The Penn Medicine Washington Square tower nearing completion at the corner of Eighth and Walnut Streets in Center City is a sign of big changes at Pennsylvania Hospital.

About 100 doctors are scheduled in August to move their outpatient practices into the 12-story building that sits on top of a parking garage, relocating from nine locations on Pennsylvania Hospital's campus, plus the Curtis Center.

In February, the clinical lab moved from three floors of the hospital to the basement, freeing space for construction of single rooms for the busy Pennsylvania Hospital maternity unit, where by Christmas every new mother will be assured of having a room to herself, officials said.

The moves at the hospital, which celebrated its 262d anniversary Saturday, are part of a $61 million master plan that included conversion of the entire hospital, with 496 acute-care licensed beds, to 100 percent private rooms over four years.

But the institution is tapping the brakes on the room conversion because of financial uncertainty in the health-care industry.

"We have money set aside, and we're doing part of the project, but how far along we go with the project and in what time frame depends on a lot of things - finances, how well we're doing, et cetera," Pennsylvania Hospital executive director R. Michael Buckley said.

Marketplace pressure is behind the private rooms and the tower, which Penn will outfit for $22 million and has leased for 20 years from Liberty Property Trust, Buckley said.

"We need to grow our volumes in our outpatient areas, as well as our inpatient areas to the extent that that's possible. If we are going to retain and recruit the best people, we needed to have facilities" where they can work comfortably, he said.

"That was that part of it. I think the private-room part is the other piece that's very important," said Buckley, a physician who has specialized in infectious diseases at Pennsylvania Hospital for 36 years. "It's just become very clear that the right way to take care of patients is in private rooms."

Regulations require all new hospitals to be built with private rooms, as is the case at Virtua in Voorhees and at Einstein in East Norriton, because research has shown that they help prevent the spread of disease, reduce medical errors, and speed recovery by making it easier for family members to stay in the room.

But the right number of beds is in question.

"Everyone is rethinking how many beds a hospital needs," Buckley said. "Should we get to the point where we still have 450-some beds and have them be all private is yet to be determined. I personally don't think we'll need 450 beds."

The market direction is clearly toward fewer beds.

During the five years ended June 30, 2012, the number of licensed acute-care beds in Southeastern Pennsylvania fell 35 percent, to 7,529 from 11,537, Pennsylvania Department of Health data show.

No one expects the financial pressures and clinical changes that have contributed to that decline in staffed beds to let up.

"So much is moving to the outpatient side of medicine," Buckley said.

The Washington Square outpatient facility, which was expected to cost Liberty Property Trust about $50 million to build, is the first big project Penn has done with a developer, said Kevin Mahoney, senior vice president and vice dean of integrative services for Penn.

Similarly, in another bid to preserve financial resources in an era of tightening margins in health care, Penn is working with Wexford Science & Technology L.L.C. on an outpatient tower for Presbyterian Medical Center.

It's significant that both facilities have parking.

"That way, we don't have to use the Penn capital for parking," Mahoney said.

Contact Harold Brubaker
at 215-854-4651 or hbrubaker@phillynews.com.