Construction begins Thursday on a new surgery center in West Raleigh that is the result of a joint venture between Rex Healthcare and Raleigh Orthopaedic Clinic.
The four-story Raleigh Orthopaedic Surgery Center on Edwards Mill Road will house a surgery center, recovery space, physical therapy facilities and the practice’s main offices. The building’s total cost is $26 million, 80 percent of which will be shouldered by Raleigh Orthopaedic Clinic.
The costs, and expected profits, from the $11 million surgery center are being split equally by the two health care providers in an attempt to manage health care costs.
The center hopes to offer the lowest prices for outpatient procedures thanks to smaller overhead costs compared to hospitals, said Steve Burriss, chief operating officer at Rex, which is owned by UNC Health Care.
“Physicians are more conscientious,” Burris said. “In the hospital, they don’t so much know what each item costs.”
The surgery center, scheduled to open in 2013, will consist of four operating rooms and two procedure rooms. The physicians practice has worked with Rex for about 60 years and currently operates at three Rex facilities. Last year, the practice handled about 5,000 cases at Rex.
When the 27,700-square-foot surgery center opens, the majority of those cases will move to the new location, Burriss said. About half of Raleigh Orthopaedic Clinic’s 250 employees will work in the building.
State regulators review major health care projects through the Certificate of Need process, which is designed to control costs by preventing unnecessary expansion.
Dr. Hadley Callaway, the clinic’s president, said the collaboration with Rex made their application for available operating rooms more competitive. The certificate of need for the facility was awarded in 2009.
While the practice will run day-to-day activities at the surgery center and will own the building, Rex will own half of the surgery center and will contribute four members to the Board of Directors responsible for overseeing strategy and ongoing operations.
Additionally, Rex leadership offered guidance on pre-construction decisions, such as selecting the center’s builder, setting up medical staff and buying equipment.
“They have a strong say in the quality and processes of the surgery center,” Callaway said. “They also have a reputational stake in it.”
The Triangle is a latecomer in the trend of joint ventures between physicians practices and hospitals, Burriss said. Supporters argue that such partnerships help spread out costs for both consumers and health care providers.
“Hospital consolidation, physician consolidation, all of those things took place faster in Mecklenburg County,” Burris said. “For some reason, the Triangle has just been slower than most metro areas to get into these.”
A groundbreaking ceremony for the facility will be held at noon at the construction site, just northeast of where Edwards Mill intersects with Blue Ridge Road.