Steindler Orthopedics gets go-ahead to start North Liberty construction

NORTH LIBERTY — With structural beams up and construction underway on the exterior of a new $525.6 million University of Iowa hospital in North Liberty, city councilors this week approved a plan for a nearby Steindler medical park — clearing the way for its construction and continuing the interchange’s transformation from open space to medical hub.

Steindler — which until the upcoming change has been based in Iowa City, where it partners with Mercy Iowa City — also is eyeing growth into the Cedar Rapids corridor, looking both for clinic space and to start performing surgeries at the hospitals there.

As for its new ambulatory surgery center and orthopedic clinic in North Liberty — which that community’s city councilors unanimously approved Tuesday for land east of Interstate 380 and west of the new UIHC hospital site — the plan is slightly smaller than what project officials proposed when seeking state approval in 2021.

Where the two buildings were to encompass 106,880 square feet under the original proposal — 35,880 for the ambulatory surgery center and 71,000 for the orthopedic clinic — they now combine for 82,894 square feet, according to North Liberty documents.

The change relates to an inflation-associated cost increase the Steindler operation flagged when officials returned to the State Health Facilities Council in February for approval to up their spend on the new ambulatory surgery center from $19.2 million to $29.3 million.

“We asked the (council) for the cost increase to have flexibility, but we always kept sight of being financially responsible,” Steindler Orthopedic President and CEO Patrick Magallanes said. “We are trying to build a smaller footprint clinic to be fiscally conservative.”

The ambulatory surgery center and orthopedic clinic are separate, albeit connected, spaces and projects, and Magallanes said designers trimmed square footage off the clinic — paring down proposed physical therapy space by deleting “some of the features we determined we could live without.”

“The resulting project still delivers a larger and more modern clinic than the building we are in today,” he said, noting Steindler’s current Iowa City-based operation at 2751 Northgate Dr. encompasses 33,000 square feet.

The ambulatory surgery center — just one feature of the medical campus Steindler is developing on 36 acres, which could include a hospital, medical office building and hotel — still will feature six operating rooms built to support evolving orthopedic needs.

“We are conversing with entities interested in putting a hospital, a multi-specialty (ambulatory surgery center), a cath lab, a stand-alone (emergency department), and a (medical office building) on the land,” Magallanes said. “We are glad to talk with anyone who shares our vision for private practice development.”

While the square footage of the two projects has ebbed, the acreage they’ll sit on has swelled from 5.65 acres to nearly 9 acres, which Magallanes said reflects specific geography of the plot and the need to reserve land “for drainage and the necessary retention pond.”

‘Anxiously awaiting’

The North Liberty City Council approved the projects to proceed without much discussion.

“It’s a very nice looking building,” North Liberty planning director Ryan Rusnak said during the council meeting. “We’ve been anxiously awaiting for this to come in, so we’re excited for them to begin construction this summer.”

Developers are pushing to open the new Steindler facilities in November 2024 — which is a year later than originally planned, according to the cost and time extension filed with the state late last year.

That puts it just ahead of the December 2024 completion date UIHC has aired for its 469,050-square-foot hospital emerging on a 60-acre site at the southwest corner of Highway 965 and Forevergreen Road.

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UIHC in August also returned to the state for approval to up its project budget from $395 million to $525.6 million.

Both UIHC and Steindler cited inflation, higher labor expenses, and supply chain issues for the cost hikes. Steindler, for example, reported most heating, ventilating, and air conditioning items are made of copper, aluminum, and steel, “all of which have experienced significant inflation.”

“War in Europe has had a direct effect, as Russia and Ukraine are the No. 3 and No. 4 global aluminum producers,” according to Steindler’s overrun request. “Global shortages of microchips has also contributed to long production lead times (approaching one year), and petroleum price increases greater than 45 percent affected not only shipping costs but also petroleum-based components.”

Growing footprint

In addition to their North Liberty expansions, both UIHC and Steindler are looking to grow their respective footprints — as Mercy Hospital in Iowa City struggles financially and administratively, recently airing plans to exit its MercyOne partnership and receiving a credit rating downgrade from Moody’s Investors Service.

Steindler long has partnered with Mercy Iowa City for a range of orthopedic services — from total joint replacements to broken bones and sports medicine. But given the uncertainty of Mercy Iowa City, it now is considering performing surgery at hospitals in Cedar Rapids too — including UnityPoint Health-St. Luke’s Hospital, Mercy Medical Center, and other inpatient hospitals regionally.

Steindler executives, additionally, are looking for clinic space in the Cedar Rapids-Hiawatha-Marion area to “serve our community in the northern part of the corridor,” Magallanes said.

UIHC, for its part, has unveiled hundreds of millions of planned expansion on its main campus — including a sprawling new inpatient tower that could reach 842,000 gross square feet, nearly doubling its North Liberty campus and outsizing its 14-story 507,000-square-foot Stead Family Children’s Hospital, which opened six years ago.

In January, UIHC announced plans to develop a new primary care medical office building in southeast Iowa City to address a “health care access gap.” And the Board of Regents last week OK’d UIHC’s takeover of a “large family medicine practice and residency program in Sioux City.”

That family medical practice owned by Siouxland Medical Education Foundation in a 33,500-square-foot medical office building boasts more than 25,000 patient visits annually and houses the only family medicine residency program in the western part of the state. But, like other community-based residency programs, it’s faced financial challenges of late.

“Without University of Iowa intervention, closure of the Siouxland program is likely,” according to Board of Regents documents, reporting previous closures of similar foundation programs have left the state producing 12 fewer family physicians a year.

“Siouxland’s closure would increase that to 18 less per year.”

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com