Regents approve budget increase for UI North Liberty Hospital to $525 million

Iowa Governor Kim Reynolds (second from left) watches the construction site of the new University of Iowa Health Care Center in North Liberty on October 14, 2021, with Dr. Brooks Jackson of the UIHC (left) and UI President Barbara Wilson (centre). The Iowa Board of Trustees on Wednesday approved a 33% increase in the facility’s budget to $525.6 million. (Jim Slosiarek/The Gazette)

AMES – The Iowa Board of Trustees unanimously agreed on Wednesday to increase the budget for the new University of Iowa Health Care Center in North Liberty by 33%, bringing the total price to $525.6 million, the most expensive new hospital in state history.

The university submitted its budget request to the regents in response to “multiple converging challenges in the construction industry, such as global and local construction market inflation, rising commodity prices, availability limited supply of building materials and local labor shortages in the construction sector”.

UIHC officials stressed that they were not changing the scope of the 469,000 square foot building.

Trustees hope to get back to the board before the end of the year to ask for another budget revision — this time down, said Rod Lehnertz, UI’s senior vice president for finance and operations.

It could come after the UIHC finished awarding 64 bids for the project, which has been under construction for months at Highway 965 and Forevergreen Road in North Liberty.

Calling the $525.6 million budget a “worst-case” scenario, Lehnertz said construction bids would be lower than revised estimates.

“When we make these offers in about a month, we will know where we are and that will allow us to assess and come back to the Board of Regents with the results and hopefully a lowered budget,” a- he declared. .

Rod Lehnertz, senior vice president of finance and operations at the University of Iowa.

The university is desperate for more space, denying 2,400 transfer requests a year and watching 6,800 Iowans leave the state for care.

Wait or change?

UIHC officials told Regents on Wednesday they were considering either halting the project to wait for the market to change or reducing its scope and size. But they had concerns with both options.

“The impact of our project delay is significant on patient care,” said Kim Hunter, acting CEO of UIHC. “Access to health care for Iowans would be reduced. The delivery of complex care to our patients is already under strain, and this would further undermine that. »

Kim Hunter, Acting CEO of UIHC

Additionally, she said, university officials expect construction costs to continue to rise after Aug. 1. And the global forces that put pressure on the market show no signs of waning, such as the war between Russia and Ukraine.

“Wouldn’t you know they are the third and fourth largest producers of aluminum in the world,” she said.

Additionally, “we have a shortage of electricians locally,” she said. “We have about 25% of what we need locally for this particular project.”

Downsizing the project seemed an equally misguided avenue, UI officials said, because leaving a space unfinished means the university will potentially have to spend more later to fill it.

“In addition to the challenges of bombing space once you have a working hospital – we learn this every day in the main hospital – disruptions to services and patient care to come back and make plans later , often at greater cost, turn into later regrets,” Lehnertz said.

Hence the recommendation to proceed with the “worst-case costs”, in the hope that they will not be as high as expected.

No state dollars

“I recognize the concerns some may have about the budget increase,” said Board of Regents chairman Michael Richards. “The increases are not due to changes in hospital plans or design. These remain the same.

Michael Richards, Iowa Board of Trustees

What has changed “significantly,” Richards said, “is the costs and scarcity of materials and labor.”

UIHC officials claimed for Richards that no state or tuition dollars would go into the project, which is paid for by UIHC’s “building use funds,” gifts and bonds.

“The University of Iowa Hospitals and Clinics are the state’s premier medical provider and offer the highest level of tertiary and quaternary care not available elsewhere in the state,” Richards said. “The North Liberty facility is the first step in creating more capacity and improving our health care service for the people of Iowa.”

Referring to a new inpatient tower and ambulatory care center UIHC wants to build on its main Iowa City campus over the next decade, Richards said those projects cannot proceed until the North Liberty installation will not be complete.

“The delay or downsizing of this project will likely delay these other projects, thereby delaying better access to health care at UIHC for all Iowans.”

Vanessa Miller covers higher education for The Gazette.

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