New Navy Hospital in San Diego Sign of the Changing Times

SAN DIEGO — A major construction project is under way to replace the existing Naval Hospital on the Marine Corps base at Camp Pendleton, the largest military training facility on the West Coast.

The new hospital will be enormous, covering about 500,000 square feet and costing just shy of $500 million. Despite its size, the facility will have relatively few acute care beds — only 67. At the same time, outpatient care is expected to reach about 2,000 visits per day.

The Navy recognized the need to respond to significant changes in hospital structural code requirements and health care delivery standards that have occurred over the nearly 40 years since the original Naval Hospital was built, said Carlos Gonzalez, vice president with Clark Construction Group. Clark Construction is building the new facility with McCarthy Building Companies.

“The U.S. Navy was facing the need to update the hospital to keep up with changes in health care [delivery] and material science,” Gonzalez said.

A Trend Throughout Region, State, Nation

Hospital inpatient space in many communities has been underutilized for some time, experts say. Like the Navy, providers nationwide are building new hospitals with an eye toward the primacy of ambulatory care.

In California, hospitals also must contend with stringent seismic safety regulations. Steven Escoboza, president and CEO of the Hospital Association of San Diego and Imperial Counties, said the planning process for new and remodeled hospitals is made more complex by the need for flexibility to meet the unknown future demands of a fast-changing health care market.

“Because of the California seismic laws, hospitals that had to meet compliance requirements are building with the idea of staying close to the number of beds they were using at the time they made the decision to go ahead and rebuild,” Escoboza said.

San Diego hospitals are ultimately looking to reduce inpatient capacity, Escoboza said, in order to survive amid declining reimbursement for inpatient care. “Mostly what I’m seeing and hearing is an emphasis on outpatient care,” he said. In many cases, hospitals plan to convert space initially identified for inpatient care to an outpatient setting within the hospital, Escoboza said.

The move toward ambulatory care is not a new trend, nor is it specific to California.  As hospital systems take on growing financial risk for the populations they serve, the pressure to treat patients in the most-appropriate and least-costly setting becomes a growing priority, and it’s reflected in facility construction strategies nationwide.

“Risk is being shifted from the payer to providers, and if you’re stuck with a large physical infrastructure where you’ve got to fill beds … it’s bad,” said Brett Hickman, a partner in the Health Industries Advisory Practice at consulting firm PricewaterhouseCoopers. “You definitely want to have anywhere from 60% to 70% of your capacity be ambulatory, not inpatient,” he said.

The pressure to keep patients out of hospital beds is only going to increase, Hickman said. Commercial payers have leapfrogged CMS when it comes to creating incentives to drive patients away from the acute care setting, he noted. The Affordable Care Act includes incentives for providers to treat patients outside of the hospital, including financial bonuses to encourage accountable care organizations to meet benchmarks established on both the cost and quality of care, and penalties levied on hospitals that fail to prevent avoidable readmissions.

“All providers are preparing for risk, whether it’s bundled payments or cost-share,” Hickman said, adding that in the next three to five years a significant portion of most providers’ business will be capitated.

The way forward for hospitals, according to Hickman, is to take a page from the Navy hospital construction project. The Navy, he said, is constructing a facility that will be able to provide the right level of care at the appropriate time. “They are a great example of what everybody else should be looking to do in their communities,” Hickman said.

Redesigning for the Modern Age

There are a number of notable characteristics of the new Naval Hospital facility, including its location.

Situated along the Interstate 5 corridor lining the Pacific Ocean, many patient rooms will have some of the most spectacular and unobstructed ocean views along the Southern California coastline.

“Because of the real estate the installation had, the designer was able to make amazing use of those views and day lighting,” said Naval Commander Dude Underwood.

In addition to a state-of-the-art medical facility, Underwood said, “we’re also building an icon that civilians driving up and down Interstate 5 will see, which will represent the goodness of the program and commitment that the nation has to its wounded warriors.  So there’s a lot of very powerful messaging behind it as well,” he said.

The redesigned facility will address a number of deficiencies in the existing Naval Hospital, including its non-compliance with the most current hospital seismic and Anti-Terrorism/Force Protection code requirements. The facility’s significant shift from inpatient-heavy delivery models to a greater focus on providing care in an outpatient setting is already reflected in current hospital practices, Underwood said.

“Even in the highest surge only two-thirds of the beds [in the existing Naval Hospital] are occupied because most treatment is outpatient,” Underwood said.

The new hospital will have 96 outpatient procedure rooms and 205 exam rooms, along with various ancillary departments. It will provide emergency and primary care, as well as offer specialty care clinics. Reflecting the particularly young military population it serves, the hospital will have eight labor and delivery rooms, along with 16 post-partum suites.

Just to the north of the coastal city of Oceanside, the facility will stand on 70 acres of land near Camp Pendleton’s Main Gate. The hospital is scheduled for completion by early 2014 and is expected to be fully operational by next spring. Military members on active duty in all branches of the military — roughly 156,000 in the San Diego area — and their families are eligible for care at the Naval Hospital.

The project became a reality when, in 2009, President Obama signed the American Recovery and Reinvestment Act, which is funding the hospital’s construction. The new Naval Hospital is the largest American Recovery and Reinvestment Act project within the Department of the Navy, with a $455 million contract.

“One of the visions of the Recovery Act was to take shovel-ready projects that needed to be done but that maybe lacked funding, and inject that economic stimulus into the work place and material sourcing and manufacturing industry,” Gonzalez said.

The existing Naval Hospital, about 10 miles from the new site, will be become administrative offices for base personnel.

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