See renderings for LMH’s nearly $100M west Lawrence project, complete with rooftop terrace and amphitheater
One of the larger projects ever for west Lawrence is starting to come together. Board members for Lawrence Memorial Hospital on Wednesday approved a new set of designs for a nearly $100 million medical outpatient building near Rock Chalk Park in northwest Lawrence.
“We wanted something that was sophisticated but not ostentatious, something striking but not weird,” LMH President and CEO Russ Johnson told the board. “We think the community will be really proud of this building, but they won’t think that the hospital threw crazy money at this building and are wasting our dollars.”
I could break out my highly technical architectural terms — like shiny, glassy and pointy — but it would be easier if you just look at the renderings, which were put together by Lenexa-based Pulse Design Group.
As a reminder, the building will be near the northeast corner of Sixth Street and the South Lawrence Trafficway. If you are familiar with the new KU Tennis Center at Rock Chalk Park, it will be on the opposite side of the street and a bit west of the Tennis Center.
A few things stand out from the renderings. Several of the renderings show people on the roof of the building. Don’t become alarmed. They are supposed to be there. The design includes a rooftop terrace.
One rendering shows what looks to be people who are either stretching or perhaps re-creating scenes from "The Karate Kid." Either way there will be will be room to sit and watch. The area is a combination amphitheater and therapy garden.
LMH officials told the board that the topography of the land was going to require a retaining wall for the area. Instead of a traditional retaining wall, architects suggested a stair-step approach that allows for amphitheater-type of seating. The area can be used for a variety of presentations and gatherings, hospital leaders said.
As for the therapy garden, think about all those exercises that physical therapists have you go through when you are rehabilitating a hip or a knee or some other type of injury. Physical therapy will be a big part of the services offered at the new medical center. Hospital leaders believe some patients will appreciate the opportunity to do some of the exercises outside on nice days. (Ok, but tell the guy in the back row of the amphitheater to avert his gaze while I’m doing Downward Dog.)
Importantly, though, the therapy garden will be open to everyone, including employees and the general public. It will include a walking path that likely will have some fitness challenge stations along its way. The path also will be connected to the broader trail system the city has built as part of the Rock Chalk Park Development.
The hospital, though, still needs to get city approval for the entire project. The development has a key hearing at the Lawrence-Douglas County Planning Commission on May 23. Planning commissioners are being asked to approve the plat for the project. The city’s planning staff is recommending approval of the plat, now that some issues related to traffic counts for the area have been resolved. Previously there was debate about how much traffic the medical office building would create. The city and LMH still don’t agree on the numbers, but the city engineer has said he’s confident the center won’t generate enough traffic that the adjacent street network needs to be improved, according to a city memo on the topic.
The hospital hopes to break ground on the project in June or July, which would put it on track to open in 2020.
As we’ve reported, the medical office building is slated to include:
• An enlarged Lawrence Surgery Center to conduct outpatient surgery procedures.
• An “orthopedic center of excellence” that will be run by the staff of OrthoKansas, which has been purchased by LMH.
• An expanded LMH Breast Center, including new clinical space.
• An LMH Therapy practice, which will focus on sports rehabilitation services.
• Doctor’s offices for the Internal Medicine Group.
• Doctor’s offices for the Mt. Oread Family Practice group.
• Office for Plastic Surgery Specialists of Lawrence.
• Medical office space that LMH will lease to a variety of specialty physicians.
• A retail pharmacy that will be operated by a third party. LMH hasn’t yet announced a partner for the pharmacy.
• A food court and rooftop garden to accommodate the more than 1,000 patients and staff who are expected to be on the site daily.
The new facility won’t offer any inpatient services that would require an overnight stay. All inpatient services will continue to be done at LMH’s hospital at Third and Maine streets.
Lawrence Memorial Hospital to get a new name; hospital has revenues exceed expenses by $18 million in 2017
Get ready for Lawrence Memorial Hospital to begin calling itself by a new name: LMH Health.
The hospital’s board of trustees on Wednesday morning approved changing the brand name of the hospital. The board followed a recommendation from its marketing professionals and an advisory group that said the Lawrence Memorial Hospital brand name does not communicate that the organization has health care practices that stretch far beyond the hospital building itself.
