
DATE: Thursday, October 2, 1997             TAG: 9710020488

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY LOUIS HANSEN, STAFF WRITER 

DATELINE: SUFFOLK                           LENGTH:   99 lines

OBICI PLANS $65 MILLION MOVE

Obici Hospital officials, citing increasing emphasis on out-patient care, have drawn up plans for a $65-million hospital to replace the 46-year-old landmark on North Main Street.

The new, 240,000-square-foot facility would have fewer beds than Obici's current 227 and shift emphasis from in-patient care to ambulatory care, said William C. Giermak, president and chief executive officer of hospital parent Obici Health System.

A 75-acre site owned by Obici in a quickly developing area of Route 10, about one mile north of the hospital, is among possible locations, Giermak said.

``The facility is almost 50 years old,'' he said Tuesday after a meeting of the Surry County Industrial Development Authority, where the plan was presented. ``The choice came down to economics.''

Giermak said he expected ``some efficiencies'' from the move but that he could not be more precise about the impact on Obici's 1,100 employees. The hospital is the largest employer in Suffolk.

The plan is several steps away from execution. Obici must apply to the state and persuade regulators that the change is necessary to better serve the community.

The $65-million price tag would make it the second-most expensive hospital project in Hampton Roads since at least 1988, when the Eastern Virginia Health Systems Agency started tracking them.

The $72-million expansion in Norfolk of Children's Hospital of The King's Daughters was completed in 1994.

Obici would be the first local hospital to move because of the shift in health-care demands, said Paul Boynton, executive director of the health agency.

``We have just not seen anything like that,'' said Boynton, whose agency monitors health care facilities in southeastern Virginia. ``We are always very cautious when we hear of replacement hospitals.''

Hospitals nationwide have had to adjust to pressures from managed care providers, which have cut expenses by limiting hospital stays. Large insurers have won cutbacks in costly in-patient care.

Most area hospitals, Boynton said, have renovated to accommodate increases in out-patient care. Obici also has made numerous renovations.

Although the hospital did not specify how many beds it would give up from its 227-bed license, Boynton said he expected a considerable drop.

According to state statistics for 1996, Obici had a 47.7 percent occupancy rate. By comparison, Chesapeake General had a 71.7 percent occupancy rate; Children's Hospital of The King's Daughters, 68.9 percent; and Sentara Norfolk General, 53 percent.

Obici plans to submit a Certificate of Need application to the state on Dec. 31, for consideration during the first six-month review period of 1998, Giermak said.

State regulators will review and make recommendations on Obici's plans. Final decisions rest with the state health commissioner.

If the state approves the plan, the hospital could go forward with construction in late 1998, Giermak said. The three-year project would be completed in 2001. No decision has been made on what will happen to the present facility.

J. Samuel Glasscock, a member of the hospital's board of directors, said members considered renovation and construction. Extensive renovation would cost an estimated $35 million and would not preclude future tinkering and retrofitting, he said.

``A number of things are really out of date,'' Glasscock said, ``and it's a new era of health care.''

Obici officials outlined financing plans at a Tuesday evening meeting with the Surry County Industrial Development Authority.

The hospital wants the industrial development authorities of Surry and neighboring Sussex counties to issue a total of $30 million worth of bonds over two years for the project.

Hospital attorney George L. Consolvo said the municipalities would not be liable should the hospital fail to repay the debt. The bonds are ``strictly an obligation of the applicant,'' he said.

The hospital would get a lower interest rate on the bonds if they were issued by the two, small industrial authorities.

Consolvo said that Suffolk, because it has issued more than $10 million in bonds this year, could not issue the lowest interest rate bonds for the hospital.

The remaining $35 million of the project would be financed from reserve funds and from the hospital foundation, Giermak said.

Built in 1951 by Planters Peanuts founder Amadeo Obici in memory of his wife Louise, the hospital has been renovated and expanded several times during the last five decades.

Obici officials have investigated other hospitals across the state that have built and moved into new facilities, Giermak said.

``Now it's time for Obici to make that decision.'' ILLUSTRATION: Color Photo

MICHAEL KESTNER/The Virginian-Pilot

The present Obici Hospital, on North Main Street in Suffolk, was

constructed in 1951. Officials hope to build a new

240,000-square-foot facility that will shift its emphasis from

in-patient care to ambulatory care. Its location has not yet been

determined.

Staff Map

Obici to Relocate: Possible site