Children’s National To Delay, Suspend Some Real Estate Projects Amid Financial Woes

Children's National Health System is losing about $1M a day as the pandemic is lowering the number of non-COVID-19 patients visiting hospitals, and this appears to be slowing its real estate expansion plans.

The hospital has suspended or delayed about three dozen capital projects because of the financial hit it is taking from the coronavirus, Children's National Chief Real Estate and Facilities Officer Charles Weinstein said on a Bisnow Town Hall webinar Tuesday.

"It looks like a lot of those projects are going to have to be delayed, and even existing projects we have right now, many of them are on a suspended basis because it's taking so much cash out of the hospital on a daily basis," Weinstein said. 

Weinstein didn’t say which projects have been suspended. But he said he is preparing for his capital budget to be significantly reduced next year and potentially the following year. 

"There are projects the hospital felt were necessary to commence that will not happen," Weinstein said. "We've got to reprioritize everything because we have fewer capital dollars to spend and we're going to need to spend money to modify spaces."

Children's National made a decision several weeks ago to continue construction on its largest project, the Research and Innovation Campus on a 12-acre portion of the former Walter Reed Army Medical Center campus in Northwest D.C., Weinstein said. 

He said it has reduced the number of construction workers on-site and taken precautions such as checking the temperature of workers, having them wear masks and gloves and eat lunch in their cars. He expects the project will be completed by early next year.

The hospital is also continuing with its plans to move into a 140K SF office space at the former Discovery Communications headquarters in Silver Spring, a lease it signed last year. But Weinstein said it will likely reduce the density of the office floor plan in response to the pandemic.

"The move in real estate up to this moment had been more and more density with smaller cubes working closely," Weinstein said. "With social distancing as part of our mindset, we have to figure out how to give people protection when they're at work."

Children's National's capital projects also include an outpatient center in Prince George's County and an ambulatory surgical center in Montgomery County, Weinstein said. He did not provide a status update on those projects. 

The hospital is hurting financially because parents have been hesitant to bring their children in for standard, non-emergency health procedures due to concerns about the spread of the coronavirus. Weinstein said the hospital has been losing about $1M every day during the crisis.

"In a pediatric hospital where parents are afraid to come, our hospital is prepared for a huge surge in more patients, but we actually have far fewer patients than we typically do, so our revenues are being hurt, our clinics are half-empty and our hospital beds are half-empty," Weinstein said. 

Additionally, he said Children's National has not received the same level of federal support as other health systems because the relief legislation based hospital allocations on the number of Medicare patients, a population the pediatric hospital does not serve. 

"We don't have Medicare patients at all, our patients are Medicaid, but that wasn't provided for, so the pediatric hospitals not only in Washington but across the country are suffering mightily from this lack of revenue," Weinstein said.