Steindler Orthopedic partnering with Mercy Iowa City on North Liberty ‘medical park’

Dr. Fred Dery prepares for the next patient in the fluoroscopy procedure suite at Steindler Orthopedic Clinic, 2751 Northgate DR. in Iowa City, Iowa, on Tuesday, Oct. 5, 2021. The clinic has applied for a state-issued certificate of need to build a $17.9 million Steindler North Liberty Ambulatory Surgery Center near the Forevergreen Rd. exit off Interstate 380. (Jim Slosiarek/The Gazette)

NORTH LIBERTY — Steindler Orthopedic Clinic unveiled a new formal partnership Monday with Mercy Iowa City to collaborate on — among other things — developing a medical park on 36 acres of land in North Liberty.

The announcement comes days before the State Health Facilities Council was supposed to consider a Steindler surgeon’s proposal to build a $19.2 million ambulatory surgery center on the North Liberty site — although consideration of that has been delayed because one of the council members can’t make the meeting.

Steindler surgeon Taylor Dennison in August first submitted an application to build a 35,880-square-foot Steindler North Liberty Ambulatory Surgery Center off Interstate 380 and Forevergreen Road. The state slated the application for a hearing in October.

But Dennison, shortly before the hearing, asked the state to delay consideration due to a potential collaboration with a then-unnamed hospital system that could reshape his application. Steindler Orthopedic Clinic President and Chief Executive Officer Patrick Magallanes told The Gazette that a hospital system had approached him with a “vision for the development.”

Although the partnership didn’t gel immediately — and the Steindler North Liberty Ambulatory Surgery Center is back before the state council without inclusion of a new inpatient hospital, for example — Steindler Orthopedic in announcing its new Mercy Iowa City partnership implied future collaboration on the site.

“The partnership includes enhanced care coordination and shared management responsibility of the orthopedic service line at Mercy Iowa City, plans to collaborate on a medical park in North Liberty, and improved access to high-quality orthopedic care in Eastern Iowa,” according to a Monday news release. But the two entities will remain financially independent, Magallanes said.

Once fully realized, according to the release, the medical park collaboration will leverage the organizations’ “clinical, administrative, and patient-centered management” experience to provide expanded orthopedic care options to the region.

Although the parties didn’t share specifics about the partnership — including detailed development possibilities in North Liberty — Magallanes said, “The vision is to create a premier destination for orthopedic care.”

“Steindler had a vision for the future of orthopedic care and independent physician practice in our community and committed to the concept by purchasing land in North Liberty,” he said. “We anticipated Mercy Iowa City would be our partner in the vision from the beginning. Today, we are pleased to announce that we are working together on a vision for our future.”

Mercy Iowa City acting President and CEO Mike Trachta in a statement also expressed appreciation for continuation of the long-standing Mercy-Steindler relationship.

“We are looking forward to continuing to strengthen our partnership with the talented team at Steindler for even greater patient outcomes,” he said.

Evolving relationship

Although this agreement begins a new chapter in their relationship, Mercy Iowa City and Steindler have been collaborating for 70 years — as Steindler provides inpatient and outpatient services at Mercy, where its surgeons hold admitting privileges.

But the Mercy Iowa City campus is tight, technology is aging and resources are thin — making collaboration on the new expansive North Liberty site a more workable and competitive way forward that also could be less costly for payers.

“Use of Mercy Hospital Iowa City’s outpatient surgical service was considered and rejected as Mercy’s cost is too high for payers and it is unable to modernize its aging facilities built a century ago,” according to the Steindler application seeking state approval to build in North Liberty.

The Iowa City-based Steindler Orthopedic Clinic plans to sell a chunk of its 36 acres in North Liberty to Dennison for the proposed ambulatory surgery center. Dennison is the only Steindler surgeon who isn’t a member of the Johnson County Surgical Investors group, which has a contract binding its members from owning, operating, managing, financing, leasing or investing in “any other ambulatory surgery center in Johnson County.”

Dennison in his application — which has Steindler’s backing — argues the project is needed to keep up with growing demand, advancing technologies and community competition, as University of Iowa Health Care also is building a new $395 million, 469,000-square-foot hospital and clinic site about 1.5 miles east of the proposed Steindler project in North Liberty.

Although Steindler hasn’t sought state approval for all its long-term development plans in North Liberty, they include a Steindler Orthopedic Clinic, medical office building, hospital and hotel.

Opposition

Among opponents to the project is the Johnson County surgeons group, which has threatened to sue Steindler.

“It strains credulity that a single physician owner of (Steindler Orthopedic Clinic) has the resources to single-handedly finance the proposed (ambulatory surgical center) without some form of direct or indirect ownership, financing, or investment by the Steindler/ (Johnson County Surgical Investors) physicians,” according to the JCSI letter of opposition.

UIHC also sent the state a letter airing concerns with the project and urging council members to consider previously-disclosed data showing ample medical space exists in area community hospitals.

Mercy Iowa City didn’t submit a letter opposing the project. But one did come from the Iowa City Ambulatory Surgical Center, which is jointly owned by the now-conflicted Johnson County Surgical Investors and Mercy Iowa City.

That letter accuses Steindler of ignoring the fact that its physicians “have been medical providers and significant owners of an award-winning surgical center for well over a decade.”

“Duplicating their existing surgery center is misguided and fails to consider the much less costly, more efficient alternative of expanding Iowa City Ambulatory Surgical Center to able to provide a higher volume of orthopedic procedures.”

The Steindler North Liberty application justified the need for expansion by airing limitations of the current facilities and projected soaring demand regionally. It also spelled out implications for other area providers — suggesting a Mercy Iowa City plan to move endoscopy procedures from its main campus to the Iowa City Ambulatory Surgical Center could alleviate any pains felt from Steindler surgeons leaving.

The Steindler application noted Mercy Iowa City has been losing outpatient orthopedic surgeries “due to patient request and payer pressure” — unrelated to any threat of departing Steindler surgeons.

In line with this week’s announced partnership, the Steindler North Liberty application notes, “Patients prefer a non-hospital outpatient setting where outcomes are equal, and cost is lower.”

“Any impact on Mercy Hospital Iowa City from movement of the remaining Steindler Orthopedic Clinic surgeons’ outpatient surgeries from Mercy Hospital Iowa City to the (North Liberty project) is inevitable as patients and payers will not pay for those procedures to be performed at Mercy Hospital Iowa City,” according to the application.

The application — submitted before the Mercy-Steindler deal closed — noted “Mercy Hospital Iowa City has been invited to participate in the development of the 36-acre site.”

“Reportedly, it has met with a firm to conceptualize a presence on a partition of the 36 acres.”

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; [email protected]

Steindler Orthopedic partnering with Mercy Iowa City on North Liberty ‘medical park’

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