AMSTERDAM — St. Mary’s Healthcare is planning two more projects to upgrade and consolidate the care and services it provides:
Relocation of its obstetrics/gynecology services to larger space on Guy Park Avenue at a projected cost of $1.4 million and expansion of its Rao Outpatient Pavilion on Route 30 at an estimated cost of $7 million to $8 million.
The two new projects follow completion of the new Rao Pavilion in 2016 at a cost of $17.2 million; creation of a methadone program at the former Memorial Campus on Route 30 ($585,000) in 2018; and an upgrade and expansion of the hospital pharmacy now underway at ($1.5 million).
The rapid succession of five big projects isn’t intentional, said CEO Vic Giulianelli.
“It’s a combination of things,” he said. “You break it between strategic opportunities and things you do to comply with regulations.”
The pharmacy expansion is all about regulations — those designed to isolate drugs from each other while they are being compounded and those that protect staff members from contact with medication.
The Rao Pavilion, and now its expansion, is designed to better serve the community with integrated one-stop shopping for health care and illness prevention.
“You don’t have to wind your way through a bigger facility,” Giulianelli said. Primary care, behavioral management and care coordination will all be in the same place. “Very convenient, very accessible right on Route 30.”
Chief Operating Officer Scott Bruce said the expansion of Rao will be about 15,000 square feet with 30 examination rooms and about 20 offices for managers and a dozen caregivers. It will be an addition of new space, so construction won’t intrude on staff and patient in the existing Rao space.
The bulk of the $7 million-plus cost of expanding Rao will be paid by the $5.1 million awarded by the state in February through the Statewide Health Care Facility Transformation Program. The remainder will be paid though fund-raising efforts by the hospital foundation and by dipping into the hospital’s reserve funds.
“Our plan is not to borrow any money,” Giulianelli said.
If all goes well, he added, construction would begin in late summer or early autumn 2020 and take about a year.
Periodic expansion, upgrade and strategy change is important for a hospital’s business model and quality of care. The financing is a bit more tricky for a hospital that services a poorer population that relies on Medicare and Medicaid, neither of which pays enough to cover services provided.
Giulianelli said St. Mary’s Healthcare will come up $9 million to $10 million short this year on reimbursement for services provided to Medicare and Medicaid patients. It makes up some of the difference through technicalities such as its designation as a disproportionate-share hospital and a Medicare-dependent hospital, each of which brings extra money from the feds.
“Instead of having a rational system of reimbursement … we have these unique reimbursement opportunities that you need to take advantage of,” Giulianelli said. “Frankly, they don’t pay enough to offset our actual costs.”
Every so often, somebody holds one of the funding streams hostage in congressional negotiations, and Sen. Charles Schumer or U.S. Rep. Paul Tonko will stand with the local hospitals to explain how vital the funding is. Then the stalemate ends, the funding gets restored, and St. Mary’s continues to finish more years in the black than in the red, without overly relying on its funding reserves.
One of the ways it makes up the difference is by adding services to help healthy people stay healthy rather than cure them when they get ill. It might seem contradictory — fewer sick people means less demand for services, which means fewer bills and less revenue — but it matches with the community health model to which insurers and government regulators are trying to steer the healthcare industry.
OB/GYN services are one of the growth areas for St. Mary’s Healthcare (7,997 visits in fiscal 2017 vs. 9368 in fiscal 2019). Obstetrics/gynecology care is expensive to provide as a small independent or solo practice, and there are fewer private OB/GYN practices in the area, Bruce said.
“We’ve had some significant growth in our OB/GYN practice and the site we’re in could no longer accommodate it,” he said. The plan is to renovate the first floor of the Medical Arts Building at 425 Guy Park Ave. as the new OB/GYN space.
When all this work on buildings and spaces is complete, or perhaps even before, Giulianelli wants to upgrade the electronic nervous system of the hospital — its computers and software.
St. Mary’s runs over 100 different applications beyond its core systems, he said.
“In theory they’re supposed to last many years. But virtually every year there’s updates.”
Integrating it all into one system won’t be quick or easy but it should be doable, Giulianelli added.