The timing of the expansion of PCH turned out to be fortuitous as Meyer notes, "It was very apparent in late 2006 that based on interest rates at the time, availability of money and everything else, the time to issue debt was then and there, so we issued our debt in January of 2007, prior to the implosion of the credit markets, which now appears to have been brilliant, but was just luck. So we got the financing in place, and with permitting, property acquisition, etc., which took us the better part of 2007, and we ultimately broke ground in December of 2008. We've been moving pretty aggressively forward, the project is on time and significantly under budget and going very well."





Phoenix Children's timing was excellent but they have still been affected by the recession, both positively and negatively. Budgeting for risks paid off for PCH, as Meyer explains, "In the timeframe we were planning, constructions costs were escalating at 10% per year, so we had built heavy inflation into our projected costs and that has not materialized. The stuff we did early, steel, concrete, etc., we've seen 5% savings to budget. The last couple pieces we took out to bid, we're seeing 20% savings to budget."

Regarding the current health of the economy, Meyer said, "Obviously we've seen reductions in Medicaid reimbursement rates, which for children's hospitals are a big deal. We have revised our assumptions around philanthropy and then obviously the investment portfolio has taken a hit. When you looked at all that, we said we needed to make some revisions in our project and so we decided we wanted to delay or put off $100 million in the project."

It turned out that solid advance planning helped PCH neutralize this potential problem. "We're trending about $40 million under budget so the first 40 of the 100 was pretty easy and the remaining $60 million was pretty straightforward, essentially we are shelling more of the hospital than we were going to. The plans originally said we were going to shell a floor and a half [of the 11 story patient tower in the new hospital], now we are going to shell three. Long and short, it was pretty easy to make that additional 60 million we needed come into play by reconfiguring and doing some additional shelling."

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