Janice Early, LMH’s vice president of marketing and communication, said many hospital companies have started dropping the word “hospital” from their names.
“That migration away from the word ‘hospital’ really began in our area aroud 2012 because hospitals have expanded beyond the hospital’s walls,” Early said.
LMH does about 75 percent of its business through outpatient services. While some of those outpatient services are performed at the hospital campus at Second and Maine streets, much of it is done in clinics and doctor’s offices spread all over Lawrence, and sometimes in other communities such as Baldwin City, Eudora or Tongaonoxie. For that reason, Early said, group members recommended the hospital’s brand name shouldn’t emphasize Lawrence but rather the initials LMH.
“Whether you are brand new to town or not, it doesn’t take people very long to start calling us LMH,” Early said. “That is what most people call us.”
Still, Early said the group did not take lightly the idea of moving away from the Lawrence Memorial Hospital name, noting that it had called itself by the name for almost 100 years.
Technically, the hospital company’s legal name will remain Lawrence Memorial Hospital because LMH’s attorney said it would be too large of a task to change all the contracts and other legal documents that refer to Lawrence Memorial Hospital.
But everywhere else, expect to see the new LMH Health name later this year, which will mean a boon for sign companies, letterhead printers and other such companies.
Board members approved the new name and accompanying logo with one objection. Board member Mike Wildgen, a former Lawrence city manager, voted against the name change, but not because it lacked the name Lawrence. (Technically, the nonprofit hospital is owned by the city of Lawrence.) Wildgen opposed the name change because he didn’t like the chartreuse color that is used as part of the logo. You can see a picture of the new logo below.
As for when the name change will happen, that is a bit uncertain. Early said it likely would be in June or July when the hospital breaks ground on its approximately $90 million outpatient medical building near Rock Chalk Park in northwest Lawrence. Early said LMH wanted to incorporate the name change in the celebration that is planned for the groundbreaking.
There is news on the LMH West project. Hospital leaders previously had said they planned to break ground on June 1. But delays in getting the project approved by Lawrence City Hall has pushed a groundbreaking into late June or even into July.
Karen Shumate, LMH’s chief operating officer, told trustees that the hospital and the city’s planning staff were disagreeing over projected traffic levels the new 200,000 square-foot medical facility would produce. The city is contending traffic levels will be higher than what the hospital has submitted as part of a traffic study.
“The city is having trouble accepting our numbers,” Shumate said. “Our numbers are accurate. We are at a bit of an impasse on that point.”
The issue caused the project to not be considered as part of the April meeting of the Lawrence-Douglas County Planning Commission. The hospital now hopes the project will be approved at the May meeting of the Planning Commission, which would put the project on track for a June or July groundbreaking.
As a reminder, the building is proposed to be LMH’s largest outpatient medical center. It would include space for OrthoKansas, the Lawrence Surgery Center, multiple doctor’s offices, a retail pharmacy, the LMH Breast Center and several other specialty medical providers.
Part of the space would be leased to medical companies that aren’t affiliated with LMH. Board members briefly discussed the possibility that the 200,000 square-foot project could be expanded by about 40,000 square feet, if early efforts show that the available space is leasing quickly. No decision was made on the idea of expanding the project, which would come with an estimated price tag of about $5 million.
The hospital did learn that it has received a strong bond rating as part of its process for financing the LMH West project. Standard & Poor’s gave the hospital an A rating with a stable outlook, which is one of the higher ratings the company offers. It puts LMH in about the top 15 percent of hospitals rated by Standard & Poor’s, according to information provided by the hospital’s bond adviser.
LMH trustees also received a report from LMH's auditing firm. The hospital was given a clean financial audit with no major deficiencies. The audit also confirmed what the hospital previously had reported: 2017 was a strong financial year for LMH.
The audit found LMH had revenues over expenses of $18 million, making it one of the better years on record for the hospital. In 2017, LMH had revenues over expenses of $16.5 million. As a nonprofit, LMH doesn’t book a profit but rather re-invests excess revenues back into the business.
The audit also found that LMH’s cash position also was positive in 2017. LMH finished the year with about $43 million in cash and cash equivalents, up from about $39 million at the beginning of the year. LMH in 2016 had seen its cash position drop significantly as it retired large amounts of debt. LMH at the end of 2017 had about $7.7 million in debt as it prepares to issue up to $77 million in bonds to finance the LMH West project.
