Stead Children's Hospital opening shifts to spring

Hundreds of construction changes lead to dispute and delays

The new UI Stead Family Children's Hospital is seen on Nov. 5, 2016, the month before its intended opening. The delayed
The new UI Stead Family Children's Hospital is seen on Nov. 5, 2016, the month before its intended opening. The delayed opening now will be on a date this spring yet to be announced. (Rebecca F. Miller/The Gazette)

IOWA CITY — A Cedar Rapids contractor asserts the University of Iowa owes it more than $8 million for work done on the Stead Family Children’s Hospital, a $360 million project plagued by design changes, contractor disputes and cost overruns that have contributed to a monthslong delay in opening.

UI officials have taken pains to keep the project on track — telling a judge in April they didn’t have time to settle a dispute with Modern Piping Inc. because delaying the hospital opening would “impact patient care for one of Iowa’s most vulnerable populations.”

Even as it was becoming obvious the long-awaited Children’s Hospital would not be done in time for its announced December opening, UI officials spent undocumented sums on temporary facades to make the hospital look finished for November open houses — only to have those facades torn down afterward so real construction could continue.

Now, nearly two months after the hospital was scheduled to start accepting patients, Rod Lehnertz, UI senior vice president for finance and operations, said the hospital opening still may be more than a month out.

“It will be a spring opening,” Lehnertz told The Gazette, adding that construction crews still are at work in the 14-story building. “Folks in administration in the hospital are going to announce that as soon as they feel they’ve got it. It is upcoming and it will be the right date.”

‘Unusual’ dispute

The UI Children’s Hospital, part of the UI Hospitals and Clinics since 1919, is Iowa’s only hospital nationally-ranked for pediatric care, earning spots in the top 50 in eight specialties in 2016.

With more than 500,000 square feet of high-tech space, the new building for an upgraded Children’s Hospital is one of the largest construction projects in Iowa right now, said Royce Peterson, business manager of the United Brotherhood of Carpenters Local 1260, based in Iowa City.


“I would put it up there as one of the largest, definitely one of the largest university projects,” Peterson said.

When the Iowa Board of Regents approved the initial project budget in June 2011, it was $270 million. The cost sneaked up to $291 million by June 2012 and skyrocketed to $360 million in September 2015 as the UI added tornado-resistant glass, an emergency elevator and more spaces to isolate patients exposed to infectious diseases, regent records show.

It’s typical for a project of this scale to have midstream changes that redirect construction and add to the cost, said Jerry Hobart, business manager for the United Association of Plumbers, Fitters, Welders and HVAC Service Techs Local 125, based in Cedar Rapids.

What’s not typical is for a conflict over payment to end up at the Iowa Supreme Court — where the UI plans to take the dispute with Modern Piping.

“It’s unusual it goes that far,” Hobart said.

The Children’s Hospital has had 868 approved change orders worth $55.4 million, or about 15 percent of the total project budget, the UI reported. More than one-quarter of those change orders by dollar amount went to work being done by Modern Piping, one of more than a dozen contractors selected through competitive bidding.

Modern Piping, a 77-year-old Corridor company with a new building on Cedar Rapids’ southern edge, has done mechanical contracting for major Eastern Iowa projects including the Cedar Rapids Convention Center, Alliant Energy’s Prairie Creek Coal Power Station and Marion police headquarters, according to it website.

Modern Piping’s contract with the Children’s Hospital was for $28 million in 2013 but had ballooned to $43 million in 2016, due to 157 change orders in three years.

The UI sought a temporary injunction April 1 to prevent the American Arbitration Association from allowing Modern to include $8.4 million in disputed work on the Children’s Hospital with arbitration arising out of the Hancher Auditorium construction project, where Modern said the UI owed it $65,000.


“Modern Piping seeks $8,385,626 in the Children’s Hospital claim,” wrote George Carroll, an assistant Iowa Attorney General arguing on behalf of the UI. “The University of Iowa does not consent to arbitration involving the Children’s Hospital.”

Carroll said the UI would suffer “irreparable harm” if required to send project managers and other staff to arbitration when they should be finishing hospital construction instead.

Johnson County Judge Mitchell Turner granted a temporary injunction last spring, but Judge Lars Anderson dissolved the order Jan. 10. The UI filed notice Feb. 7 it was appealing Anderson’s decision and “each and every adverse ruling and order” to the Iowa Supreme Court.

Neither Modern nor UI officials would talk about the dispute.

Saving face

Hospital officials announced Nov. 30 they were delaying the planned Dec. 10 opening — just weeks after a widely-publicized open house. Tens of thousands of visitors poured through the expansive lobby for the three-day event, during which Hawkeye cheerleaders, storybook characters and the Herky mascot greeted children and showed them around.

Cruising elevators lit with an array of colors — depending on the floor — crowds peeked in patient rooms and out walls of windows featuring prime views of the field inside Kinnick Stadium. Hospital executives at that time told The Gazette the timeline was on track.

On Nov. 11, the university held an official dedication ceremony attended by patients, families, employees, lawmakers, UI administrators and donors — including Jerre Stead, whose family has committed $25 million to children’s medicine at the UI.

But the hospital wasn’t even close to being done at that time. UI Hospitals spokesman Tom Moore, after being pressed for weeks on the issue, confirmed that temporary carpet, ceilings and bathroom fixtures were installed for the open house events.

“The vast majority of those materials will be reused elsewhere across University of Iowa Hospitals and Clinics,” Moore said. He declined to give specifics about where those items will be reused and how much they cost — explaining the hospital doesn’t have an “existing record that would show the total.”


To come up with a cost for the temporary facades, the UI said it would need to charge The Gazette $450 to go through 28 contracts. Instead, the UI said it would provide details after a “project closeout phase” when construction is done or nearly so.

The UI also said The Gazette would need to pay $2,250 for information on Modern’s change orders, which officials initially said numbered “approximately 400.” When The Gazette asked for a December 2015 report sent to all Children’s Hospital contractors and including much of the change order information, the UI said it would take 36 hours to review and cost the paper $1,050.

Last phase underway

UI President Bruce Harreld, at a recent event touting nearly $2 billion raised through the UI Foundation’s eight-year philanthropy campaign, pointed to the Children’s Hospital as a major benefactor.

Funded entirely through bonds, patient revenue and private donations — not taxpayer dollars — the new Children’s Hospital, Harreld said, “will open soon.”

When contractors are done in the building, inspectors will make sure it is safe and ready for pediatric patients and everything will be sterilized, Harreld said.

“This is not like opening a department store or grocery store or a car dealer,” he said.

UI Health Care has hired more than 220 full-time staff members for the new hospital, according to Moore. That includes mostly housekeeping and food and nutrition workers. It doesn’t include another 50-plus pediatric physicians added over the past four years.

When asked whether those new hires have been without work for the past few months, Moore said they’ve been integrated into existing Children’s Hospital operations.


The new hospital will provide 134 patient beds, most of which will be in single rooms, and it will keep 49 beds on the main campus for neonatal patients.

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