Regents quick to OK construction of new University of Iowa hospital in North Liberty

With little debate but much praise for the project — which struggled to get the go-ahead it needed from a state health facilities panel — Iowa’s Board of Regents unanimously approved Tuesday the construction of a $395 million University of Iowa Hospitals and Clinics site in North Liberty starting as soon as this month.

“We're doing this for the people in the state of Iowa,” regents President Mike Richards said during the brief special meeting, called just days after the State Health Facilities Council granted a certificate of need for a $230 million health care portion of the overall project.

“I think that should be remembered,” said Richards, who last week spoke in defense of the project during a nine-hour meeting of the panel that heard bot organized opposition and support. “It will be a very nice part of our facility. But, again, we take care of people from every walk of life in the state. And this will be their hospital.”

While UIHC had focused discussion on the $230 million health care facility that needed state approval, board documents released Friday outlined the full 469,000-square-foot scope of the project at the corner of Forevergreen Road and Highway 965.

A 300,000-square-foot portion will feature up to 48 beds, 21 emergency care rooms, 16 operating rooms and two more procedure rooms, along with laboratories, a pharmacy and other amenities. Community health care providers — including Mercy Iowa City, Mercy Medical Center in Cedar Rapids and UnityPoint Health — unsuccessfully opposed the new hospital, arguing it's too costly and will drive them out of business.

By adding another $165 million for an attached 169,000-square-foot “academic and clinic building” — which will hold outpatient clinics, faculty offices and education, collaboration and research spaces — the project cost will surpass the $392.7 million of UIHC’s Stead Family Children’s Hospital.

That project — which opened, in part, in 2017 — was plagued by ballooning cost overruns, delays and mismanagement, according to a Gazette investigation. Those issues led to the only regent question Tuesday before the board unanimously approved the North Liberty endeavor.

Regent Nancy Boettger asked whether the plan to use a “construction manager at risk” method will help UIHC “avoid the issues that we had with the Children’s Hospital construction site?”

“There are multiple strategies that we've placed in terms of this project that mitigate some of the risks associated with Children's,” UIHC Chief Executive Officer Suresh Gunasekaran told regents. “One such feature is the construction manager-at-risk, where one outside party is responsible for the total scope of the project and managing all of the component parts.”

For the 14-story Children’s Hospital, UIHC had itself taken on the risk and responsibility of acquiring contractors and producing a final project that was supposed to be on time and on budget.

In addition to designating JE Dunn of Des Moines as the construction manager-at-risk, Gunasekaran said, UIHC also allowed JE Dunn to engage in the design process and help develop a budget.

“They've been able to sign off on the scope, and they've been able to sign off on the approach,” he said, adding UIHC also has worked with the main campus’ facilities managers on the project. “That’s also quite a bit different than the last time.”

Supporting that notion, UI Senior Vice President for Finance and Operations Rod Lehnertz said the North Liberty construction will be less complex since it’s happening on a “green field.”

“The Children's Hospital was constructed on a very tight urban site at the main campus,” he said, although acknowledging this new project involves the complex construction of a “central utility plant” dedicated just to UIHC’s North Liberty campus.

Construction of the utilities facility is included in the total project cost, according to UIHC officials. And although UIHC expects to operate it, officials said they’re considering Engie — the main campus’ new utilities operator under a private-public partnership — “as an option.”

The new site won’t involve a parking ramp but will offer about 1,100 patient, visitor and staff spaces, officials said.

UIHC had to bump its initial construction timeline after the state’s five-member Health Facilities Council in February narrowly denied its first application following broad outcry from community health care providers.

The university resubmitted an application a few months letter in an effort to better describe the need for expansion and the services it would provide, ultimately earning it the approval.

UI President Barbara Wilson — who is new to campus, having started over the summer — participated in Tuesday’s meeting by praising the board and UIHC officials who put in long hours to achieve this approval.

“We are turning away too many transfer patients right now,” Wilson said. “We've got much, much work to be done to help ensure the health and safety of our populace across the state. This will allow us to do that, to extend our very high level of care for very sick patients.”

UIHC, in its regent proposal, said it plans to cover the North Liberty price tag with hospital revenue bonds, gifts and UIHC building usage funds. UIHC hasn’t yet received gifts or commitments to this project, according to spokeswoman Laura Shoemaker.

“There is philanthropic interest, but no gift funds have been dedicated to this project to date,” she said. “We have a general gift fund that we can tap into for any capital project.”

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