City building totals down a bit from year ago; outgoing commissioner gets appointed to powerful city board
I figure it is a natural time to talk about building in Lawrence, given an army of men are still putting together the “some assembly required” Christmas presents, all the while refusing to look at the directions and muttering the famous phrase “they must have sent a half-dozen extra bolts with this.” Lawrence home and commercial contractors aren’t quite having those types of problems, but building totals in 2017 are down a bit, according to the city’s latest report.
The city has issued permits for $160 million worth of new construction through November. That’s down from $210 million at this point in 2016 and $216 million at this stage in 2015. But really, unless it is my December credit card statement, $160 million is not a bad number. It still ranks as one of the better years in Lawrence construction history. However, it just doesn’t stack up to 2015 and 2016, which were the two best years Lawrence has seen on the construction front.
For further perspective, since 2008, the average number of new permits issued has been $133 million through November. So, while this year is below our historic highs, construction activity is still about 20 percent above our recent averages.
If you were to label this year, perhaps it would be the year of the hotel. Lawrence thus far has had seven projects check in at $3 million or more. Of those, three of them have been hotels. The largest project started this year is a $10.7 million Best Western Plus near Rock Chalk Park in northwest Lawrence. A $4 million Tru by Hilton hotel in the Bauer Farm development near Sixth and Wakarusa is the second largest project. The third hotel is a $3.9 million Country Inn & Suites that is being built on the eastern edge of town next to VenturePark.
The Best Western hotel should be a sight to see. It is about $7 million more expensive than the other two hotels, despite not being that much larger. The Best Western is planned to have about 120 rooms, while the other two hotels each will have a little more than 80 rooms. The Rock Chalk Park property is a Best Western Plus brand, which claims to have larger-than-normal rooms and other such amenities. But my understanding is the hotel isn’t the type that has its own bar and restaurant, which certainly does make for a larger project. So, it will be interesting to see what other bells and whistles the project is offering.
Actually, the entire Rock Chalk Park area will be interesting to watch next year. The hotel development will be completed, and I would expect construction on LMH’s new $65 million medical office building — which will be just a bit west of the hotel — to be underway. The key thing to watch is whether those two developments will spur other development near the sports complex.
I would think it certainly would cause some restaurants to locate near the center. I’ve been told restaurants want to be next to the recreation center, which attracts large weekend crowds as part of its youth basketball and volleyball tournaments. Those restaurants, though, have been waiting for a larger project to come into the development to help shoulder many of the water, sewer and other infrastructure costs that are required to develop in the area.
The LMH medical building qualifies as a large project, so this should be the year that theory is put to the test.
Here’s a look at some other facts and figures from the November building permit report for Lawrence:
— 2017 has been the year that apartment builders have taken a break. The city has issued permits for only eight apartment living units thus far. Last year, the city had issued permits for 1,205 apartment units, and in 2015, the city issued permits for 467. Don’t expect the break to last, though. As I’ve reported, plans have been filed for two apartment projects — one behind the south Lawrence Walmart and another near Clinton Parkway and Crestline that would total about 475 units with almost 1,350 bedrooms.
— Single-family and duplex construction is on last year’s pace. The city has issued permits for 167 single-family and duplex projects, compared with 166 at this time last year. While those numbers aren’t big compared with the time period before the housing bust in 2008, this year’s total is above more recent averages. Since 2009, the average through November has been 142 units.
In other news and notes from around town:
• As we have noted a few times recently, Mike Amyx is ending his 22-year career as an elected official soon. His last City Commission meeting is Jan. 8. But it appears he is going to be headed to another set of meetings.
City commissioners at their year-end meeting Wednesday morning appointed Amyx to serve as a member of the Lawrence Memorial Hospital board of trustees. The hospital board is appointed by the city — the city technically owns the hospital — but the board is far more than your run-of-the-mill advisory board. The hospital board serves as the governing body for the hospital, meaning it oversees the hospital’s approximately $270 million budget.
With the appointment of Amyx, the LMH board is beginning to look a bit like Lawrence City Hall from the 1990s. In addition to Amyx, former Lawrence mayor Bob Moody is on the LMH board, and so too is former Lawrence city manager Mike Wildgen.
