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State denies Crystal Lake hospital;  Sherman still trying to stop Huntley’s

An artist's renditishows proposed Mercy Health System hospital Crystal Lake. A state review board voted Tuesday deny permissibuild hospital. |

An artist's rendition shows the proposed Mercy Health System hospital in Crystal Lake. A state review board voted Tuesday to deny permission to build the hospital. | Submitted

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Updated: October 14, 2012 1:26PM

NORMAL — Two months after approving construction of a new hospital in Huntley, the Illinois Health Facilities and Services Review Board on Tuesday denied permission for Mercy Health System to build a hospital in Crystal Lake.

Meeting in Bloomington-Normal, the board voted 6-3 to affirm a decision it had made last December that such a hospital was not needed. Mercy wanted to erect a 70-bed, $115 million building at Route 31 and Three Oaks Road.

The project is strongly opposed by Centegra Health Systems, which got permission from the board on July 24 to build a 128-bed, $233 million facility at Haligus and Reed roads in Huntley after also having been originally turned down by the board in December.

Sherman Hospital in Elgin, Advocate Good Shepherd Hospital in Barrington and St. Alexius Medical Center in Hoffman Estates have been lobbying against both McHenry County projects, arguing that there is not enough hospital business to support themselves plus a new hospital.

In fact, on Aug. 28 attorneys representing the Sherman-Advocate-St. Alexis coalition filed a lawsuit in Will County court, asking that an administrative review judge re-examine the state board’s December decision approving the Centegra Huntley Hospital. Two days later, Mercy Health System filed a similar suit, also challenging the pro-Huntley decision.

The two lawsuits argue that by deciding to re-examine the proposed Huntley plan after having voted it down last December, the state board violated its own rules and procedures, and acted arbitrarily.

The lawsuits were filed in Will County because the state board’s August meeting, at which Centegra Huntley Hospital was approved, was held at Bolingbrook Country Club in Will County.

Mercy officials have argued that Crystal Lake is large enough to need a hospital of its own, that Crystal Lake would be a better place than Huntley to put such a hospital, and that having an emergency room closer to places such as Huntley, Crystal Lake, Hampshire, Lake in the Hills and Algonquin would make residents in those towns safer than they are now, when an ambulance has to take them to existing hospitals in Elgin, Barrington, Woodstock or McHenry.

Mercy also argued that having one hospital in McHenry County owned by Mercy Health, based in Janesville, Wis., would avoid the county’s health care becoming virtually a monopoly of Centegra Health System.

Centegra, which has its offices (but no hospital) in Crystal Lake, already owns hospitals in Woodstock and the city of McHenry. The only other hospital now operating in McHenry County is a small one in Harvard owned by Mercy.

An attorney representing Mercy declined to comment on either the lawsuit or Tuesday’s decision.

In Elgin, Sherman officials applauded the board decision.

“The board’s action supports our contention that this project would duplicate health care services that already exist for residents of northern Kane County and southeastern McHenry County,” said Rick Floyd, president and CEO of Sherman Health.

Sherman officials have argued during the hearings that their 3-year-old, 255-room hospital draws patients from both Huntley and Crystal Lake; that many beds in Sherman go unused, with a Sherman occupancy rate of just 60 percent; and that allowing a new hospital in either town would harm Sherman financially, probably requiring employee layoffs.

Unless it is stopped by the ongoing legal wrangling, Centegra expects to open Centegra Huntley Hospital in 2016.

Meeting in June 2011, the state board voted 8-1 to warn both Centegra and Mercy that the board “intended to deny” both the Huntley and Crystal Lake proposals. At that time, Mercy wanted to build a larger hospital at the Crystal Lake site.

When the state board met to make its final decision on each proposal last December, the Mercy-Crystal Lake proposal — now trimmed down to a smaller, less-expensive project in an effort to minimize its damage to the existing hospitals — was rejected by a vote of 6-2. But the Centegra Huntley project this time split the board down the middle, with four votes yes and four votes no. Five are required for approval.

Because of a clerical error, an administrative law judge ruled this spring that the state board should reconsider its December “no” votes. That led to the Huntley project being approved July 24 and the Crystal Lake one being denied on Tuesday.

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