University of Iowa voices concerns with Steindler North Liberty surgery development


HR King
May 29, 2001
After butting heads with community health care providers opposed to its plans to build a new hospital in North Liberty, University of Iowa Health Care now is echoing its own critics’ concerns as the state considers a proposal to build a new ambulatory surgery center down the road from UIHC’s project.

The State Health Facilities Council in February is set to consider an application to build a $19.2 million Steindler North Liberty Ambulatory Surgery Center near Interstate 380. If approved, that project would establish North Liberty as the region’s newest health care hub — sitting just 1.5 miles west of a $395 million, 469,000-square-foot hospital and clinics that UIHC started developing after obtaining hard-fought state approval last fall.

UIHC faced significant pushback from community health care providers in seeking the state certificate — which it eventually got in August after being denied last February. And now — as some of the same community care providers speak out about the Steindler application and its potential to threaten their livelihood — UIHC is amplifying those same concerns.

“In granting UIHC’s North Liberty (certificate of need), UIHC appreciated that (the State Health Facilities Council) was able to use data submitted by all parties and distinguish between capacity needed for normal, lower risk ambulatory surgery, and capacity need for complex tertiary and quaternary procedures that make up the majority of UIHC’s surgical volumes,” according to a letter UIHC sent this week to the state, which it characterized as being “neutral” on the Steindler project.

“However, with respect to (Steindler North Liberty Ambulatory Surgery Center), UIHC is concerned that the data presented to date suggest construction of six new ambulatory (operating rooms) would duplicate existing, not fully utilized space at Mercy and (the Iowa City Ambulatory Surgery Center).”

‘Reconcile any discrepancies’​

The Steindler North Liberty Ambulatory Surgery Center application — proposed by a Steindler Orthopedic Clinic surgeon to be an independently owned and operated facility — aims to begin offering services from a new 35,880-square-foot facility in January 2024.

A tentative timeline for the UIHC North Liberty hospital — which will include a new emergency room, up to 48 patient beds, 16 operating rooms, a pharmacy and laboratories — has construction wrapping in spring or summer 2025.

A key part of the first UIHC application, which drew much of the criticism from other providers, was its intentions to move orthopedics to the North Liberty site. In its subsequent application, which was approved, UIHC removed mention of it.

“Our plans for this facility remain flexible as we continue to evaluate and determine which clinical specialties will be offered on the new campus based on patient demand,” UIHC spokeswoman Laura Shoemaker told The Gazette in October in response to a question of whether it still intended to move orthopedics to North Liberty. “Based on this patient demand, orthopedic sub-specialties may be included at the new location.”

Although the Steindler application slated for review next month is only for the proposed ambulatory surgery center, the application airs long-range plans for 36 acres in North Liberty — including a 71,000-square-foot orthopedic clinic; 157,000-square-foot hospital; 75,000-square-foot medical office building; and four-story hotel with event space.

“In deciding whether Eastern Iowa requires additional orthopedics-focused ambulatory surgery capacity and ultimately an orthopedic specialty hospital, UIHC asks (the council) to carefully review the data submitted by many of these same providers during UIHC’s certificate of need application process and to address, evaluate, and attempt to reconcile any discrepancies between these materials and Steindler’s application,” according to the UIHC letter, signed by UIHC Chief Executive Officer Suresh Gunasekaran.

'It strains credulity’​

The Steindler project initially was on the state’s October agenda until the applicant pulled it because of interest from an unnamed hospital system in a collaboration. Although those talks continue, according to Steindler President and CEO Patrick Magallanes, they aren’t moving fast enough to make the February agenda.

The Steindler North Liberty application argues it needs more modernized space to compete and doesn’t have access to the quality it seeks in its currently available facilities.

UIHC admittedly only “sparingly” comments on certificate of need applications — and didn’t provide any letter in response to the first Steindler application. But Gunasekaran in his letter said UIHC wanted to comment this time “on the possible implications of (the Steindler) proposed ambulatory surgery center to the state’s health delivery system.”

Like they did in the fall, the Johnson County Surgical Investors and Iowa City Ambulatory Surgical Center again submitted letters of strong opposition, even threatening to sue if the project proceeds.

According to those groups, Steindler and its physicians — most of whom are members of the investors group — are contractually prohibited from competing “directly or indirectly” by owning, operating, managing, financing, leasing or investing in another ambulatory surgery center.

Taylor Dennison, one of the few Steindler surgeons who is not a member of the Johnson County group, is the sole applicant for the North Liberty project — circumventing the prohibition. But the Johnson County investors say the application still is a violation.

“Simply put, it strains credulity that a single physician owner of Steindler Orthopedic Clinic has the resources to single-handedly finance the proposed ambulatory surgery center without some form of direct or indirect ownership, financing, or investment by the Steindler/JCSI Physicians,” according to a letter from the physicians’ attorney. “And each of those activities is explicitly prohibited by those physicians’ restrictive covenants.”

Regardless of how the state votes on the Steindler application, the group plans to try to block the proposed project from moving forward, according to the attorney’s letter.

“Johnson County Surgical Investors is actively pursuing available avenues of relief, including without limitation litigation.”