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Hammes Company saves client eight weeks and $1 million

LONDON, Ky., and BROOKFIELD, Wis., September 14, 2010 In fall 2008, when the credit markets froze and the Great Recession intensified, executives of Catholic Health Initiatives (CHI) made a difficult – but responsible – business decision. The Denver-based non-profit health organization slowed capital spending by temporarily putting some of their construction projects on hold.

One of those projects was Saint Joseph - London, a 120-bed, 340,000 square foot replacement hospital intended to provide outpatient and inpatient services for London and the surrounding parts of southeastern and south-central Kentucky. The new hospital was already under construction on a highly visible, 52-acre greenfield site just off of Interstate Highway 75 and Highway 192, about two miles from an existing 89-bed facility. But construction was halted for 12 weeks – until CHI executives were convinced that it would be prudent to proceed.

Of course, stopping work on the project did not stop the growing demand for healthcare services in the region. Nor did it reduce the need to replace the existing hospital (formerly Marymount Medical Center) with a larger, more modern facility with all private patient rooms. But the delay did result in considerable shutdown and restart costs, as well as $500,000 in capitalized interest that accumulated during the delay. So when it was time to resume construction, CHI executives asked Hammes Company if there was a way to make up for the lost time while recouping some of those costs.

Hammes Company met the challenge. The Brookfield, Wis.-based healthcare consulting firm tightly managed the project budget and schedule, and worked closely with the construction manager and subcontractors to identify cost savings. As a result, the project was able to absorb the shutdown and restart costs without increasing the original budget. Those efforts also allowed Hammes and the rest of the project team to make up eight of the 12 weeks lost to the shutdown, reducing the amount of capitalized interest at the end of the project by approximately $1 million.

In addition, Hammes and the rest of project team were able to add a second floor operating room expansion and shelled space for a future patient floor to the Saint Joseph - London facility – all within the original project budget. The hospital officially opened and all patients transitioned to the new facility on August 19.

CHI has worked with Hammes Company for over eight years as a source of healthcare real estate solutions,” says Eugene Woods, CEO of Lexington, Ky.-based Saint Joseph Health System (SJHS). “These projects have included large renovation and expansion projects, new greenfield construction, and major replacement hospitals such as Saint Joseph – London.”

When we paused the construction in 2008 and subsequently resumed a few weeks later, we were concerned about the impact of the delay on the budget and schedule. However, through efficient planning and operations with the entire project team, Hammes was able to not only complete the project on time, but under budget as well. The staff and community are very pleased with the results at Saint Joseph - London.”

Saint Joseph - London is a prime example of CHI’s unwavering dedication to delivering exceptional patient care,” Hammes Company Chairman and CEO Jon Hammes says. “We are pleased to have had the opportunity to work closely with CHI on this and numerous other projects.”

Hammes Company’s other recent projects for SJHS have included:

  • Saint Joseph Jessamine, RJ Corman Ambulatory Care Center, Nicholasville, Ky. Hammes Company provided project management services for a new, 60,000 square foot outpatient facility that opened last year in Nicholasville. It houses Jessamine County’s first and only full-service, freestanding, 24/7 emergency room. It also provides diagnostic imaging, lab services, community center and physician offices, and has already exceeded its five-year patient volume projections.
  • Saint Joseph Hospitals, Main Campus, Lexington, Ky. Hammes Company provided project management services for the renovation and expansion of the main campus of Saint Joseph Hospital in Lexington. The project includes a five-story, 90,000 square foot addition and a 110,000 square foot renovation of existing space, including a new Heart Institute.
  • Saint Joseph Hospital East Campus, Mother/Baby Center, Lexington, Ky. Hammes Company provided project management services for a new, three-story, 60,000 square foot Mother/Baby Center, plus the 52,000 square foot renovation and expansion of the cath labs, emergency department, radiology, endoscopy, nuclear medicine and parking.

About Saint Joseph Health System
Saint Joseph Hospital, Saint Joseph – London, Saint Joseph East and Saint Joseph - Jessamine are members of Saint Joseph Health System, a 981-bed, eight-facility healthcare system that spans central and eastern Kentucky. Saint Joseph Health System is a member of Catholic Health Initiatives, the nation’s second-largest Catholic health care system. For more information, please visit www.SaintJosephHealthSystem.org.

About Catholic Health Initiatives
CHI is a national nonprofit health organization with headquarters in Denver. The faith-based system operates in 18 states and includes 72 hospitals; 40 long-term care, assisted- and residential-living facilities; and two community health-services organizations. Together, those facilities provided $553 million during the 2009 fiscal year in charity care and community benefit, including services for the poor, free clinics, education and research. With annual revenues of $8.6 billion, CHI is the nation's third-largest Catholic health care system. For more information, please visit www.CatholicHealthInit.org.