Our next hospital: Site and financing among questions


Where will Indian River County’s next hospital be located? Out west, is presumably the answer as the county continues to expand in that direction. But exactly where, and when, is a third hospital likely to join Cleveland Clinic and Sebastian River Medical Center?

Since the pandemic, not only have developers resumed construction in developments stalled during the Great Recession, but new homes, communities, apartment complexes and businesses are coming online.

That’s not likely to stop as the County Commission mulls whether or not to expand the westward boundaries of the county’s Urban Services Area. In time, an additional hospital almost certainly will be needed.

The Indian River County Hospital District began to scratch the surface of the issue at last week’s Board of Trustees meeting, but the brief discussion closed leaving a great deal more questions than answers.

The timeliness in planning for the county’s next hospital is twofold — the need to designate existing land holdings in west-central Indian River County for a medical center, or to secure a significant piece of land for a new hospital campus and ancillary medical offices before all the available, appropriate land is developed into housing or commercial buildings.

There are also the questions of how to finance a new hospital to serve the growing community, and who would take that project on.

Would Cleveland Clinic design and build it? Would the Indian River County Hospital District build it and then lease it back to Cleveland Clinic on a long-term lease? Would it be some sort of public-private partnership?

The current hospital on 37th Avenue is owned by the hospital district but governed by a complex 75-year lease agreement, so the district and Cleveland Clinic are enmeshed financially for virtually this entire century.

The hospital district owns 45 acres of vacant land on 82nd Avenue, between the Heron Cay manufactured home community and Pointe West. Plus an adjacent 45 vacant acres are owned privately by an LLC. But that land does not have frontage on State Road 60, meaning the substantial traffic to and from a hospital would run through a residential area.

The western parcels were purchased decades ago to place a territorial claim on that geographic sector of the hospital market, to prevent another competing hospital or hospital chain from locating in that area. Due to Certificate of Need (or CON) laws, the construction of new hospitals must be approved by state regulators.

As explained by the National Conference of State Legislatures, these CON programs are in effect in 35 states and “primarily aim to control healthcare costs by restricting duplicative services and determining whether new capital expenditures meet a community need.”

The two parcels the district owns on 82nd Avenue have a combined market value of just less than $2 million, according to the Indian River County Property Appraiser, but values stated by the county, due to the time lag of the assessment process, can run 12 to 18 months behind the market so a private appraisal would likely be higher.

Hospital district Trustee Paul Westcott said he’s spoken to some reputable Realtors who told him that land could sell at a price between $4 million and $6 million. Should the district put the land up for sale and get a viable offer, the way the deed is written, Westcott said, Cleveland Clinic would then have the right to match that and purchase the land.

“Our assessment of the viability and use of the property should probably incorporate some long-term planning, that we discuss, too, where’s our next medical campus going to be?” Westcott said.

“I’d just like for us to take steps to explore that as an option for us,” he said.

Trustee Karen Deigl questioned what the hospital district’s role might be in planning for the next hospital that Cleveland Clinic might or might not want to open and operate in Indian River County.

“Is that really our format?” she asked. “We’re not the ones. If they’ve got that land, got the first right of refusal on it, it’s them,” referring to Cleveland Clinic.

District Chairwoman Marybeth Cunningham said they could have the conversation “in the spirit as partners.”

“If we’re going to commit that property for medical use, we’d be well advised to take a 30,000-foot look and coordinate with and plan where’s the ideal location, and not let the tail wag the dog,” Westcott said. “If the better location is out at the intersection of I-95 and State Road 60, and the County Commission believes so, or for planning purposes that’s the better location as opposed to a mile and a half south of State Road 60, I think we need to know that.”

“The question then begs, are we an organization that only disperses money and we’re not thinking strategically, or are we an organization that the public reasonably expects that we’re going to be engaged in strategic planning? I think we’re the latter, and that’s what I’m advocating for,” Westcott said.

The matter came up as part of a discussion about purchasing property for a future sober living center, and how selling other land the district might offset the investment in the drug and alcohol rehabilitation center. Westcott first raised the issue in December and wanted to make sure it remained fairly high on the trustees’ agenda.

Westcott pointed out that the county’s next hospital location would not just be a standalone hospital building, but an entire medical community, as doctors, imaging centers, diagnostic labs, physical therapy, pharmacies and other services would want to be near the new hospital.

The State Road 60 corridor near I-95 is home to about 5,000 manufactured homes in age 55-plus communities, a local resident told the trustees in public comment. Indian River Estates’ 100-acre senior community with assisted-living, memory care and skilled-nursing care is also about two miles from I-95 on State Road 60, but a full 7.2 miles or roughly a 20-minute drive in heavy traffic from Cleveland Clinic Indian River Hospital.

District Trustee Dr. William Cooney reminded the trustees of the need for emergent medical care in the western portion of the county. Cleveland Clinic Vice President Dr. David Peter told the district trustees last fall that the hospital’s top fundraising priority right now is a total revamp of the main campus Emergency Department. The I-95 area only has a Cleveland Clinic Urgent Care center at Pointe West, where patients are evaluated and then transported across town to the hospital if needed.

“Every hospital organization has a facilities plan, and we haven’t seen it,” said hospital district Treasurer Michael Kint. “I’d be interested to see if they’ve got to the point where they’re projecting 10, 20 years out.”

“If part of that decision from their perspective, Cleveland’s perspective is location at this juncture, that land exists. I’d kind of be interested to see what they say would be the best location, so that would play a factor,” Kint said.

District Executive Director Fran Isele agreed with Kint that Cleveland Clinic should have a Master Facilities Plan. “They are not going to make an investment in expansion without doing a lot of work on needs analysis and all that. It’s going to be very thoughtfully done, so I think a good place to start would be to get that Master Facilities Plan from Cleveland Clinic Indian River.”

Cunningham said she would “feel better about Cleveland’s plan than I would the county commissioners saying where the best spot (would be), personally.”

“So I don’t know that it (the 82nd Avenue property) is off the table. I think there are uses and at this point and time the sale of that property would be something that I would even want to consider until we do understand what their vision is, and the whole housing situation is,” Cunningham said. “There’s a lot of community impact. I would hate to get rid of an asset that would have a huge impact.”

Cunningham also noted that some representatives from an affordable housing coalition had asked about the hospital district’s parcel on 82nd Avenue.

District legal counsel Jennifer Peshke said Cleveland Clinic holds a first right of refusal on many of the district’s properties and any property offered for sale would need to be declared as surplus.

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