Kaiser Permanente is pulling the plug on a planned $900 million headquarters in Oakland, California—a decision the healthcare giant says is not related the COVID-19 pandemic.
The plan for the Kaiser Permanente Thrive Center, a 1.6 million-square-foot facility, was first unveiled in June 2019. The project was expected to break ground this year, with the goal of wrapping up construction by 2023.
The center would have united 7,200 workers from seven offices in the region. The health system estimated that building the headquarters could save $60 million per year in operational costs.
“Delays and increasing costs related to this project caused us to re-examine the feasibility and focus on renovating our current buildings,” Kaiser Permanente said in a statement to FierceHealthcare.
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The headquarters project was set to be a significant financial boon to Oakland, generating a onetime economic benefit of $23 million and $15 million annually in tax revenue.
Oakland Mayor Libby Schaaf touted that the health system would still be centered in the city, San Francisco Business Times reported.
“It’s a pivot for Kaiser, and one that makes sense for the organization and members at this time,” Schaaf said.