Although it has been the works for over a decade, a University of New Mexico Hospital (UNMH) expansion may finally have the momentum it needs to become a reality.

HDR Architects and FBT Architects, the firms selected to design the project, posted an announcement on their website which stated the "Replacement Hospital Master Development Plan" is "part of a multi-phase, multi-year project to design, construct and operate a new Modern Medical Facility."

Plans have changed multiple times since UNMH declined the Lovelace Gibson building back in 2007. UNMH leaders are now advocating for a 96-bed expansion which would be built on the seven-tenths of an acre where the old UNM Physics and Astronomy building is currently located (at the Northeast corner of Yale and Lomas Boulevards).



Current estimates are that the first phase of the expansion will cost about $385 million in construction costs. Chief Operating Officer Mike Chicarelli explained, however, that this estimate is not final.

"Until we bring on a CMAR (Construction Management at-Risk)… (and) we get them fully into the project, that number is going to fluctuate. And that doesn’t cover what we call soft costs. That doesn’t include equipment and the other things you have to put in the rooms," said Chicarelli.

At the time of publishing, UNM Health Sciences spokesperson Alexandra Sanchez confirmed that a letter of intent had been sent to a CMAR, but a deal had yet to be signed.

Expansion cost estimates have fluctuated over the years from as low as $230 million to as high as $600 million — depending on the location, number of beds and types of rooms. UNMH leaders said the increase in costs can be attributed to both an increase in construction costs and the types of beds that are going to be built.

"The general rule of thumb was one million dollars a bed; now we are up closer to two or two and a half million," Chicarelli said. He attributed this increase in costs to inflation and market forces, citing a number of other, ongoing construction projects in the area.

The new facility will now also include additional operating suites, ICU beds and a new emergency room.

"Operating, ICU and emergency spaces are more expensive to build than typical inpatient space. The (previously discussed) 120-bed hospital was strictly inpatient beds," said Kate Becker, CEO of UNMH Health Sciences, in correspondence with the Daily Lobo.

UNMH leaders said the hospital has been functioning at or above capacity for years, with patients sharing rooms and sometimes having to wait on gurneys in hallways before they are assigned to a room.

"Our organization runs very, very full. We are quoted anywhere from ninety five to one hundred plus percent occupancy per day… We have people waiting in our emergency departments and post op areas for beds," said Chicarelli.

The expansion has not been supported by everyone: Republican State Representative Bill Rhem has been a vocal opponent.

In a 2016 Albuquerque Journal column, Rhem argued that the solution to the capacity problem at UNMH was not to build a new facility, but rather to renovate an older facility that Lovelace was willing to sell to UNMH for $1.

However, UNMH argued that after a team evaluated that site, they determined the costs of renovating the Lovelace location didn’t make financial sense.

"The remediation that would be required to bring (the Lovelace Gibson building) up to standard would cost more than if we built another facility," said Chicarelli.

Unlike most other public building projects, UNMH does not plan to use bond money. Rather, UNMH leaders explained to the UNM Board of Regents that the funding streams for the project will involve cash reserves as well as possibly U.S. Department of Housing and Urban Development (HUD) insurance financing.

Mark Rudi, a public information officer with the Health Sciences Center, told the Daily Lobo that in addition to using the reserves, "the hospital will pursue Mortgage Insurance under HUD Section 242 of the National Housing Act, which provides mortgage insurance for acute care hospital facilities."

Chicarelli said at this point, UNMH have not actually applied with HUD for insurance funding. This is because the project is only at schematic design, and other tasks must first be accomplished before an HUD application.

When asked by the Daily Lobo about where the surplus funds came from, Rudi said, "The funds were from surpluses in operations, with the majority coming from the transition under the Affordable Care Act (ACA) in fiscal year 2015."

The ACA provided health insurance via Medicaid to many of the indigent patients that UNMH previously had to pay for.

Rehm estimated the number of uninsured indigent patients dropped from approximately 100,000 per year in 2013 to as low as 35,000 after the ACA went into effect.

"I am not saying we shouldn’t take care of indigents, but we are bringing in more money than we need," said Rehm.

Rehm explained that he believes UNMH brings in nearly $100 million a year from the Bernalillo County mill levy property tax, and said despite what hospital leadership has told the legislature in the past, their income is exceeding their expenditures.

When asked about how much income UNMH makes after expenses each year, Chicarelli said, "Unfortunately, I don’t know the answer to that. I would have to pull the numbers and I don’t want to misquote… I’m the COO, not the CFO."

According to the 2018 University of New Mexico Hospital Audit Report conducted by the New Mexico State Auditor, UNMH ended 2018 with $317,080,830 in total net position (assets minus liabilities).

Concerns have also been raised about about UNMH’s plans for staffing the new facility.

The Daily Lobo reported that last month UNMH lost their neurosurgical residency accreditation in August of this year. One of the residents’ allegations to the accreditation body was that residents were "consistently taken out of the operating room to perform basic service-related tasks that are typically performed by nurse practitioners and physician assistants" due to was "inadequate non-physician clinical staffing" that was needed to support the program.

Eleanor Chavez, district president of nurses' union Local 1199, said despite the hospital’s reserves, hospital administration has consistently tried to cut corners when it comes to staffing costs.

The union and UNMH recently ended negotiations over healthcare premiums where the hospital was pushing for nurses and other support staff to start covering a portion of their own healthcare costs. Chavez said for a lot of low wage workers at the hospital, this "would have forced a lot of them to go without health insurance."

Ultimately, the union and administration agreed to have the hospital continue to cover employees’ healthcare premiums, but Chavez pointed out employees are still on their own for any dependents that need coverage.

"Our position is that the hospital needs to be a leader in healthcare — including the healthcare they provide their employees," Chavez said.

The hospital has not released any additional information about how it will address the recurring operational costs after the expansion is up and running.

According to Rudi, "planning is expected to be completed in the next year, construction is set to begin in August of 2020 and the first patient should be admitted in November of 2024."

Lissa Knudsen is a beat reporter at the Daily Lobo. She can be contacted at news@dailylobo.com or on Twitter @lissaknudsen