Emory suspends $1.5B medical expansion
Emory University said Monday that it is suspending its $1.5 billion medical expansion project, citing general uncertainty about the economy.
Construction had not yet begun on the ”big box” building projects, including a new hospital on Clifton Road, Emory officials said. The project suspension will likely last through this year, said John Fox, CEO of Emory Healthcare.
“We’re not in a very bad financial situation at all, but we have to do some things to make sure we don’t get there,” Fox said. The credit markets ”are in disarray,” he said.
“If you’re in a period of high uncertainty, you want maximum flexibility,” Fox said.
Emory’s plans included a new replacement hospital and large outpatient clinic on its main Clifton Road campus, plus a medical tower on West Peachtree Street that would have hospital beds along with outpatient clinic space.
It would add up to 300 combined beds to Emory University Hospital and the newly renamed Emory University Hospital Midtown, formerly known as Emory Crawford Long Hospital.
About $1.1 billion was designated for the Emory hospitals and outpatient clinics, with the balance targeted for adding medical research capacity.
The economic downturn has shaken the finances of hospitals across the country. Many hospitals, like Emory’s, have seen an increase of uninsured patients amid widespread layoffs. Meanwhile, elective surgeries — money-makers for hospitals — have declined. Investment income has tumbled, and charitable contributions have lagged for many hospital organizations.
A recent Georgia Hospital Association survey found almost three of four hospitals in the state are postponing or reconsidering capital expenditures.
Piedmont Healthcare, citing the instability of the debt market, in December placed on hold its $194 million project to build a new hospital in Newnan. Emory pointed to other major universities slowing, delaying or canceling huge construction projects, such as Harvard and Stanford.
“We’ve been dinged [by the recession], but we’re still profitable,” Fox said, adding that Emory’s credit rating is ”extremely good.”
Emory’s decision makes good financial sense, said Peggy Cella, an Atlanta-based principal of consulting firm Noblis.
“There are not a lot of positive revenue factors out there” for hospitals, Cella said. In the current environment, she said, ”you’re better suited to delay a capital project.” Health care ultimately will still be needed, she said.
Emory in September reopened a recently acquired Tucker hospital after about $17 million in renovations. The 45-bed Emory University Orthopaedics & Spine Hospital specializes in knee replacements, total hip replacements, spine surgeries and other orthopedic operations.
Fox said smaller construction projects already underway at Emory would continue, such as its new public health building on its main campus.