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Major hospital projects from Cumberland to the Eastern Shore are either near completion or in the planning stages, said Rex W. Cowdry, executive director of the Maryland Health Care Commission.

"Maryland's hospital system has had a major reinvestment in infrastructure, a huge surge in reinvestment," he said.

Silver Spring's Holy Cross Hospital announced this week it plans to seek state approval to build a new 93-bed hospital in Germantown and renovate its hospital.

Several factors are driving the trend. Recently, the Maryland Health Services Cost Review Commission increased the rates hospitals can charge for services, which provided them with enough revenue to look beyond their immediate needs, Cowdry said.

"2004 to 2006 saw some loosening of the rates to begin initiating recapitalization," said Paul Sokolowski, senior vice president of finance for the Maryland Hospital Association. "It's not as if whatever was done [then] was going to cure all ills, but it loosened up, and this is the result."

The reason the state approved the rate hike was demographics. Baby boomers are aging, driving up the need for more hospital beds.

"What there was is a pent-up demand that's been very difficult for folks in the past to get financing because of the rates being offered by Maryland's rate setting commission," said James P. Hamill, president and CEO of Washington County Health Systems. "[Hospitals] went through a cycle where you weren't seeing the types of dollars that would allow for additional debts. Now they're catching up."

Booming statewide

The state's biggest project is Johns Hopkins Hospital's $1 billion expansion to add two new patient towers and renovate the existing hospital in Baltimore. The project, announced in 2005, is expected to see the patient towers completed in 2011 and the entire project finished in 2016. It is expected to more than double the hospital's capacity, to 959 beds.

In six months, Washington County Health System plans to begin work on a new 297-bed hospital outside Hagerstown to replace its aging downtown facility. The new hospital, scheduled to open in November 2010, is projected to cost $294 million.

Hospital officials looked at Washington County's growing and aging population and considered renovations to the old hospital, but decided the cost-effective solution was to move to a 75-acre site next to a 387,000-square-foot medical mall, Hamill said.

The new hospital will replace an aging structure where one entire wing did not meet code, Hamill said. The last addition was built more than 25 years ago, and there was no more space on its downtown property.

"We couldn't come up with good solutions," Hamill said. "The hospital was essentially landlocked in town."

Many hospitals across the state are facing similar pressures of having to build or renovate to be ready for the expected demand as baby boomers age, said Nancy Fiedler, a spokeswoman for the Maryland Hospital Association.

"It takes time to gear up for that," she said. "The other issue is most of the hospitals were all built in the early '60s in the state and so they're all aging out at the same time. They're all requiring significant renovations and changes to come up to codes."

"I feel almost miserly when talking about our project compared to all of these other projects," said Victor Broccolino, president and CEO of Howard County Hospital, which is spending $105 million for a three-phase project to build a new garage, followed in 2009 by a new patient and support services wing that will add 90 private rooms. Officials also plan to convert the rest of the hospital to private rooms. The facility will have 228 rooms when completed.

But all of the new construction and expansion are causing hospitals to become more competitive, Broccolino said.

Key support

Washington Adventist Hospital's plan to move from Takoma Park to the Calverton area would put it in more direct competition with Howard County Hospital.

Officials at Adventist HealthCare, which owns the hospital and Shady Grove Adventist in Rockville, have expressed concern that Holy Cross Hospital's plan to build a 93-bed hospital in Germantown is encroaching on Shady Grove's territory, especially in Germantown, where Adventist HealthCare won a hard-fought battle three years ago to build an emergency care center. Holy Cross has objected in the past to Shady Grove's new patient tower in Rockville as well as Washington Adventist's move from Takoma Park.

Holy Cross's plan "warrants further scrutiny," said Adventist HealthCare Associate Vice President Robert Jepson.

"It's very challenging for a hospital to make a move if it doesn't have the support of the local politicians," Broccolino added.

Washington County Health System also faced opposition from local elected officials who wanted the hospital to stay downtown, CEO Hamill said.

"They tried to block the project, so it was a long delay in getting this project under way," he said. "That didn't change the economics that a replacement hospital was better than a series of compromises to the old site."

Holy Cross president and CEO Kevin J. Sexton said he does not expect problems in receiving state approval. Holy Cross sent the letter of notification to the state last week, which will be followed within 60 days by a request for a certificate of need.

Montgomery County House Delegation Chairman Brian J. Feldman predicted that questions will arise.

"I have no reason to believe it wouldn't be a smooth process, but the moment somebody raises an issue that hasn't been brought up before, it may not be as smooth," said Feldman (D-Dist. 15) of Potomac.

Del. Luiz R.S. Simmons (D-Dist. 17) of Rockville, who lives two minutes away from Shady Grove Adventist Hospital, said he is not as optimistic.

"The economy is going to shape the debate," he said. "If one facility gains certain resources, the other loses. And the dollar only stretches so far. And many of these facilities are laboring in a very hardscrabble economic environment and each would view the other as a competitor."

The proposed Germantown hospital is unlikely to confront the same hurdles faced by Germantown's 2-year-old Shady Grove Emergency Center, which required emergency legislation from state lawmakers when its application was denied by the Maryland Health Care Commission, said Sen. Robert J. Garagiola (D-Dist. 15) of Germantown.

The commission rejected the free-standing emergency room in part because it was concerned an approval would open the floodgates for more stand-alone facilities. In addition to labeling the Germantown center a pilot project, the 2005 legislation instructed the commission to develop regulations for free-standing facilities.

The process to determine if a community needs a new hospital or a renovated one is based on demographics and cost projections, among other factors, said Cowdry of the state health commission.

"Any time you're talking about a new hospital or new facilities, it's not unlikely for other interests to get involved," Garagiola said. "I only hope that the Health Care Commission keeps the politics out of it."

The challenge may be convincing the state that a new hospital is needed, said Montgomery County Council President Michael J. Knapp, whose district includes Germantown.

"I'm not sure there's a full understanding of the need in that part of the county," Knapp (D-Dist. 2) of Germantown said, noting the struggle faced by advocates of the Shady Grove Emergency Center. "Clearly they didn't realize there was so much growth in Montgomery, especially the upcounty."

"I'm not sure how all of that will play out," said Del. Peter A. Hammen (D-Dist. 46) of Baltimore, chairman of the House Health and Government Operations Committee. "Hospital politics is kind of a different beast."

Staff Writers Meghan Tierney, Janel Davis and Marcus Moore contributed to this report.