Watching LMH may be one of the more important tasks of 2018. In addition to the major west Lawrence expansion mentioned above, we’ll need to keep our eyes peeled for any news of potential partnerships LMH may undertake. As health care companies combine forces in both Kansas City and Topeka, I think LMH leaders are giving much thought to the long-term strategy needed to be successful in the future.
LMH completes deal to buy one of the largest doctor groups in Lawrence; talk of more health care shakeups continues
There is a new trend in the Lawrence medical industry, and thankfully this one doesn’t involve a doctor trying to convince me that Doritos — hello, they’re corn — aren’t part of the vegetable group. Instead, it involves independently owned doctors’ offices being bought by hospitals. The latest deal involves one of the largest primary care practices in the city being bought by Lawrence Memorial Hospital.
LMH and The Reed Medical Group have finalized a deal in which five of the doctors at Reed have become employees at LMH. The hospital took ownership of the practice on July 1, and the name changed to Reed Internal Medicine. The practice continues to be located in its longtime building at Fourth and Maine, which is essentially across the street from the hospital.
Janice Early, vice president of communications for LMH, said the transition for patients should be relatively seamless. The doctors involved in the deal are Donald Hatton, Joan Brunfeldt, Lida Osbern, Philip Hoffmann and Walter Farrell. Drs. Elaine Kennedy and Eric Huerter will be affiliated with the group but won’t be LMH employees. As we have reported, those two doctors have been operating under a different business model. They offer “concierge” service, which confused me because I thought I had found a doctor who not only would endorse my Dorito intake but actually deliver them to me on my couch. Instead, the service refers to more of a membership model for health care. The doctors take on a limited number of patients, and each patient pays an annual fee to have extended access to the physician and to receive more in-depth treatment and preventive services. Huerter and Kennedy will continue to operate out of the Reed building and will continue to have privileges at LMH. They’ll operate their practice separately, though, under the name Reed Medical Group MDVIP Affiliates.
Early said the other doctors in the Reed Group approached LMH about taking over their practices. She said that is becoming a more common scenario as regulations, information technology demands and other such items become more demanding for independent practices.
“I think they look to the hospital as a potential partner because we have the infrastructure in place to handle those issues, and they can focus on practicing medicine instead of the business side of medicine,” Early said.
Reed becomes the eighth primary care practice owned by LMH. In addition, the hospital owns 13 specialty care practices. The deal comes on the heels of news that LMH is in negotiations with OrthoKansas to form a partnership to build a new state-of-the-art orthopedic facility in Lawrence. We reported in March that the two sides were in serious negotiations to build a multimillion-dollar facility that provides services in hand, shoulder, elbow, foot, ankle, hip and knee replacements and other such services.
Early confirmed that those discussions are still underway, and the hospital remains confident that a deal will be struck with OrthoKansas, perhaps by the end of the summer.
Talk of an OrthoKansas partnership came after KU hospital reached a deal with Dr. Jeffrey Randall — a sports medicine doctor who previously was with OrthoKansas — to open a new orthopedic practice in Lawrence. Randall’s practice, which is part of the University of Kansas Health Systems Sports Medicine and Performance Center, has moved into its new facilities at the Corporate Centre off of Wakarusa Drive. The practice represented the first time KU medical system set up operations in Lawrence, but it may not be the last such partnership. KU medical system officials have said they “are working with other health care organizations in Lawrence to identify collaborative practice opportunities.”
KU’s move into the market may spur a host of strategic moves in the Lawrence health care market. Russ Johnson, the relatively new CEO at LMH, has made exploring partnership opportunities an important part of LMH’s strategic plan. Early said the deal with Reed was a significant one because of Reed’s long history in the community and its standing as one of the largest primary care practices in the city. Primary care practices are particularly valued because those doctors often are a patient’s first point of contact with the health care system.
All the talk of strategic partnerships has created questions about whether LMH is looking to create its own deal with another larger, metro hospital. The KU hospital certainly could be a player on that front. The KU medical system has reached deals with hospitals in Hays and Topeka recently to expand services there. But there could be other players as well. The Kansas City market includes large hospitals, including Overland Park Regional Medical Center, the St. Luke’s System, the Olathe Medical Center and others. In Topeka, Stormont Vail is a large player.
