St. Elizabeth’s announces $50 million expansion at O’Fallon campus. What’s included?

St. Elizabeth’s Hospital has revealed plans for a major expansion at its O’Fallon medical campus.

Seven years after leaving its old hospital in Belleville for the new facility off Interstate 64, administrators are seeking state and local approval to build an ambulatory surgical treatment center and a medical office building.

“This represents a $50 million economic development project for the region,” St. Elizabeth’s President Chris Klay said during an O’Fallon City Council committee meeting Monday.

“We’ve outgrown the hospital, which is a really good problem to have.”

A new 70,000-square foot medical office building, which includes the 20,000-square foot ambulatory surgical treatment center, will be three floors. It is to be located adjacent to Green Mount Road, directly north of the main entrance and roundabout on the hospital campus. If approved, construction could start in spring 2025 and ready for operations in 2026.

Citing a need for expanded health care availability, Klay said their operating rooms were being used last year at 120.85% of their capacity, according to a state report. The target is 80%. He said totals have escalated from 78 surgeries to 140 - 160 a year.

“Many providers – spanning general surgery, urology, neurosurgery, otolaryngology, gynecology, gastrointestinal and orthopedic specialties – have asked St. Elizabeth’s for improved operating room access to time-efficiently meet the needs of their patients more cost-effectively on an outpatient basis,” he said.

The existing office building is at 100% capacity.

“The region presently has a shortage of available medical office building space to meet the demand,” Klay said.

Large neurosurgery, urology, podiatry, and pediatric physician groups are asking for new or additional space on St. Elizabeth’s campus, including Cardinal Glennon and Urology and Neurology of St. Louis, Klay cited as examples.

“Today, 40% of patients within our service area travel to St. Louis for healthcare services. A majority say they would elect to receive their healthcare in Illinois if access to specialized care was improved,” Klay said.

The Ambulatory Surgical Treatment Center will feature four operating rooms and two procedure rooms.

Klay told the committee of the whole meeting Monday that they have submitted a certificate of need application to the Illinois Health Facilities and Services Review Board for authorization. They received word Monday it was received and the board likely will act on the request on Jan. 28, 2025.

The O’Fallon council needs to approve a resolution at its meeting Monday, Oct. 7, which would amend the original redevelopment agreement to extend the timeline until Dec. 31, 2026.

“The proposed resolution does not change or extend the Green Mount Medical Campus TIF District,” City Administrator Walter Denton said.

“The construction of the medical campus has far exceeded the minimum requirements to pay for the infrastructure and has been an ideal example of public-private partnerships using Tax Increment Financing,” he said.

The expansion project will create additional taxable property for the TIF District, Denton said.

Klay stressed that the patient referrals for the surgical center will come from St. Elizabeth’s and not other facilities. He also said that commitment letters from tenants for the office building will be new providers to the region and from existing ones who want to expand.

Denton noted that the resolution is the only action the city must take to advance the project. The proposal does not need to go through the Planning Commission or the council again. The hospital will have to apply for building permits and other such steps the city requires for new construction.

TIF History

When O’Fallon partnered with the Hospital Sisters Health System in 2011 to build a new St. Elizabeth’s Hospital, moving the operation from Belleville, one of the challenges was the existence of abandoned coal mines under the property.

Tax Increment Financing District was created to provide a funding source to remediate the mines underneath, reconstruct Green Mount Road, and extend utilities to the hospital before construction began, Denton explained.

“The city agreed to issue bonds to pay the upfront cost of the infrastructure improvements with the intention of being reimbursed by TIF revenue,” Denton said.

The TIF redevelopment agreement between the city and St. Elizabeth’s Hospital includes timelines for the hospital to build taxable medical office space so the city can pay the city-issued bonds and the TIF can generate revenue to pay other TIF-eligible expenses, Denton said.

“While the medical campus has been successful and a benefit to the community, the hospital has not built the amount of taxable property required in the redevelopment agreement. It allows the mayor to grant a one-year extension, which he did last year, and any further extension requires city council approval,” Denton said.

St. Elizabeth’s Hospital

Founded in 1875 by the Hospital Sisters of St. Francis, St. Elizabeth’s will celebrate its 150th anniversary next year.

In 2015, the state health services board unanimously approved St. Elizabeth’s plan to relocate from Belleville seven miles away to O’Fallon. In November 2017, St. Elizabeth’s opened its doors in O’Fallon and is located near the Interstate 64 interchange at Green Mount Road.

The number of beds went from 303 to 144. The new hospital cost $253 million with an adjacent $34 million ambulatory care center. The campus covers 120 acres.