Steindler CEO: Health care competition vital to Johnson County

The CEO of Steindler Orthopedic Clinic in Iowa City says approval of a certificate of need for a new orthopedic facility in North Liberty is vital to ensure the viability of private health care providers in Johnson County, particularly in the wake of the State Health Facilities Council’s Aug. 31 approval of the University of Iowa Health Care’s new $395 million North Liberty facility – a project that broke ground last month. Patrick Magallenes recently discussed plans for the new orthopedic facility with the Corridor Business Journal. Under the proposal, a new entity, Steindler North Liberty, is asking the State Health Facilities Council to approve a certificate of need (CON) application for a new ambulatory surgical center. Steindler Orthopedic Clinic had announced plans in February to relocate operations from its four-acre, 36,000-square-foot clinic building in Iowa City to a 36-acre medical campus near the intersection of Forevergreen Road and Highway 965, near the site of the new UI Health Care facility. That transaction, which includes plans for a 71,000-square-foot Steindler Orthopedic Clinic, a physician office building, acute care hospital, general market hotel and space for future development, is expected to close later this year. With the UI Health Care project now underway, Mr. Magallenes said it’s even more important for state health officials to recognize the importance of competitive health care options and the capacity needed for the ambulatory surgical procedures Steindler plans offering at their new campus.

“With the University of Iowa's CON application and the scale of project they're doing, I think it would be absolutely appropriate to have a competitive vision for private practice physicians in Johnson County just two miles away,” Mr. Magallenes said. “A new modern facility creates a competitive landscape for all the private, non-university affiliated physicians, in light of what (UI Health Care) is going to be building. So that's really the desire.” Steindler’s new CON application proposes adding a $17.9 million freestanding ambulatory surgery center at the North Liberty site, wholly owned by Dr. Taylor Dennison, a partner and orthopedic surgeon at the Steindler Orthopedic Clinic. In the application, Steindler officials say the new facility is needed to provide competition and develop operating rooms with adequate space to accommodate robotic surgery procedures and expand capacity for higher demand for orthopedic procedures in the future. The application was originally to be heard by the state review committee in October, but was rescheduled to February after a health care provider, which hasn’t yet been publicly identified, approached Steindler officials to build an inpatient hospital facility that would anchor the North LIberty development. Mr. Magallenes said he couldn’t provide further details on the proposal due to a nondisclosure agreement. “There’s interest in working with Steindler to develop a medical campus in North Liberty,” he said. “It’s a partnership in that we’re working together to develop something that furthers both sides’ interests, but I’m not suggesting that we would go into a partnership from a legal perspective. Physicians are not able to own hospitals, so it's not really a partnership. It's a collaboration.” The project faces possible headwinds from a series of letters of opposition filed with the state review committee, including from ENT Medical Services of Iowa City; Johnson County Surgical Investors (JCSI), part owners of the Iowa City Ambulatory Surgical Center (ICASC); and the ICASC itself. All three letters point to similar disputes with Steindler’s CON application, including the need for additional surgical capacity and a covenant that precludes JCSI and Steindler physicians from owning or operating a facility that would compete with the existing ICASC. Specifically, the ICASC letter asserts that Steindler physicians use less than 45% of the operating room time currently allocated to them at the ICASC. “We find it difficult to believe that SOC physicians, as mentioned in their application, are unable to get their cases on the operating room schedule at the ICASC when they are not even utilizing half of their dedicated operating room time,” the letter states. When the state review committee hears the Steindler proposal, Mr. Magallenes said he hopes the committee acknowledges the importance of competitive options in orthopedic care in terms of both medical capacity and affordability. “When you look at what hospitals need in order to operate successfully, it's usually cardiothoracic and orthopedics that provide the revenue that lets the hospital do everything else,” he said. “I don't think there's a lot of controversy there, so what's important to me is that Steindler Orthopedic has an opportunity to help a community hospital establish a strong competitive presence. We want to just make sure that we're partnering with a community hospital that can benefit from what Steindler does and to ensure that there's a community hospital presence in Johnson County.”