Cost of new hospital for Prince George’s increases by 10 percent

January 22, 2013

The cost of a proposed new regional hospital in Prince George’s County has risen to $650 million, about 10 percent more than initial estimates, and it could go even higher, officials said Tuesday.

The $50 million increase is attributable to new estimates of technology costs and equipment needs at the proposed acute care hospital, state and county officials said. They outlined the new price tag at a joint meeting of the Maryland state Senate’s budget and finance committees as they continued to press for state support for the hospital.

The two committees will play a significant role in determining whether the $200 million pledged by Gov. Martin O’Malley (D) in his recent $37.3 billion budget plan will be approved.

The new hospital, and an affiliated primary care network of physicians, would replace the financially ailing Prince George’s Hospital Center in Cheverly and create a medical campus that would serve Prince George’s and Southern Maryland. The goal is to help reduce what recent studies have found are substantial disparities in the health of the nearly 1 million residents in majority-minority Prince George’s, where many residents suffer disproportionately from diabetes, heart disease and obesity.

“A transformed health system needs to promote health, prevent diseases, support wellness and support health equity and quality of life,” John Ashworth, associate dean of the University of Maryland Medical School, told the senate panel as he and other officials pressed for their support for the higher price tag.

The news of higher costs follows an announcement last summer that the proposed hospital would have about 280 beds instead of the 330 originally envisioned.

The increased cost sparked questions from panel members about the possibility of reducing real estate acquisition costs. County and state officials are looking at five to six potential sites for the hospital, including the shuttered Landover Mall, and property near Woodmore Towne Centre, both just off the Beltway, according to an official with knowledge of the sites who spoke on the condition of anonymity for lack of authority to discuss the matter publicly.

Another site under consideration is Largo Town Center, which is also close to the Beltway and has a Metro station. Officials also are looking at land around the Morgan Boulevard Metro station as a possible hospital site. Currently, plans call for transforming Prince George’s Hospital Center site in Cheverly into an outpatient facility.

The new hospital is expected to become part of the University of Maryland Medical System under a deal brokered in 2011 by Prince George’s County Executive Rushern L. Baker III (D). Eventually, the Maryland system is expected to take over Dimensions Healthcare, which, in addition to Prince George’s Hospital Center, also operates Laurel Regional Hospital and an outpatient site in Bowie.

Plans call for a new company — New Dimensions — to float $450 million in bonds to pay to build the new hospital. Much of its debt service — $200 million in total — would be paid by the state.

The plan does not require any outlay of funds from the Maryland medical system, but it would help supply physicians and other medical professionals for the new hospital.

Prince George’s would float $200 million in bonds, possibly as soon as late this year.

Dimensions also must find a solution to its $100 million in unfunded pensions and $50 million in bond debt. Officials from the Maryland medical system have said they do not plan to absorb those expenses.

In 2007, a $329 million, eight-year agreement with the state to share operating costs and hospital renovations in Prince George’s fell apart. Former county executive Jack B. Johnson (D) backed it, but then-Council Chairman Camille Exum (D-Seat Pleasant), caught many elected officials by surprise when she told the General Assembly that the council opposed it as too expensive.

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