High costs, lack of planning and collaboration behind University of Iowa hospital rejection - The Gazette

IOWA CITY — Steep project costs, lack of collaboration, insufficient planning, inefficiencies, and potential harm to community health care providers are among the reasons a state council in February denied University of Iowa Health Care a certificate to build a new $230 million hospital in North Liberty.

“The cost of the project is $230 million for a 36-bed facility, a cost of over $6 million per bed, making this one of the most expensive proposed projects in council history,” according to written decision from the State Health Facilities Council made public Tuesday — more than a month after its narrow 2-3 vote Feb. 17 to deny UIHC’s application for a “certificate of need.”

Citing more than seven hours of testimony council members considered in determining whether UIHC met a four-pronged legal standard allowing them to grant a certificate to proceed, the decision noted, “UIHC failed to establish that less costly, more appropriate alternatives are not available.”

In fact, according to the decision, “The evidence which was presented to the council indicates that less costly alternatives to building a $230 million dollar hospital are available, including existing underutilized acute and outpatient services offered in this service area, collaborations with current providers, improving efficiencies at UIHC main campus, or renovating or expanding UIHC main campus.”

UI Health Care wants to build its 216,180-square-foot four-story hospital on 60 acres at the southwest corner of Forevergreen Road and Highway 965 in North Liberty by 2024. And UI Vice President for Medical Affairs Brooks Jackson — one week after the rejection — told the Board of Regents he expects the project eventually will materialize.

“The outcome, while disappointing, is not unexpected,” Jackson told the regents. “Those of you who may be familiar with the Iowa certificate-of-need process know that it is not uncommon for a project of this significance to require more than one hearing before receiving approval.”

UIHC at the time announced it would wait until receiving the full written decision before deciding how to proceed. Officials reiterated that position Tuesday, saying, “We are reviewing the State Health Facilities Council’s decision.”

“This feedback will better help us to evaluate all options for how best to serve the complex health care needs of Iowans, who deserve to have access to high-level specialty care here in our state. We will continue our commitment to advocating for the resources to serve them.”

The council’s decision in February, according to the findings provided to The Gazette on Tuesday, hinged on its findings UIHC failed to meet all four of the standards needed for approval.

The Iowa Legislature has provided the council can grant a certificate of need “only if it finds” the following four factors exist:

Less costly, more efficient, or more appropriate alternatives are not available or not practical;

Existing facilities providing similar services are being used appropriately and efficiently;

Alternatives — like modernization and shared arrangements — have been considered and implemented to the maximum extent;

And patients will experience serious problems in getting care without the new proposed facility.

To the question of costs and alternatives, the council determined UIHC “did not establish that it collaborated with the local facilities prior to submission of their application.”

“Thus they did not adequately explore existing alternatives to building a new hospital.”

To the factor requiring appropriate use of existing facilities and providers, council members questioned conflicting UIHC testimony.

Although UIHC asserted its North Liberty operation would offer more complex services to sicker patients than are treated at community hospitals and ambulatory surgery centers, the council pointed to the UI application characterizing its proposed new campus as a “general acute hospital” offering “general and specialized hospital services.”

“The letters and testimony established a lack of collaboration by the UIHC with local providers, that excess capacity exists at current facilities, that the UIHC is proposing to conduct procedures that could be provided by the community-based hospitals and ambulatory surgery centers in the area, and a substantial concern about the future viability of existing facilities if the UIHC is allowed to build the hospital,” according to the written decision.

Plus, according to testimony cited by the council, UIHC has an unfair employment advantage in its ability to provide IPERS as a staff benefit, “one that community facilities cannot provide.”

“The council also notes that the UIHC plans to hire 535 staff for the new hospital,” according to its decision.

“Noted by the opposition during testimony were concerns that the UIHC would actively recruit staff from Mercy Iowa City and other providers in the area.”

The council received 27 letters of support for the UIHC project and 53 letters of opposition — including from several asserting, “There has been little to no coordination with other providers to determine opportunities for collaboration.”

Critics also accused UIHC of failing to be a “good steward” of health care resources — citing substantial cost overruns on its Children’s Hospital project.

To the question of whether UIHC has considered modernization or shared arrangements, the council noted the university indicated in their application it “did not have a long-range development plan and that they would engage planning experts to consider how to best use both campuses only if their (certificate of need) was approved.”

Regarding patient harm — should the UIHC project fail to materialize — the council determined plenty of space exists at other nearby facilities.

“There are nine hospitals in the service area,” according to the decision, which found those alternatives are operating at below-capacity levels. “Both Mercy Cedar Rapids and Mercy Iowa City report a 10 minute wait time in their respective emergency rooms, while, according to opposition testimony, patients may wait several hours in the UIHC emergency room before being seen.”

Thus, “The council concludes that patients will not experience serious problems in obtaining care of the type which will be furnished by the proposed health service, in the absence of that proposed service.”

During UIHC testimony in February, UI Hospitals and Clinics CEO Suresh Gunasekaran rejected allegations his enterprise is veering outside its lane by asserting the expansion in North Liberty is similar to expanding on its main campus — just not in the shadow of Kinnick Stadium.

UIHC treats sicker patients, many of whom are transferred to its emergency room from community providers. The hospital is near capacity — forced to offer mostly double rooms — and pining to spread out and offer better accommodations for both patients and providers.

“This proposal will make Iowa health care stronger,” Gunasekaran said after citing numbers showing UIHC’s strapped resources and soaring demand for complex care. “The university for many, many years has expanded its capacity to continue to meet the needs of Iowans, and at the same time community hospitals have thrived.”

UIHC can appeal the council’s rejection of its certificate of need application, although officials have not announced their next move.

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

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