WakeMed chooses Cary over Raleigh for hospital expansion

A $60 million proposed expansion of the WakeMed Cary hospital would cost WakeMed’s main Raleigh campus 30 beds and one surgery suite if regulators approve the transfer requested by the Raleigh hospital system.

WakeMed administrators have proposed adding 52 new beds and an operating suite to the current 156-bed facility in Cary. The Cary hospital currently has 11 operating rooms while the main campus has 23 operating rooms and 567 beds.

WakeMed’s application to the N.C. Department of Health and Human Services says that since the 30 beds were approved for its flagship Raleigh hospital in 2014, patient demand for medical services has grown much faster in Cary than in Raleigh.

WakeMed applied to transfer the permit to Cary after the state agency notified the health care organization this summer that, after repeated delays, the state permit to add 30 beds in Raleigh would not be further extended.

WakeMed said the expansion in Cary is justified for a number of reasons. WakeMed expects a significant increase in patients from the planned Chatham Park community in eastern Chatham County, where up to 22,000 new homes are planned for as many as 60,000 new residents near Jordan Lake and Pittsboro.

“Health care is changing rapidly and there are constantly shifts in how and where health care is delivered,” WakeMed spokeswoman Kristin Kelly said by email. “As a health system, WakeMed is fortunate to have bed resources available with the opportunity to potentially move them between campuses in order to meet the needs of patients.”

WakeMed also pointed out that the Raleigh hospital was approved for a total of additional 50 beds in 2014, so that after transferring 30 to Cary, WakeMed could still add the remaining 20 beds at the Raleigh hospital. At this time, though, there is no plan to add the new beds in Raleigh that were approved by state regulators three years ago.

WakeMed’s application also says that it must provide more services in fast-growing Cary to compete against much-bigger rivals, UNC Health Care and Duke University Health System, which provide less charity care for the poor than WakeMed.

In its application to the N.C. Department of Health and Human Services, WakeMed also wrote its future viability depends on its ability to compete for patients, physicians and staff: “Facilities that can meet the demands of these three key constituencies will be better positioned for long-term success.”

WakeMed Cary is the only hospital in western Wake County and the closest full-service hospital for residents of portions of neighboring Lee and Harnett counties. The area it serves is the fastest growing section of Wake County with a growing population of elderly residents who require more frequent and more intensive medical care.

If approved by the N.C. Department of Health and Human Services, the WakeMed Health & Hospitals construction project would turn WakeMed Cary into a 208-bed hospital with 12 operating rooms. The 26-year-old facility’s west wing would rise from three stories to five stories in height. Hospital officials say it could be completed in October 2019, if all goes according to schedule.

WakeMed’s competitors could hold up the project. State permits for health care expansions are often contested, and the proposed expansion in one of the most lucrative health care markets is likely to face opposition from competitors. UNC and Duke officials said they are reviewing WakeMed’s application.

UNC Rex is planning to begin construction this summer on a 50-bed hospital in Holly Springs, about 10 miles south of WakeMed Cary. The hospital received approval for its state certificate of need in 2014, nine years after it first proposed building a hospital there. (Its approval was held up by challenges from Novant Health, which had hoped to enter the Triangle market with a facility in Holly Springs.) The $70 million hospital is set to open in late 2020 near Rex’s medical office buildings at the corner of N.C. 55 and Avent Ferry Road.

The deadline for UNC, Duke and others to file public comments on WakeMed’s Cary proposal is Dec. 1. A public hearing has been scheduled for Dec. 14 at DHHS’s office on the Dorothea Dix Campus in Raleigh.

Major health care projects and expansions require state approval under North Carolina’s “certificate of need” system to prevent unnecessary duplication of services.

In public filings, WakeMed said the reason it didn’t add the 30 beds in Raleigh was because it was in the midst of other large-scale projects. Also, in 2013 WakeMed replaced its CEO, CFO, COO, CLO and other top-level administrators, which resulted in a reassessment of the organization’s budget priorities.

The year WakeMed replaced its executive leadership, it posted the first operating loss in its 50-year history, losing $14.4 million. In the 2015 fiscal year, WakeMed posted another operating loss of $49.9 million.

To finance the project, WakeMed would borrow $59.6 million from Wall Street investors. As of September 2016, WakeMed carried $516.9 million in debt in bonds, loans and leases.

This story was originally published November 13, 2017 at 12:34 PM with the headline "WakeMed chooses Cary over Raleigh for hospital expansion."