New $40-million 'medical mall' coming to 10th Street SE in a newly created Medical District

Physicians' Clinic of Iowa plans to build a $40-million “medical mall” building on both sides of Second Avenue SE at 10th Street SE so it can consolidate five existing offices into one new place and have room to expand.

Mike Sundall, PCI's chief executive, said Tuesday that the plan is to build the new 180,000 square foot building in 2011 and 2012 and to move into it by late 2012 or early 2013.

Sundall and the top executives at the city's two hospitals joined Mayor Kay Halloran at a Tuesday morning news conference to announce PCI's building plans and to announce the formal creation of a Cedar Rapids Medical District with St. Luke's Hospital and Mercy Medical Center serving as bookends for the district.

The idea for the district, in part, is to “re-envision” medical care in Cedar Rapids and to make it more “logically comfortable” for those who come to the city to see a doctor or go the hospital, Ted Townsend, president/CEO of St. Luke's Hospital said. He said the idea of a demarcated medical district can turn Cedar Rapids into a medical “destination,” and he named Rochester, Minn., and Cleveland, Ohio, as medical centers that have accomplished that.

Tim Charles, president/CEO of Mercy Medical Center, said the era is coming when there will be a shortage of medical providers, and he said the creation of the medical district and the newly announced investment by PCI will help the community recruit medical providers in the years to come.

PCI's Sundall said PCI currently is comprised of 55 physicians, 25 additional “midlevel” providers like physicians assistants and physical therapists, and 230 staff members. PCI hopes to grow to have 70-75 physicians, he said.

Tuesday's news conference was held at the four-story medical office building at 600 Seventh St. SE, which is owned by Mercy Medical Center and where PCI leases space on three of the four floors, Sundall noted.

Sundall said PCI will leave the building and four other spaces when the new building opens. But he suggested that the 600 Seventh St. SE building did not necessarily have to remain as a medical building once PCI leaves it. Maybe it could become an office for, say, a software company or even a hotel for family members visiting those in the hospital, he said.

The new medical district will become a special self-supported municipal improvement district - downtown Cedar Rapids is another such district - that will have the ability to impose additional property-tax levies on itself with the extra revenue used for improvements in the district.

Mayor Halloran said the city also will provide some improvements to the district, and PCI's Sundall said the physicians' group will receive some financial incentives to build its new medical office building.

Sundall said the group looked at some 25 different areas in and outside the city to build a new building before settling on a spot between the two hospitals. He said City Manager Jim Prosser played a key role in convincing the group to invest in a new medical district.

Tuesday's announcement comes one week before the Nov. 3 city election, and three City Council members on the ballot, mayoral candidate Brian Fagan, District 1 council member Kris Gulick and District 3 council member Jerry McGrane, were introduced at Tuesday's event.

Afterward, Gulick noted that the new medical district had been an idea that first surfaced in 2006 at City Hall and has been discussed there ever since. The district, he added, sits at the edge of his council district, which is predominately the westerly part of northeast Cedar Rapids. Gulick said PCI drove the timing of Tuesday's event, not him.

Halloran said she did not “orchestrate” Tuesday's announcement or “choreograph it” to occur at any particular time. “As soon as we got it done, we did it,” she said.

Sundall said his group began meeting with the hospitals and the city back in the spring. All along, he said his board and shareholders were looking to make a decision in October about being a part of the medical district. PCI shareholders didn't ratify the decision until last Tuesday, he said.

“From our perspective, they (city leaders) were playing to our timetable,” Sundall said. He said PCI asked the city not to make PCI's announcement a political event.