Penn Health moving closer to building massive new hospital tower

The University of Pennsylvania Health System is moving forward with the construction of a new hospital tower that would cost an estimated $1.5 billion and be built in phases over several years, sources say.

The project would consist of constructing a new complex on the site of the existing Penn Tower, which would be torn down. Penn Tower was originally built in 1975 as the Hilton Hotel of Philadelphia. It was later acquired by Penn, and now houses a variety of offices and clinics for the Penn Health System.

The health system has talked about doing such a momentous project at that site for years, but only now has taken the first step in making it come to fruition.

A letter was sent earlier this month to prospective construction companies, architectural and other firms based in Philadelphia asking them to indicate whether they would be interested in undertaking such a big, complicated development.

How many firms were contacted couldn’t be determined but it’s speculated roughly a dozen or more companies that have done health-care projects before were notified. It's also rumored that these firms are forming teams to compete for the job.

Each team that's interested must respond by Aug. 18. Penn will then whittle down that list to six, sources said. Those finalists will then be invited to respond to a request for proposals and Penn expects to name the winning team by year end, sources said.

The proposed tower would consist of 700 patient beds, 50 operating rooms, a relocated emergency room, and other medical-related programs. The existing Hospital of the University of Pennsylvania (HUP), which is connected to the tower by a covered walkway, has 772 beds.

The project would nearly double HUP's bed count and be a major milestone for the health system — and with it carry some hefty significance. “Our goal is to be recognized nationally as the most accomplished and respected school of medicine and health system,” Penn wrote in the letter it sent to prospective construction companies.

The University of Pennsylvania Health System is the parent organization for HUP and Penn Presbyterian Medical Center in West Philadelphia, Pennsylvania Hospital in Center City and Chester County Hospital in West Chester, Pa. It also provides clinical services at Chestnut Hill Hospital through a partnership with Community Health Systems Inc. (NYSE: CYH) of Brentwood, Tenn., and is a partner with Good Shepherd Rehabilitation Network of Allentown in a joint venture called Good Shepherd Penn Partners, which provides inpatient and outpatient rehabilitation services and long-term acute care.

The Penn Health System is part of Penn Medicine, which also includes the Raymond and Ruth Perelman School of Medicine at the University of Pennsylvania.

The health system is one of Philadelphia’s largest employers and is a huge economic engine for the region. The health system and medical school together form a $4.3 billion enterprise. HUP generated a net income of $267.8 million in fiscal 2013, according to the latest financial data available from the Pennsylvania Health Care Cost Containment Council, making it easily the area’s most profitable medical center. Children’s Hospital of Philadelphia was next with a $184.5 million profit followed by Thomas Jefferson University Hospital at $104.9 million.

The health system has been aggressively expanding its facilities as it competes with other medical facilities in a regional rich with options, and aims to solidify its position as a top medical care provider. It has more than $200 million in capital projects it will complete in the next two years.

Among those is the $38 million, 13-story Penn Medicine University City tower. That's opening in stages beginning this month. That building at 3737 Market St. will add more than 150,000 square feet of physician practices, testing and surgical space to the Penn Presbyterian Medical Center campus. The building will feature nearly 110 exam rooms, six outpatient operating rooms, and an outpatient medical imaging and diagnostic testing center.

Penn is well underway with construction of a $127 million Pavilion for Advanced Care at 38th Street and Powelton Avenue. The 178,000-square-foot pavilion will create space for a new trauma center, which will transfer from its current base of operations at HUP. It will also feature upgrades and enhanced capacity for emergency, surgical, trauma and critical-care patients at Penn Presbyterian. The facility is scheduled to open early next year.

In addition, it's completing the $38 million Henry A. Jordan Medical Education Center adjacent to the Perelman Center for Advanced Medicine.

Penn Presbyterian’s existing hospital building at 38th and Market streets is also being expanded and renovated as part of the project. Renovations will include improvements to the hospital’s emergency and radiology departments, an additional emergency bay and more operating-room capacity.

Last year, the health system opened Penn Medicine Washington Square, an outpatient-care center and medical office building it's leasing at 800 Walnut St. Penn signed a 20-year lease for the building and invested $22 million for the interior fit-out of the space developed by Liberty Property Trust at a cost of $49.6 million.

Other recent Penn Health System building projects include the $370 million Translational Research Center, which opened in 2011, and the $302 million Perelman Center for Advanced Medicine and the Roberts Proton Therapy Center, which opened in 2008.

Source: Philadelphia Business Journal