Lawrence Memorial Hospital’s nearly $50 million expansion project is about to get very real.

Hospital board members were told Wednesday that LMH leaders are ready to issue $55 million in bonds, which will fund the majority of the project and refinance about $15 million worth of existing debt the hospital has. Hospital leaders also were told construction on the first phase of the project could start in August or September.

“It is not just a planning process anymore,” said Gene Meyer, LMH president and chief executive officer.

LMH leaders are scheduled to get City Commission approval to issue the hospital revenue bonds on Tuesday. They will then travel to New York to meet with the bond rating agency Moody’s to try to secure a higher bond rating that will lower the interest rate the hospital will pay, saving about $250,000 per year in interest costs on the 30-year bonds.

Once the bonds are in place, hospital officials will have the money they need to begin constructing the project. Meyer on Wednesday gave more details about the timeline for the different phases of the project:

¢ Phase one would involve constructing 18 new private patient rooms above the second floor of the western wing of the hospital. That expansion will allow the hospital to then convert all of its remaining semi-private rooms into private rooms. Work on phase one could begin in late summer or early fall. It may take up to 10 months to complete.

¢ Phase two is a new three-story tower that will be built on the east side of the hospital, roughly where the circle drive and main eastern entrance to the hospital are now. The first floor will house an expanded emergency department. An expanded intensive care unit will occupy the second floor. The third floor will allow the hospital’s maternity unit to expand by about a dozen rooms. Work on that phase could begin a few months after work begins on the first phase. The tower likely will take 18 to 24 months to complete.

¢ Phase three will be an expanded surgery center in the current emergency room, at the north end of the building. Work on that project couldn’t begin until the tower is completed and the emergency department is moved.

“It will be a stressful process for the next three years,” Meyer said. “It will be a disruptive process. It won’t create any safety issues for our patients or visitors, but we will have noise and relocation issues that we’ll all have to deal with for awhile.”

The nonprofit hospital in 2005 took in $7.4 million more in revenue than it had in expenses for the year. Through May of this year, the hospital has taken in $4.9 million more in revenue than expenses.

“We really feel like we have put ourselves in the financial situation to take this on,” Board Member Lindy Eakin said.

Once the project is completed, it will add about 100,000 square feet of new patient space, which should increase revenues even more, said Simon Scholtz, the hospital’s chief financial officer.

Meyer said hospital administrators also are keeping an eye on construction costs. Meyer said discussions with the project’s construction manager, JE Dunn Construction Co., indicated that construction costs – currently pegged at about $31 million – had the potential to increase by about 20 percent.

In addition to the bonds that the hospital will be issuing, the hospital hopes to use about $8 million in cash to help fund the project. That money is being raised through a capital campaign conducted by the LMH Endowment Assn. The campaign currently is at the $6 million mark.