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AMES — The Iowa Board of Regents on Wednesday unanimously agreed to increase the budget for University of Iowa Health Care’s new facility in North Liberty by 33 percent — bringing the total price tag to $525.6 million, the costliest new hospital in state history.
The university brought its budget request to regents in response to “multiple convergent construction industry challenges, such as worldwide and local construction market inflation, higher raw material prices, limited availability of construction materials, and local construction trade labor shortages.”
UIHC officials stressed they’re not changing the scope of the 469,000-square-foot building.
Administrators hope to come back to the board before year’s end to seek another budget revision — this time in the downward direction, said Rod Lehnertz, UI senior vice president for finance and operations.
That could happen after UIHC finishes awarding 64 bid packages for the project, which has been under construction for months at Highway 965 and Forevergreen Road in North Liberty.
Calling the $525.6 million budget a “worst-case” scenario, Lehnertz said expectations are construction bids will come in below revised projections.
“When we realize those bids in roughly a month from now, we'll know where we stand and that will allow us to assess and come back to the Board of Regents with the results and, hopefully, a revised downward budget,” he said.
The university is desperate for more space, reportedly turning away 2,400 transfer requests a year and watching 6,800 Iowans leave the state for care.
Wait or change?
UIHC officials told regents Wednesday they considered either halting the project to wait for the market to change or curtailing its scope and size. But they had concerns with both those options.
“The impact of delaying our project is significant on patient care,” Interim UIHC CEO Kim Hunter said. “Health care access for Iowans would be reduced. Providing complex care to our patients is already strained, and this would further strain that.”
Plus, she said, university officials expect construction costs will continue to increase past Aug. 1. And global forces putting pressure on the market show no signs of waning — like the war between Russia and Ukraine.
“Wouldn’t you know it, they're the third and the fourth largest aluminum producers in the world,” she said.
Also, “we have a shortage of electricians locally,” she said. “We have about 25 percent locally of what we need for this particular project.”
Downsizing the project seemed an equally ill-advised avenue, UI officials said, as leaving unfinished space means the university will have to potentially spend more later to fill it out.
“In addition to the challenges of shelling the space once you have a hospital under operation — we learn this every day in the main hospital — disruptions to the services and patient care to go back in and do projects later, often at a higher cost, turn into later regrets,” Lehnertz said.
Thus the recommendation to proceed with the “worst case costs,” in hopes they won’t be as high as projected.
No state dollars
“I recognize concerns some may have about increasing the budget,” Board of Regents President Michael Richards said. “The increases are not due to changes in plans or design of the hospital. Those remain the same.”
What has changed “considerably,” Richards said, “are the costs and scarcity of materials and labor.”
UIHC officials affirmed for Richards that no state or tuition dollars will go into the project, which is being paid for by UIHC “building usage funds,” gifts and bonds.
“The University of Iowa Hospitals and Clinics is the state’s leading medical provider and delivers the highest level of tertiary and quaternary care that is not available elsewhere in the state,” Richards said. “The North Liberty facility is the first step to create more capacity and improve our health care service to the people of Iowa.”
Referencing a new inpatient tower and an ambulatory care center UIHC wants to build on its main Iowa City campus within the next decade, Richards said those projects can’t proceed until the North Liberty facility wraps.
“The delay or downsizing of this project will likely delay those other projects, thus delaying greater access to health care at UIHC for all Iowans.”
Vanessa Miller covers higher education for The Gazette.
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