UK HealthCare using $30 million in cash to outfit eighth floor of new hospital

lblackford@herald-leader.comJune 10, 2013 

University of Kentucky HealthCare officials said Monday they would use $30 million in cash to outfit the eighth floor of Pavilion A at UK Chandler Hospital in coming months.

The $592 million patient tower has been open since 2010, but half of its 12 floors remain empty, waiting for the money needed to equip the space.

The eighth floor will hold 64 beds, including 24 intensive care beds for the cardiovascular program, which offers heart transplantation, artificial hearts and ventricular devices.

"We are in critical need of more beds for our growing cardiovascular program," said Michael Karpf, UK's executive vice president for health affairs. "We continue to attract a growing number of complex patients who need our patient care services."

The UK Board of Trustees' Health Care Committee approved the proposal Monday at its annual retreat. The full board will consider the plan at its Tuesday meeting.

It will cost roughly $274 million during the next five years to fully equip and occupy Pavilion A.

Currently, Pavilion A's ground floor houses adult and pediatric emergency rooms, an auditorium and a chapel. The first floor contains a surgery waiting area and other areas, including a gift shop, a pharmacy and space for a planned cafeteria. The second floor holds nine operating rooms, 43 pre-operation beds and post-surgery beds. The third and fourth floors hold mechanical systems. The fifth floor is empty. The sixth floor holds a 64-bed neurology care unit, including 48 intensive care beds. The seventh floor holds the 64-bed trauma intensive care unit.

The next phase of the plan includes finishing floors 8 and 9, along with the kitchen and cafeteria. After that, UK will place ancillary services such as radiology, blood banks and rehab services throughout Pavilion A. Then floors five, 10 and 11 can be outfitted with patient beds.

In addition, Kentucky Children's Hospital will undergo an extensive retrofitting, starting with a $32 million neonatal intensive care unit on its first floor, as well as other pediatric programs. Older portions of Chandler Hospital also could be converted to new medical spaces.

Officials estimate the cost for all expected construction, renovation and outfitting could reach about $530 million. When added to the initial cost of constructing Pavilion A, the total price tag will top $1 billion over 20 years.

Although UK HealthCare has suffered from delayed payments from Medicaid and Medicare providers in recent months, its overall revenue is up, according to documents provided at Monday's retreat.

UK HealthCare is expected to take in $952 million in fiscal year 2013, which ends June 30. That is a 4.3 percent increase over revenue of $913 million in fiscal year 2012. It is expected to produce operating income of $58.7 million in fiscal year 2013, up from $42.3 million in fiscal year 2012.

Officials are projecting $971 million in revenue in the next fiscal year, but operating income is expected to fall slightly to about $51 million. That's because reimbursements will decline as competition mounts, said chief financial officer Murray Clark.

Clark said UK must improve its financial outlook so it can grow. That's why officials recommend a program to reduce costs by $30 million in 2015 and 2016, he said.

"This is not something that we have to do immediately," Clark said. "It will be well planned and well executed to get the efficiencies."

Linda Blackford: (859) 231-1359. Twitter: @lbblackford.

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