California hospital unveils plan for financial security: Housing, retail, and office space

A pediatric hospital in California is taking a novel approach to improving its financial security.

Valley Children's Healthcare is planning to build a 468-acre development dubbed "The Hill," which will include retail, housing, office space and other uses. The project is meant to ensure the pediatric system's long-term viability, officials said.

Valley Children’s Healthcare has unveiled plans for a 443-acre commercial development surrounding its healthcare campus in Madera, California. Valley Children is calling the project “The Hill,” and the plans call for housing, retail, restaurants, a supermarket, office space, and a hotel.

Todd Suntrapak, president and CEO of Valley Children’s, said the goal is to ensure the long-term financial viability of the pediatric health system.

“Every decision we take here at Valley Children’s is focused on sustaining this asset for the care of children for the decades and centuries to come,” Suntrapak said in a video released by Valley Children’s.

The Hill will incorporate residential, retail, hospitality and recreation components surrounding the healthcare campus, which includes Valley Children’s and River Vista Behavioral Health.

Suntrapak said the development would ease the burden on families who have children in the hospital for treatment. Hospital officials said it would also generate additional tax revenue for the county.

Valley Children’s officials made the case that it is launching the project due to the financial distress seen in other hospitals. Officials point to the closure of Madera Community Hospital in January 2023 as a vivid example of the threat to a provider in its own community. The system also points to the 117 acute care hospitals that have closed nationwide between 2018 and 2023, according to The Advisory Board.

Suntrapak says Valley Children is on sound financial footing, and he said the system has been focused on its financial sustainability as other California facilities have closed or reduced services.

Kelly Beall, senior vice president and chief people officer of Valley Children’s Healthcare, said the project would meet the needs of staff. She said the organization is surveying staff members, who have expressed desires for more housing, both short-term and long-term options, along with day care, shops and restaurants. Beall also said the project would help recruit and retain staff.

“I think it’s a really exciting and strategic vision to provide diversified revenue to support our patient care operations, but also to differentiate ourselves and create a wonderful healing environment around the hospital that also provides services and provides back to our community,” Beall said.

The project calls for 450 apartments, ranging from studios to three-bedroom apartments, along with townhouses. The plans call for more than 30 shops with lofts above retail spaces. Walking paths would also be incorporated in the development.

Valley Children’s doesn’t have a timetable for The Hill development, but the system said it hopes to announce tenants soon. The costs of the development have yet to be determined, but the system plans to develop The Hill in phases, officials say.

Elements of the project could be funded from several sources, including investors and Valley Children’s investment portfolio, officials said. None of the money used for the project will be diverted from current or future operations, and donations made to Valley Children’s won’t be used for the development, the system said. Profits from retail operations will be used to support Valley Children’s services.

Rob Poythress, chairman of the Madera County Board of Supervisors, offered a statement in support of the project.

“I believe it is a brilliant idea to enhance revenue at Valley Children’s for those services necessary to take care of kids, and Madera County is excited about the opportunity to help Valley Children’s move forward with this development,” Poythress said in a statement. “It is always about the care – that is number one. But it is also about supporting employees and residents in the area.”

Valley Children’s has also been focusing more on sustainability, and its efforts go beyond reducing waste and pollutants. Valley Children’s is building a renewable energy microgrid that is expected to be operational next year. The microgrid will reduce emissions and cut energy costs, officials say.

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