San Diego Business Journal

Faced with significant cost increases to build a new hospital in Escondido, Palomar Pomerado Health officials are seeking ways to trim $184 million off the project's estimated $957 million price tag.

Officials overseeing the project say they would consider a number of options, including a delay in building a proposed five-story medical tower at Pomerado Hospital in Poway and cancellations to healing gardens, rooftop helipads and other expensive additions at the new Palomar Medical Center in Escondido. Canceling plans for a central power plant at the new hospital could save $68 million alone, officials say.

The health care district, which operates the 107-bed Pomerado Hospital in Poway and 319-bed Palomar Medical Center in Escondido, has been looking at ways of controlling costs in recent years.

In May, PPH officials changed the hospital's construction manager from Rudolph and Sletten to DPR Construction, both based in Redwood City with offices in San Diego. Los Angeles-based CO Architects remains in charge of the hospital's design.

Dr. Marcelo Rivera, chairman of the district's board of directors, said that the health district would consider reopening certain bids "depending on what the market conditions are."

Double The Bed Count

The Pomerado Hospital tower was the second phase of a project to nearly double the hospital's bed count, and a key element of the district's pitch to voters in 2004, when they approved $496 million in facilities bonds. It would bring the number of acute-care beds to 201 from 107.

In May, Pomerado added a 172,000-square-foot outpatient pavilion and four-story parking garage as part of its first phase of renovations.

Hospital district officials are quick to point out that while the tower could be delayed a year or more, renovations at Pomerado would continue.

Dr. David Tam, Pomerado Hospital's chief administrative officer, says expansion efforts would bring the number of intensive care unit beds from 12 to 20, and improve nursing efficiencies by joining ICU beds with intermediate care beds.

"Right now, they're in two separate places," he said.

Tam says the district could reap cost savings by delaying the tower while updating its current facilities.

"If we looked at deferring the tower and, at the same time, renovating the ICU, that could potentially free up $91 million for use in other parts," he said.

Proceed With Caution

Robroy Fawcett, an Escondido patent attorney and outspoken critic of the health district's construction plans, says PPH should weigh its options carefully.

"They should restore capital and maintain budgets for Palomar Medical Center and probably complete the tower for Pomerado and, as money is available, finish off the new hospital," he said.

Original estimates in 2004 put the so-called "hospital of the future" price tag at $753 million, but administrators say upward pressures on costs now put it at almost $1 billion. Earlier cost hikes to steel and other construction materials were partly to blame, they say.

"Some of the things have been the natural rise of costs over the years. Then, some of it happened to be a circumstance of high construction going on over time. Now, it's the process of the economy," Rivera said. "So, those are things you can't predict."

Rivera said that while "the cost of money became much more difficult to obtain," the district has enough money to complete the project.

The hospital is scheduled to be completed by late 2011, according to PPH, which covers an 800-square-mile area and has 3,000 employees.