Johnson, who previously was a health care administrator in the Denver area, came from an environment where partnerships were common. Early confirmed the hospital engages in a variety of discussions with other area hospitals, but stopped short of saying there were any current talks of a merger.
“Literally from day one, Russ has reached out and been open to talking to other hospitals and other providers, both east and west,” Early said. “It is a discussion. I don’t know what the future will hold. Are we in active discussions about joining another hospital? No. But we are talking with other hospitals about how we can work together. That door is open and we will keep that door open.”
High-tech firm files plans for Lawrence expansion; LMH provides more details on plan to tear down houses for parking
Finally, a Lawrence business that makes something smaller, other than my wallet. I’ve reported several times over the years about Crititech, a Lawrence-based high-tech firm that makes drug particles smaller. The latest news on the company is it has filed plans to expand its North Lawrence headquarters and laboratory.
Crititech has filed plans with the Lawrence-Douglas County Planning Department to build a 4,100 square-foot laboratory, research and production building at 1849 E. 1450 Road. If you are having a hard time picturing the location, it is just north of the North Lawrence city limits, next to the large Heetco propane station.
I’m waiting to hear back from Crititech officials to learn more about the project, but it appears to be a significant expansion. The company currently operates out of an approximately 10,000 square-foot laboratory, research and office building. The application for the project states the need for the expansion is due to company growth. It also says the company will be processing two types of products, and FDA regulations require the work to be done in separate building. Hence, the expansion.
The big question is whether the expansion will result in any new jobs at the company, which generally employs researchers and other good-paying scientific positions. I haven’t heard on that, but I’ll let you know when I do.
The company moved from west Lawrence to North Lawrence in 2013 to give itself more space for growth. At that time, the company had about 10 Lawrence employees, but company leaders then said they could envision that growing to about 50 in five years.
What does the company do that has it growing? In a nutshell, it provides technology to other drug companies that are looking to make their pharmaceutical products more palatable to the body. Often times, that means making the drug particles smaller. For instance, if you can make a drug particle smaller, a pharmaceutical that once had to be taken orally might be able to be delivered through a patch, an inhaler, injections or some other type of less invasive delivery method. Sometimes the smaller particles actually help the body better absorb the drug, making it more effective.
The company ended up in Lawrence because its founder is Bala Subramaniam, a renowned KU researcher. The company continues to have some strong Lawrence ties. Longtime Lawrence entrepreneur Sam Campbell is the chairman of the company, and Matt McClorey, who led the efforts to get the Lawrence Bioscience and Technology Incubator off the ground, is Crititech’s president.
I did a longer article on the company in 2012 when it added McClorey and had signed a deal to put some of its technology into India. The company at that time was reaching a stage that has become dangerous to some Lawrence startups: They become successful enough that outside investors begin looking to buy the company and move it to one of the more traditional high-tech hubs on the coasts.
Campbell back then said he couldn’t make any promises, but that he was working to figure out ways to keep Crititech based in Lawrence for the long term. Keeping promising tech companies in Lawrence is a prime goal of local economic development leaders. These latest expansion plans seemingly provide some evidence that the company continues to have its needs met in Lawrence.
I’ll let you know if I get more details from the company.
In other news and notes:
• On Tuesday I reported on a plan by Lawrence Memorial Hospital to tear down six houses along Michigan Street to make way for an approximately 100-space parking lot. At the time I told you I was waiting to hear some more details from hospital officials. Well, I have heard from the hospital, and the hospital spokeswoman confirmed LMH has heard from quite a few members of the public.
Tearing down any house in Lawrence can become a controversial subject.
“We recognize it is a very sensitive issue,” spokeswoman Janice Early said.
But Early said the hospital is working hard to balance several issues. Among the points she expressed:
— The hospital has considered building a parking garage on site rather than expanding into the neighborhood with another surface parking lot. However, the numbers for a parking garage get big in a hurry. She estimated a surface parking lot costs about $4,000 per parking space, while a parking garage usually costs a minimum of $15,000 per space and often more.
