State halts University of Iowa plans for new hospital in North Liberty

IOWA CITY - Given fervent opposition to a proposed $230 million University of Iowa Health Care hospital in North Liberty - including the economic threat posed to community providers like Mercy Iowa City - the State Health Facilities Council on Wednesday narrowly denied UIHC permission to proceed, halting the project for now.

Despite UIHC arguments it's too full and desperate for more beds, operating room space, and emergency department capacity, the five-member council charged with granting a certificate of need for the project sided by a slim 3-2 vote with opponents who argued a new 300,000-square-foot, 36-bed hospital is unnecessary, insufficient to address the needs UIHC says it has, and detrimental to existing care.

'This is more than just a building project,” Andrew Ashby, pulmonologist and medical director for Mercy Iowa City's Intensive Care Unit, told the council during a nearly seven-hour discussion. 'I think this is a vote about, is community-based medicine going to be allowed to survive?

'This hospital goes in, and Mercy won't make it,” he said. 'We'll try. But we will not make it. And that would be the first case. That would be the test case. I don't believe that it would stop there.”

UIHC, which planned to erect the four-story hospital on 60 acres on the southwest corner of Forevergreen Road and Highway 965 by 2024, can appeal the decision - which council member Brenda Perrin acknowledged was tough to make.

'This is a big project, and part of me is not sure that we can make that decision. … I know we have to,” she said, moments before voting not to grant UIHC permission. 'There is definitely lots of testimony on both sides of the fence, very heavily. And it's not going to be easy.”

UIHC has several options, including appealing the decision or refiling an application. UIHC Chief Executive Officer Suresh Gunasekaran after the hearing said his campus will await the council's written justification.

'We haven't specifically decided what's next,” he said, noting UIHC needs to do a better job telling its story and educating the state, region, and council about its role and mission. 'But we're firmly committed to moving forward with the project.”

In fighting for approval during the marathon meeting, Gunasekaran combated concerns his institution is leaving its lane of academic medical care and swerving into community hospital turf.

Rather, he said, the project simply expands the main campus - just not in the shadow of Kinnick Stadium.

'I think there's been a fundamental misunderstanding based on the simple geography of us not continuing to crowd our campus next to Kinnick,” he said. 'That choice is unsettling. But let me tell you, what is being moved to North Liberty is no different than what is happening next to Kinnick. It's better for Iowans, it's better for patients, and it's better for the community if we decompress our main campus and offer this same level of care in North Liberty.”

Several community leaders voiced support for the expansion, including mayors and officials from Coralville, Iowa City, and North Liberty - who touted the need for such a facility given its rampant growth in recent years.

Gunasekaran pushed back against the notion a new hospital would drive into the ground already struggling community hospitals, by urging this project isn't a community hospital.

'This proposal will make Iowa health care stronger,” he said after citing numbers showing UIHC's strapped resources and soaring demand for complex care. 'The university for many, many years has expanded its capacity to continue to meet the needs of Iowans, and at the same time community hospitals have thrived.”

He rejected accusations the university's North Liberty proposal is an attempt to 'skim the cream” by pulling 'high-dollar” services from competitors.

Opposition

Wednesday's rejection leaves vacant for now a swath of land the campus bought for $11.7 million in 2010 and added to in 2019, spending another $2.2 million. And it leaves UIHC without an immediate solution to the problem officials told the council they were trying to solve with the new hospital - overcrowded inpatient units dominated by double rooms, long admission waits, and rejected transfers from other hospitals.

Gunasekaran said UIHC serves an entirely different patient base than regional community hospitals. And, he said, empty beds in their facilities won't solve the problem of at-capacity census numbers in his.

'What we really need to understand here is that an operational reality for UI Health Care is there isn't enough UI Health Care to satisfy the need,” he said. 'And that every single day, we live with the reality that these patients don't have an alternative. … What we were looking at is how do we meet the demand that is already on our doorstep?”

But critics poked holes in those assertions and accused UIHC of 'highly inappropriate” and 'predatory” tactics.

'There is no need for an additional ER in Johnson County,” said Peter Peraud, one of the medical directors of the Mercy Iowa City emergency department. 'This project, in my view, is completely unnecessary. It's bad for our physician group, bad for the community hospitals that we serve, and bad for the patients in our local community. In fact, this duplication of services could close the only community hospital in Iowa City.”

Peraud blamed inefficiencies inherent in teaching hospitals for the backlog in UIHC's emergency room - which it planned to expand at the North Liberty hospital.

'The daily volume of the UIHC ER is not significantly more than the volume of many community hospitals across the state, including the hospitals that have been mentioned today,” he said. 'Unfortunately, university inefficiencies have led to significantly longer wait times and significantly longer lengths of stay.”

Certificate criteria

The council, in deciding whether to grant UIHC a certificate of need, had to consider several mandatory criteria - beginning with the question of whether UIHC demonstrated that no less expensive, more efficient, or more appropriate alternative was available.

Opponents argued UIHC failed that test, calling the $230 million price tag exorbitant and reporting UIHC hasn't pursued expanded community collaboration or innovative problem-solving.

Gunasekaran said his campus appreciates cooperation, and does collaborate, but argued the proposal is not more complex or expensive than similar facilities across the country. In making those cost comparisons, he said, UIHC views its competitors as the Mayo Clinic in Rochester or academic medical centers in Omaha or St. Louis.

Another criteria asks whether existing facilities providing similar services 'are being used in an appropriate and efficient manner.”

Again, opponents reported their staffed beds - in many cases - are only half full, suggesting they have space.

If that were a reasonable solution - if the region had plenty of space for the most complex and sick patients demanding UIHC care - Gunasekaran asked why local hospitals were transferring so many patients to his campus.

'The answer is it's in the best interest of the patient,” he said. 'The appropriate and most cost-efficient care for this patient population is at UIHC.”

But opponents rejected that argument, pointing to shrinking population estimates. And they noted Iowa and - specifically - Eastern Iowa already has more hospitals and beds than most regions.

'Adding a 12th hospital in an already congested service area will irreparably harm the existing hospitals … by stripping them of patients and staff, thereby stressing these institutions in a time when they are already facing extreme financial challenges from the pandemic that threatens their survival,” according to an opposition letter from Mercy Cedar Rapids President and CEO Timothy Charles.