Hospital projects suffer delays due to recession 

Three years after the Palo Alto Medical Foundation got the city’s OK for a major new medical complex, the foundation is breaking ground this month on a clinic building and parking structure.

But a 91-bed hospital in the original plans has been delayed indefinitely, making it one of a number of Peninsula medical providers that, under pressure to meet new state seismic standards, has experienced a change of plans for major projects during the economic downturn.

Seton Medical Center secured an extension allowing it until 2020 to comply with the new seismic rules, compared with an original deadline of 2013. The county’s San Mateo Medical Center, which has endured years of cuts, also got an extension to 2020 on upgrading its administrative offices. And Kaiser Redwood City is moving forward with scaled-down plans for a rebuild of its campus, though Kaiser officials declined to give a specific reason for the changes approved in July. 

“The economy has really impacted the hospital industry in general, and as a result of that, everybody’s challenged to just be able to make ends meet, so to speak, and at the same time you have major capital expenditures,” said Seton CEO Lorraine Auerbach.

Palo Alto Medical Foundation officials say they are still committed to building the hospital in San Carlos eventually. The foundation’s parent company, Sutter Health, suffered investment losses that made it reprioritize its capital projects, said spokeswoman Cynthia Greaves.

“They just shelved things to wait for some economic recuperation,” Greaves said. “The project in San Carlos is one of the first projects that they will be funding as the economy slowly begins its recovery. It’s kind of a bright spot.”
Seton figures it will need to build a new $350 million hospital tower to meet the new state seismic standards. But because the hospital provides a significant amount of charity care and also has seen patient volumes drop during the recession, the hospital is still trying to find the needed funding, Auerbach said.

“We felt we could do it but we needed more time,” Auerbach said.

Kaiser Permanente also revised plans for its Redwood City campus, and now plans to break ground in 2011 on a 149-bed hospital, down from 2003 plans for a new 192-bed facility.

In a statement Kaiser declined to state a specific reason for the changes.

“The planning process for any hospital is lengthy, and projections and assumptions are regularly re-evaluated before construction plans are finalized,” the hospital said.

Meanwhile, Mills-Peninsula Hospital’s new $619 million hospital is scheduled to be completed in February, while Sequoia Hospital’s $240 million rebuild project is on track for a fall 2012 completion.

“Very fortunately, we had our capital secured before it became more difficult to do so,” said Kathy Romano, Sequoia’s chief operating officer.



The slowed economy is a factor in the scaling back or delaying of several hospital projects on the Peninsula. Others have been reduced or delayed for reasons that are not stated.

— Palo Alto Medical Foundation in San Carlos
— Seton Medical Center
— San Mateo Medical Center
— Kaiser Redwood City

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