DMC planned in Rockford, Ill., Rochester businessman involved

ROCKFORD, Ill. — MercyRockford Health System, a five-hospital, 80-clinic medical system in southeastern Wisconsin and northern Illinois, announced plans last week to build a $400 million, 188-bed intensive care and specialty services campus east of Rockford.

A notable detail about the MercyRockford plan is its use of the phrase "Destination Medical Center" to describe the new project, parroting the name of the $6 billion plan backed by public funding and investment from Mayo Clinic and private backers.

"Within the health-care industry, a destination medical center is a generic term for a medical center that has a whole range of health-care services but primarily has intensive tertiary care services and receives self referrals and referrals from multiple hospitals and physicians on a regional, national or international basis," said MercyRockford President and CEO Javon Bea in an email to the Post-Bulletin.

Intended as a destination tertiary care resource for the region, the project is planned for a 263-acre site along Interstate 90 east of Rockford, allowing easier access from patients in Wisconsin and points south.

MercyRockford was created by the merger in January of Janesville, Wis.-based Mercy Health System and Rockford Health System, which owns one of three large hospitals in the Rockford area. Its president and CEO is Bea, the Oronoco businessman who heads a group of investors who own four downtown Rochester hotels, including the historic Kahler Grand Hotel.


Bea is a former Mayo Clinic administrator and a native of Rockford.

"The medical destination hospital campus on I-90 at Riverside will be a convenient location for patients from within the greater Rockford area and for those traveling from other communities, bringing significant value to Rockford," Bea said in the email. "The medical destination campus will incorporate superior technology and expanded patient services, designed to the standards of today and the future."

The campus will become a partner site with Rockford Memorial Hospital. That campus will retain an emergency department, cancer center and several outpatient services, but will repurpose many of its areas and reduce its beds from 302 to 94. The project will result in a net reduction of 109 beds for MercyRockford, or 28 percent of the system's total.

"MercyRockford is setting a trend by giving back beds to the state of Illinois that have been licensed and are no longer needed because of the decreased length of stay due to modern technology and medical protocols," said Bea. "The state of Illinois has Certificate of Need laws to try to reduce excess bed capacity within the state."

Like most large hospitals, MercyRockford had a large percentage of unused beds. A recent analysis from Crain's Business estimated 67 percent of its beds were occupied.

The new campus will offer a Level I trauma center, advanced neonatal and pediatric intensive care units, 10 operating suites and outpatient specialty care, among other services.

According to MercyRockford Health System, the original site was not capable of being renovated to accommodate advanced services and specialty care.

"I think it's about systems having a vision to get larger, to expand their geographic reach, to position themselves as centers for specialty care and to try and draw patients to those specialty centers rather than losing them to places like Madison," said Allan Baumgarten, an independent analyst for the hospital and health-care market in the Midwest.


The new campus will be developed for hotel, restaurants and retail, and the project is being called the biggest single investment in Rockford's history.

MercyRockford will use a combination of debt financing and current assets to finance the project.

Obtaining capital to fund the project would not have been that hard, says Baumgarten. "I am pretty sure Mercy has a pretty strong balance sheet," Baumgarten said. "I'm sure it's possible for them to bond for it. Bond rates are very low, so it's a good time to borrow."

"Destination medical centers typically have amenities nearby for lodging, eating and shopping to utilize while their loved ones are getting care," Bea said. "In MercyRockford's case, it has been getting regional self referrals and referral from over 40 hospitals and large medical group practices for tertiary care from northern and central Illinois and southern Wisconsin regions. So the new $400 million destination medical center on I-90 will continue to serve as a destination medical center for the northern and central Illinois and southern Wisconsin regions."

The project will require state approval based upon a review of need. Pending that approval, construction is slated to begin late next year.

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