Plus, the hospital is unsure that it really will need a parking garage in the future. New LMH President and CEO Russ Johnson has talked about the need for LMH’s geographic footprint to be more varied in Lawrence. That could mean some ambulatory services would be removed from the hospital’s main campus and relocated elsewhere in the community. That could cause a reduction in parking demand near the hospital.
— On the six houses that are slated to be demolished, Early said the hospital did study whether they could be made available to people who wanted to move them to another site. A consultant, however, recommended against such a strategy. The consultant determined they are not really in a movable condition. Some of the houses also would require significant improvements to meet current standards. For instance, some of the houses have asbestos siding, Early said. The hospital, however, will hire a firm to remove fixtures and other such items from the interior of the homes for recycling, she said.
— The plans submitted to City Hall showed several angled parking spaces would be added along Arkansas and Maine streets. Early said the hospital has decided not to move forward with building those new spaces. She said the new lot along Michigan Street is expected to be adequate to meet parking demand.
— Early said the new parking lot will include a substantial amount of landscaping, and the project will install a new sidewalk along much of the east side of Michigan Street, according to the plan.
— The parking shortage that the hospital faces can be severe at times, Early said. The hospital has expanded its free valet parking service for patients and visitors, but that doesn’t address staff parking issues.
“We definitely are spilling over in the neighborhood today,” she said. “Both staff and visitors are parking on residential streets in front of people’s property.”
Neighbors have noticed that. She said LMH has met with the Pinckney Neighborhood Association to discuss the parking lot proposal. She said the hospital heard supportive comments about the proposed parking lot because it would cut down on the amount of on-street parking that occurs in the neighborhood.
If the plans are approved — both the Planning Commission and the City Commission will have to consider them — the hospital hopes to have the lot completed by early fall.
A multimillion-dollar deal is brewing between two local health care companies that could someday result in Lawrence being known as the “knee and hip replacement capital of the Midwest.”
No, it is maybe not the best moniker for the convention and visitors bureau, but it could result in big business, and might end up being a key development in Lawrence's changing health care market.
Leaders with Lawrence Memorial Hospital and Lawrence-based OrthoKansas confirmed this morning they are in serious discussions about partnering on a new state-of-the-art orthopedic facility that would be built in Lawrence but designed to serve patients from throughout the state and beyond.
“We want to take the clinical expertise that already exists here, and create a partnership that better leverages that into a regional delivery system,” said Russ Johnson, president and CEO of LMH. “There is every reason to think Lawrence could become a true destination for orthopedic care and sports injury in the next 20 years.”
LMH and OrthoKansas hope to finalize a deal by the end of summer. The deal could involve LMH purchasing OrthoKansas, but Dr. Doug Stull, president of OrthoKansas, said he didn’t think that was likely. Instead, some sort of partnership is more likely. LMH and OrthoKansas are characterizing the talks as an exploration of a possible “affiliation.”
The new facility would be a “regional center of excellence” that would provide services in hand, shoulder, elbow, foot, ankle, hip and knee reconstruction. It would be a one-stop shop for surgery, therapy and imaging services. The center also would likely include a sports performance and and athletic training program that would focus on high school and collegiate athletes.
The two parties haven’t decided on where the facility should be built. But in my conversation with Johnson and Stull, it sounds like they are not necessarily looking to build it near LMH’s main campus at Third and Maine streets.
“It needs to be a place where the region can access us,” Stull said. “If you live in Ottawa or Hays or Atchison or any number of other places, how do you get there easily?”
The potential deal between LMH and OrthoKansas comes at an interesting time. As we reported in December, KU Hospital has reached a deal with Dr. Jeffrey Randall to open a new orthopedic practice in Lawrence. Randall is a sports medicine doctor who previously was with OrthoKansas. The deal is significant because it marks the first time KU Hospital has entered the Lawrence market in such a big way. Importantly, KU Hospital made it known as part of its announcement that is is “working with other health care organizations in Lawrence to identify collaborative practice opportunities.”
That makes this potential deal between LMH and OrthoKansas about more than just knees and hips. Johnson confirmed that if LMH can successfully complete this deal with OrthoKansas, it should send a message to the broader medical community that LMH also is serious about partnerships and knows how to get them done.
“I think Lawrence is a fantastic market and it is very likely that as a community we’ll see other people enter this market,” Johnson said of other health care providers. “I think it is important for them to know they can enter it in a partnership way with us, and we can build a strong alliance as the local community hospital and serve the community in a very good way.
