Illinois health review board to rule on Mercyhealth microhospital plan in Crystal Lake

A state board will vote Tuesday whether to grant Mercyhealth permission to build a 13-bed “microhospital” in Crystal Lake.

But to get a certificate of need from the Illinois Health Facilities and Services Review Board, Mercyhealth will have to contend with six deficiencies with state standards outlined in accompanying staff reports, not the least of which is the fact that state regulations require hospitals to have a minimum of 100 beds.

Mercyhealth has been trying without success since 2003 to build a hospital at the corner of Route 31 and Three Oaks Road. It is hoping that a microhospital that caters to the Crystal Lake area – an idea that has taken off in several other states but not Illinois – passes with a third attempt.

Mercyhealth wants to build a $79.5 million hospital and an $18.8 million medical office building. Should the Rockford-based health care system get the OK from the review board, it hopes to open both by the end of November 2020.

Plans for the 111,346-square-foot hospital call for 11 medical-surgical beds and two intensive care beds, as well as an emergency department, two operating rooms, a laboratory and pharmacy. The 39,922-square-foot office building would have 42 examination rooms.

Clients would be centered on patients in the Crystal Lake area – which Mercyhealth has maintained for more than a decade needs its own hospital – with an emphasis on local Medicaid recipients and patients already in the Mercyhealth outpatient system, according to the review board’s staff report. It predicts that about 69 percent of its patients will have Medicare, 13.1 percent Empire Blue Cross Blue Shield and 9.1 percent Medicaid.

State law requires a certificate of need from the review board to build or expand a hospital in Illinois. Board members at their Tuesday meeting in Bolingbrook either will grant Mercyhealth that certificate or issue what is called an intent to deny, which means they will vote to reject the concept at a future meeting and give Mercyhealth one more chance to make its case for the microhospital.

The 50-page staff report for the hospital portion of Mercyhealth’s proposal identifies a number of review board standards that it does not meet.

Several target the need, saying that the new hospital might create an “unnecessary duplication of service” that will affect other area hospitals. Of the eight hospitals within 45 minutes of Mercyhealth’s proposal, only one – Advocate Good Shepherd in Barrington – is at target occupancy for medical-surgical and intensive-care beds, according to review board data.

Although the staff report states that the county has an excess of 43 medical-surgical beds and three intensive-care beds, Mercyhealth intends to negate any increase by reducing the number of beds at its Mercy Harvard Hospital from 15 medical-surgical beds to four, and from three intensive-care beds to one.

The report also says that Mercyhealth could not provide evidence that the hospital’s two intensive-care beds would be at 60 percent occupancy within two years of completion, and although it assured that the medical-surgical bed would meet target occupancy, it could not make the assurances for all services in which the review board has set utilization standards.

Perhaps the most significant hurdle is that state regulations don’t have provisions for the concept of microhospitals – a hospital must have 100 medical-surgical beds and four intensive-care beds.

The concept of microhospitals is a relatively new one in medicine. They generally can be thought of as similar to a community or rural hospital but smaller and located in more metropolitan areas, providing low-acuity, ambulatory and emergency care but leaving more complex care to larger facilities. They have taken root in Texas, Arizona, Colorado and Nevada.

Competitors Centegra Health System and Advocate Health Care have written the review board to oppose the project, questioning the need for a microhospital. Crystal Lake-based Centegra operates three McHenry County hospitals, including Centegra Hospital – Huntley, which opened its doors in August. Downers Grove-based Advocate, the state’s largest health care system, has spent at least $247 million modernizing Good Shepherd Hospital in Barrington.

In its opposition letter, Centegra said that the main purpose of a microhospital is to be a cheaper way to deliver care in areas where it is not as readily available, and that this proposal doesn’t meet either condition.

However, the proposed microhospital has received letters of support from the McHenry County Economic Development Corp. and the Crystal Lake Chamber of Commerce.

The review board staff report did not identify any deficiencies in Mercyhealth’s proposal for the medical office building.

Mercyhealth’s new cost forecasts are slightly cheaper – it originally pegged the costs at $82 million for the hospital and $23 million for the medical offices.