University of Iowa Healthcare executives will have to have an “honest conversation about the feasibility” of a new inpatient tower that is expected to cost $1.5 billion for its construction, UI Healthcare CEO Bradley Haws said during a Board of Regents meeting Wednesday.
Haws comments come as federal lawmakers eye cuts to Medicaid and Medicare, the largest health insurance providers in the country, and changes to payments directed to healthcare facilities by the federal government are imminent.
Haws said the state’s largest healthcare system will have to look at the feasibility and affordability of building the new inpatient tower on the UIHC campus this fall as lawmakers approve the final touches on a massive tax and spending cut championed by President Donald Trump and congressional Republicans.
“I think by November, hopefully we’ll know more about what’s happening with the federal funding and those kinds of things,” Haws said during the presentation of a request to begin construction on the early work to make way for the new tower. “We’ll have to sit down with this group and have a really honest conversation about the feasibility of the entire project and whether that still fits within our capital plans and affordability.”
The tower has a $1.5 billion target for construction costs, according to UI Healthcare officials, and is estimated to cost north of $2 billion when equipment costs for the new tower are included.
Haws said that changes to the payments the hospital receives from the federal government could drastically affect their ability to afford the new tower.
“Changes in Medicare, Medicaid, 340B pricing — all of those have dramatic potential impacts on us,” Haws said. “We’re waiting daily to see what kind of news is out of Washington, and wanting to be very cognizant of those as we plan.”
The discussion about the feasibility of the project came as UI officials asked the Iowa Board of Regents to approve the health system to begin construction on “early work” that would make way for the multi-billion dollar patient tower that would be the largest project in state history.
The request asked the regents to approve a $72.5 million construction project to modernize and prepare for the pending 842,000-square-foot inpatient tower.
The request, if approved by the whole board, would allow the UI to renovate and expand patient, staff, and visitor entrances in the John Pappajohn Pavilion in the main hospital. This would include the construction of a new vestibule, interior lobby, and the reconfiguration of lanes on Hawkeye Wave Way.
It would also include the relocation of the skywalk entrance to the Roy Carver Pavilion in the main hospital campus.
It would also include utility upgrades and site work to prepare for the pending tower construction.
Haws said that these projects would be needed even if the health care system decided not to move forward with the inpatient tower because of the aging facility needing modernization.
This project would continue a number of “enabling projects” that the UI has completed to make way for the new tower including the construction of the new Health Sciences building which is expected to be completed by the end of the year, the construction of the a new parking ramp near Kinnick stadium, and the construction of a new water tower to handle the hospitals expanding capacity. The new parking ramp is complete and operational and the new water tower is months away from being completed.
After the completion of these projects the UI asked permission for the regents to raze three buildings that would lie in the footprint of the new inpatient tower.
The UI asked permission to demolish the Wendell Johnson Speech and Hearing Center, which is home to the UI’s department of Communication Sciences and Disorders department, Hospital Parking Ramp 1, and the current hospital water tower.
Both requests were approved via general consensus by the regents Property and Facilities Committee on Wednesday and require a vote of the full board at Thursday’s meeting of the full board.