Talks suspended for new downtown hospital UA, Banner Health still at odds over teaching facility

Ken Alltucker and Jahna Berry
Arizona Republic
October 15, 2007

Nearly a year after announcing an ambitious plan for a new downtown hospital, the University of Arizona and Banner Health remain at odds over important issues such as the size of the hospital and faculty staffing.

Both acknowledge that the goal of completing negotiations and signing a contract by the end of summer was overly optimistic. Still, the two sides believe they can strike a deal to build and operate a teaching hospital as an anchor of the city's emerging bioscience presence.

"We have basically taken a breather as both sides run lots and lots of numbers," said Edward Shortliffe, dean of the UA-College of Medicine in Phoenix, in partnership with ASU.

"It is a very complicated discussion. I think we are now doing a more rigorous and thoughtful discussion of this."

UA believes any downtown teaching hospital must be larger than the original plan to build a 200-bed facility.

Banner representatives say important questions about faculty staffing and development must be worked out before the hospital group can commit to specifics such as number of beds and location.

Critical piece of hub

The stakes are high because the teaching hospital is a critical piece of Phoenix's vision of a thriving biomedical hub anchored by the UA medical school, the Translational Genomics Research Institute, and other research-based educational and private-sector business.

University and city leaders today will celebrate the biomedical campus' latest addition, the $29.6 million Arizona Biomedical Collaborative building near TGen, that will combine cutting-edge engineering, genomics, and health-care research and education.

UA and Banner in December announced plans to build a hospital after months of quiet negotiations. Gov. Janet Napolitano and other political leaders familiar with the negotiations urged the two sides to work out terms. Napolitano even arranged a closed-door meeting last summer, according to people involved in the negotiations. A governor's spokesman on Friday declined to discuss the matter.

Phoenix Mayor Phil Gordon remains optimistic the downtown hospital will be built.

"There have been a lot of naysayers that didn't believe that we would be this far, and we have a medical school that's accredited and doctors being trained," Gordon said.

A supersize hospital

Deputy City Manager Rick Naimark said a large, on-site hospital is an important part of the long-term vision for the Phoenix Biomedical Campus.

Phoenix recently unveiled a master plan that calls for taller campus buildings, plus a supersize hospital and clinical spaces. The city's plan calls for roughly 400 beds on the campus at build-out. Phoenix must maximize the space because of rising land costs and the relatively small size of the 28-acre campus, city leaders have said.

Shortliffe, who heads UA's negotiating team, expects both sides will resume active talks within four to eight weeks.

The university has hired consultants to figure out details such as beds and financing issues.

A key issue is how much it will take to pay for faculty training. Banner is expected to pay all capital costs for the $350 million hospital and operate the hospital.

Bill Byron, Banner Health's assistant director of public relations, said a key issue for Banner is ensuring sufficient clinical faculty to staff the hospital.

"It's a complex project," Byron said. "You want your decisions to be right decisions so they will ensure long-term viability of a hospital."

UA, Maricopa ties

Maricopa Integrated Health System, which runs the Maricopa Medical Center, psychiatric hospitals and clinics, had been negotiating with UA last year about building a downtown hospital. Those talks came to a halt after UA and Banner announced their agreement.

Maricopa Integrated CEO Betsey Bayless said her groups would continue to work with UA. Maricopa is the largest teaching hospital in the county.

The county hospital system still plans to build a new acute-care hospital with 400 to 450 beds. The system has embarked on a six- to nine-month plan that seeks to answer important questions, including financing and location, for a new hospital.

"We were talking about going to downtown Phoenix. That is not necessarily our plan right now," Bayless said.

Phoenix City Councilman Greg Stanton expects UA and Banner will agree to terms and build a hospital in downtown Phoenix. He said the biomedical campus makes it the most prestigious location in Arizona for a new hospital.

"We hope it's Banner, based upon the MOU (memorandum of understanding), but if it's not them, whoever it will be will end up being very successful," said Stanton, who is chairman of the City Council subcommittee that handles biomedical-campus issues.

"The option won't be nothing. The option will be another system that will be very prestigious and successful at that location."

UA Medical School Dean Keith Joiner said Arizona has accomplished a lot in a short period. Those accomplishments include the collaboration of UA and ASU, as well as political compromises that made the downtown medical school a reality.

"Hospital affiliations are more complicated," Joiner said. "I don't think it is surprising at all that it is taking more time."

Last updated on August 8, 2008