HELENA n Helena-area residents will have an expanded, modernized hospital by next year n for a cool $43 million.

For the money, which comes out of annual profits and cash reserves at St. Peter's Hospital, residents of the Helena Valley and surrounding communities get an expanded emergency room and intensive care unit, new private rooms, plenty of building improvements, a larger "diagnostic imaging center," $10 million in new equipment and furniture, and room to expand into growth areas like cardiology, joint replacement and cancer treatment.

"It's not just to improve the physical (building)," says John Solheim, chief executive officer at St. Peter's. "It's to improve care.

"It's going to give (health-care professionals) a better place to practice in, it's for better patient care, and it helps recruit new staff."

The project may seem like a big one for a hospital and community this size. But when it comes to hospital building projects in Montana, it's hardly unusual.

THE REMODEL RAGE

In the past five years, Montana's nine largest hospitals have spent or planned to spend more than $400 million on capital projects, from extensive remodeling to new surgery rooms to cancer-treatment centers.

In downtown Missoula, for instance, St. Patrick Hospital spent nearly $50 million upgrading its main building three years ago, including an elaborate entryway complete with a garden courtyard and decorative pool.

The Billings Clinic is in the middle of a $100 million, multiyear expansion and remodel.

And in Butte, St. James Healthcare completed a four-year, $45 million remodel two years ago and has embarked an another $14 million project that includes a small out-patient surgery center.

The constant building and remodeling prompts some to wonder whether hospitals are spending their money on care that's truly needed n or perhaps chasing profit centers, like cardiac surgery, joint replacements or cancer treatment.

"I think sometimes they're being driven by financial empirical data, rather than medical data," says Eve Franklin, executive director of the Montana Nurses Association. "Have we designed systems that are patient-focused, rather than focusing on other values?"

Hospital executives say large capital investments are inevitable, because hospitals must respond to growing demand, an aging population and ever-changing, expensive medical technology.

"We have to build infrastructure," says John Nordwick, CEO at Bozeman Deaconess Hospital. "It's just like a city. In order to meet the needs of this population, you have to have facilities and equipment."

ST. PETER'S $43 MILLION EXPANSION

At St. Peter's Hospital in Helena, its local governing board decided three years ago to launch the $43 million project, which is scheduled for completion by December 2007.

It's being financed by $30 million in borrowing, $10 million from the hospital's cash reserve and $3 million from the hospital's capital budget.

Solheim says the expansion occurred after more than a year of study by the board, with input from local physicians, other health-care professionals and the community.

The expansion is responding to projected growth in the Helena area, including demographics showing a 33 percent growth in people over 65 and 28 percent growth in those over 45, he says.

While it doesn't add any new beds outside of the emergency room and ICU, the conversion to all private rooms does increase the hospital capacity by 25 percent, he says.

"We're getting ahead of the growth curve," Solheim says.

He also says a modern hospital with services that people need is an economic draw for the area: "It's helped businesses relocate to our community. We've heard they're more comfortable relocating in a community like this, with a health care facility like this."

Solheim acknowledges that a good chunk of the expansion focuses on upgrading or laying the groundwork for growth in services that are money-makers for the hospital: Cardiology, radiology, orthopedics (joint replacement), surgery and cancer care.

Yet, as most hospitals around the state will tell you, those services are in demand by an aging population.

"Typically, hospitals are nice places, and they have a great appetite for the expensive," says Barry Kenfield, a vice president at Community Medical Center in Missoula, which lately hasn't been a big spender on capital projects. "But I do think that health care is very consumer driven."

Nick Wolter, CEO of the Billings Clinic, says hospitals want to make a return on their investments in equipment and new buildings. At the same time, however, hospitals do have an obligation to provide care that's needed but may not make money, such as mental health and geriatric care, he says.

"We make investments every year on services for which there is not a return," he says. "But you have to have a balance between those services and those that do make a return. We've tried to find that balance, based on what people in the community need."