to make sure that we’re not getting ahead and getting too far out and making investments where we don’t see a clear demand and a need. I think you’ll continue to see building out of what we call our “access point network,” which would include urgent care, freestanding emergency departments, physician clinics, into the broader geography over the next couple of years. So we’re looking farther north, we’re looking farther sort of northeast. There may be a couple of opportunities to the south, but those would be more in the access point range, not as much as full-service hospital types of additions.
Click here for the article source.