The Galveston County Daily News

WEBSTER — St. Luke’s Episcopal Health System has terminated a lease with a developer for a 175-bed hospital at Blossom Street and state Highway 3, leaving a hulking, partially built structure with no immediate tenant.

But the hospital would be built and another major health care system would operate it, say officials with Houston-based Medistar Corp., developer of the project where construction was halted in late February and cranes still are idle.

St. Luke’s on Monday cited delays as Medistar Corp. sought refinancing of short-term debt as the reason for terminating the lease.

St. Luke’s and a group of physicians, which was to own 49 percent of the Webster hospital, planned to operate the facility.

“The physician joint venture terminated the lease due to the elapsed time for when the developer was to have received complete funding for the construction,” St. Luke’s spokeswoman Jessica Michan said. “St. Luke’s voted its shares with the majority of the units voted by the physicians.”

But St. Luke’s terminated the lease just as the developer was about to secure a new loan for construction of the hospital, said Robert Hodge, chief financial officer of Medistar.

“In 30 days we would have had the loan closed and in place,” Hodge said. “The hospital will be built by Medistar. There are quite a few other health care companies very interested.”

Hodge did not divulge potential operators of the planned 375,000-square-foot hospital.

It was St. Luke’s and not the physicians group that terminated the lease, Hodge said. Representatives for the physicians group could not be reached for comment Monday.

Construction of the nine-story hospital, expected to cost about $160 million, began a year ago, but stopped in February as Medistar Corp. sought refinancing.

St. Luke’s Clear Lake hospital was scheduled to open next year with 10 operating rooms and 22 emergency treatment rooms, along with the 175 beds.

After Medistar secures a new operator for the hospital, it would remobilize its contractor, Hodge said.

“We absolutely have to find a new operator, and we’re dealing with several very prominent health care groups that are extremely interested in the facility for its location, demographics and strength and quality of physicians,” Hodge said.

Hospital systems are attempting to stake out ever more territory in the affluent northern Galveston County and the Clear Lake area.

The University of Texas Medical Branch, which operates John Sealy Hospital on the island, has attempted to get a foothold there, as well.

It already is building a 110,000-square-foot, $61 million specialty care center on 35 acres near Interstate 45 and FM 646 in League City.

Just before Hurricane Ike struck Sept. 13, the medical branch paid $9.4 million for 29 acres near the specialty care center, a possible place for a hospital, officials have said.

Medistar, which specialized in developing medical facilities and offices, has a proven record in Webster, said Betsy Giusto, the city’s economic development director.

Medistar successfully developed the 92,000-square-foot Triumph Hospital Clear Lake at 350 Blossom St., and the nearby 113,000-square-foot Medical Plaza Clear Lake, which houses several medical specialty services under one roof.

“I’m confident that another health care system will take over and work with Medistar and the hospital will be completed,” Giusto said.