"Or, if that is not their interest, they may just want to come in and compete.”
Johnson said it is not yet clear what type of relationship KU Hospital’s new Lawrence facility — called the Sports Medicine and Performance Center — wants to have with LMH. Johnson said LMH is open to working with the new practice.
In this business of finding partners, the stakes are high for LMH. Think of it this way: The hospital receives some of its business from patients who just come through the door of the emergency room. But it sees a lot of its business from physician offices that refer patients to LMH for a scheduled procedure or service. If several of those physician offices become affiliated with KU Hospital or other hospitals in Kansas City or Topeka, LMH could be at risk of losing some of that referral business.
Johnson didn’t get into that level of detail with me, but did acknowledge that the search for partners is a high priority for the hospital, and that such partnerships will become more critical as the industry changes.
“It is a new era in health care,” he said.
It could be a good one for consumers. If multiple hospitals from Kansas City and elsewhere decide they want to be players in the Lawrence market, that could mean other new facilities, new state-of-the art equipment, and maybe even competitive pricing practices.
Stull said he thinks the potential new orthopedic facility could be a good example of what local providers and LMH can offer to compete with the larger Kansas City companies.
“I know there are some people in Lawrence who think seeing a doctor in Lawrence isn’t good enough, and they think they need to go to the city,” Stull said. “I want those people to stay in Lawrence. I’m confident this alliance will show them that if they had a doubt about where to go, they won’t have a doubt anymore.”
As for the near term, OrthoKansas will continue operating at its facility at Sixth and Maine Streets, which shares a building with the Lawrence Surgery Center. OrthoKansas has about 60 employees and has offices in Lawrence, Leavenworth and Holton.
A conversation with LMH president and CEO Russ Johnson, plus a look at whether LMH will find a partner
As part of my effort to bring you more conversations with community leaders, I sat down recently with Russ Johnson, the relatively new president and CEO of Lawrence Memorial Hospital. Yes, I probably missed a golden opportunity because I did not ask him why the gowns are so drafty. Instead, I asked him about the hot breath of competition that LMH may be feeling more acutely these days.
Johnson took over the hospital’s top spot in August after the retirement of longtime president and CEO Gene Meyer. By December, he had gotten a welcome present from neighbors to the east. As we have reported, officials with KU Hospital confirmed construction work is underway on a new orthopedic clinic along Wakarusa Drive. It will be KU Hospital’s first expansion into the Lawrence market, and I opined at the time that may be a significant sign of things to come.
Johnson agreed that KU Hospital’s decision to have a clinic in Lawrence is significant. It was not a development, however, that caught him by surprise. Johnson said it is clear to him that partnerships, collaboration and scale are among the most important trends in the health care industry for today and tomorrow.
None of those ideas are likely to discombobulate Johnson. Although he grew up in the Kansas City metro area, he comes to Lawrence after having served as an executive at Centura Health System in Englewood, Colo., a suburb of Denver. Centura operates 17 hospitals and has affiliation agreements with 12 other hospitals throughout Colorado and western Kansas. It is Colorado’s largest health care network and has more than 21,000 employees.
“Centura was all about creating partnerships and scale,” Johnson told me. “That doesn’t really scare me.”
Those could end up being important words for the future of Lawrence health care. It seems clear that LMH will have opportunities to collaborate or partner with other health care organizations in the future. Whether those opportunities end up being the right fit is tough to say, but it sounds like Johnson is in a mood to explore them.
I did not get the impression, though, that such exploration will start and stop with KU Hospital. The KU Hospital may be a good fit for a partnership or a collaboration, but just because it has the KU brand in its name doesn’t mean that it is a given that it will partner with Lawrence’s largest health care provider.
“There are lots of options out there,” Johnson said.
The Kansas City market is full of them. There’s St. Luke’s, Shawnee Mission, Overland Park Regional, Olathe Medical Center and others. LMH may not limit itself to collaborating with just a single entity. Aside from watching whether any of those Kansas City hospitals form partnerships or collaborations with LMH, it will be interesting to see how many of them expand into Lawrence with or without an LMH connection.
