CHICAGO - Northwestern Memorial Hospital in Chicago last week announced a $600 million project to replace its current facilities that will be partially financed with proceeds from the issuance of $225 million of revenue bonds. Eugene Principi, treasurer and senior vice president of finance for Northwestern Memorial Corp., which oversees the hospital's finances, said the five-year project will enable the hospital to replace its aging facilities located near downtown.
A new hospital, outpatient center, and physician offices will be constructed on a nearby parking lot currently owned by Northwestern University.
Principi said the bonds, which will be backed by general hospital revenues, will be issued through the Illinois Health Facilities Authority.
First Boston Corp. will play a major role in the bond issuance, though Northwestern Memorial has not formally chosen underwriters or its bond counsel on the deal, he added.
The bonds would be sold in three issues, most likely beginning with a $50 million issue next summer or fall, Principi said. The health facilities authority will sell a $120 million issue in 1995 and the remaining issue in 1996, he said.
Northwestern Memorial intends to seek ratings from Moody's Investors Service and Standard & Poor's Corp. on the deal, Principi said.
Moody's currently rates about $120 million of the hospital debt Aa. Standard & Poor's rates about $116 million of the debt AA.
In addition to the $225 million of bonds, Northwestern Memorial Corp. will raise an additional $355 million for the project. The money will come from private donations, expected to total $50 million, and funds from the corporation's reserves and operating revenues, according to Principi.
The remaining $20 million will likely be used for physician offices and parking. Principi said the Northwestern Memorial Faculty Foundation will pay for the offices and Northwestern University will finance the parking facilities.
The project is scheduled to get under way in 1994.
The new facilities, which will replace buildings built in 1929 and 1941, will enable Northwestern Memorial to respond to the ongoing shift from inpatient to outpatient care, according to Dan Parker, spokesman for the hospital. They will also enable the hospital to provide more specialized care, he said.
The new hospital will have approximately 300 fewer beds than the present 1,093, but will provide more sophisticated and intensive services.
In addition, outpatient services currently offered at 22 sites at the hospital complex will be consolidated into one facility when the construction project is completed, Principi said.
The existing hospital buildings will then either be used to house nonpatient care and administrative services or be taken over by Northwestern University, according to a news release.
Mayor Richard M. Daley of Chicago said the project "will create thousands of jobs over a five-year period, including 1,000 new full-time construction jobs, a welcome addition to Chicago's economy," according to the release.
Northwestern Memorial is one of several hospitals in the Chicago area considering construction projects to replace aging facilities.
Last month, Richard Phelan, president of the Cook County Board of Commissioners, unveiled plans to replace the 80-year-old Cook County Hospital on the city's West Side. County officials have said the project could cost more than $100 million and would be financed with general obligation bonds.