Some of you may remember the late 1990s and early 2000s when new banks sprouted in Lawrence faster than dandelions. I wonder if such a trend will occur with health care facilities in Lawrence. Some of the same conditions may exist. Many banks came to Lawrence because they decided they wanted to try to remain an independent bank rather than be gobbled up through a merger. But to remain independent you needed to grow. To grow, you needed to have a presence in growing communities. Sadly, there are only a handful of communities in Kansas that are growing. Lawrence was and is one of them, thus Lawrence seemingly ended up on every bank’s radar screen. There may be hospital chains going through the same calculations currently. That doesn’t mean we should expect to see lots of new hospitals. Instead, think of clinics and other outpatient procedure facilities. The grand prize for a KC hospital would be a partnership with LMH.
Well, actually, the grand prize may be to purchase LMH. However, nothing in my conversation with Johnson led me to believe that LMH is looking to be sold. That would be an unexpected outcome. LMH has been very financially strong for more than a decade. Normally, hospitals that feel a need to sell do so because they are facing a shortage of financial resources. That’s not the case with LMH today.
“We are in the enviable position of being able to be thoughtful about whatever we do,” Johnson said.
As for some other takeaways from my conversation with Johnson:
• Don’t look for all the growth of LMH to occur at the hospital’s main campus at Fourth and Maine streets.
“Fourth and Maine has a critical long-term future as an inpatient facility, but a lot of our future will be in decentralized delivery,” Johnson said.
There still will be improvements made at the main campus, but Johnson characterized them more as improvements inside the existing walls of the facility “rather than new bricks and mortar.”
But other facilities — outpatient care is about 75 percent of LMH’s total volume — are possible. Johnson said he believes convenience is definitely at the “top of the consumer value proposition.” Hospital leaders will be keeping their eyes open for where the hospital needs to be offering services in order to be convenient to area residents.
• Figuring out new ways to deliver health care services will be critical to LMH’s success. Johnson briefly mentioned how people in the future will access health care services on their smart phones much more than they do today. He talked about how consumers, especially those with high-deductible health care plans, are going to shop around for the best price for a service more than they do today. And he said LMH will have to continue to offer more services in the areas of prevention and wellness. In addition to that being the right thing to do for people’s health, Johnson is betting that ultimately the way hospitals get paid will be tied back to factors such as health and wellness metrics. He said he doesn’t know how the Trump administration and changes to Obamacare will shake out, but he thinks hospitals already were destined to face changes to their payment models.
“Our payment model eventually will change,” Johnson said. “We won’t always be a fee-for-service type of business.”
Hospital leaders will spend the next several months thinking about what the future may look like. LMH is undergoing a formal strategic planning process. It seems clear that Johnson will play a role to help people understand that change sometimes is both good and necessary.
“If we continue serving the community in the same ways we always have, I think we become vulnerable to somebody who has a better mousetrap,” Johnson said.
Pretty soon, the cafeteria/atrium area at Lawrence Memorial Hospital is going to have a bit of an Allen Fieldhouse feel to it; there will be championship banners galore.
LMH has made another banner-worthy type of list. The hospital recently was named as one of the “100 Great Community Hospitals” in America by Becker’s Hospital Review.
The ranking comes after LMH earlier this year landed on the granddaddy of hospital lists: Truven Health Analytics’ 100 Top Hospitals. That list stacked LMH up against every hospital in America, and conducted a rigorous review of LMH’s data on various performance measures.
This latest ranking focuses on smaller hospitals that have fewer than 550 beds, minimal teaching programs, often are located in rural areas and serve as the only hospitals in their communities. Becker used the rankings of Truven and other similar rankings programs to create its top 100 list.
LMH was the only Kansas hospital included on the Becker list. The Becker report called attention to LMH’s $45 million expansion in 2009 that included new facilities for its emergency and surgery departments as well as additional space for maternity and intensive care units.
As for the banner, I don’t really know whether LMH will hang a banner for this award. Hospital leaders did hang a large one in the dining/atrium area near the hospital’s cafeteria when it landed on the Truven list.
So, who knows, perhaps they can consult with the banner experts at Allen Fieldhouse about whether they should hang a banner for this one. Hopefully they won’t take this too far, though. A “Beware of the Phog” banner is not what I want to see when I sit down to eat my fine LMH cafeteria food.