Higher costs associated with LV medical center

Dan Kulin

Friday, July 1, 2005 | 11:21 a.m.

University system Chancellor Jim Rogers called for continuing negotiations with the University of Pittsburgh Medical Center over a proposed Las Vegas academic medical center, which is now envisioned as an equal partnership between Nevada and Pittsburgh interests, but would also probably require more money from both.

In a memo to University system regents, Rogers said the Las Vegas center would probably cost $400 million to build, and not $250 million as previously reported. Las Vegas Mayor Oscar Goodman has said that the local and state share of the construction cost will be about $250 million.

Rogers said the Pittsburgh center would contribute the remaining $150 million toward construction of the center, which is planned to be one piece of the development coming to the city's vacant 61 acres on the western edge of downtown.

City and university officials said the building, expected to be primarily a teaching hospital, did not suddenly become more expensive overnight, but they said the $250 million figure was repeatedly cited as the cost of the project because that is the anticipated cost to Nevada entities.

Another difference between earlier plans and the brief financial breakdown in Rogers' memo is that the state universities and the Pittsburgh center would be equal partners in the Las Vegas center, splitting the costs and profit, if any, 50-50.

The Pittsburgh center would still be expected to fund the start-up costs for the Las Vegas center, which Rogers estimated would be "well over" $100 million. An earlier proposal from the Pittsburgh center also said it would bear all the costs of running the center, and the local partners would have a share of any profit.

Rogers said being equal partners in the venture would make the project more palatable to local philanthropists -- "Why would you give money to it if all the profits go to Pittsburgh?" he asked. Also, being equal partners would ensure Nevada school officials equal influence over the project.

Within a week or so, the Pittsburgh and Nevada school officials will formally agree to hire a consultant to put together a plan for what the center could look like and how much land it would need, Rogers said.

The amount of the city's 61 acres could be available for a medical center or medical-related uses for has ranged from 8 acres to more than 20 acres, Rogers said. The exact amount of available land will depend on the city's negotiations with the other groups involved with the 61 acres, most importantly the Related Cos., which is working on a development agreement for the 61 acres with city officials, he said.

But Rogers said if there isn't enough land on the 61 acres, the medical center could go elsewhere, such as 17 acres owned by the university system near the University Medical Center.

"The project is more important than where it goes," he said.

In his memo to regents, Rogers wrote: "It is my preliminary opinion that an academic medical center in Las Vegas is a project that all of us must examine very carefully because it may have such incredible potential that to fail to do so would be a dereliction of our duty to provide more comprehensive world-class medical care."

Later in the memo Rogers said that "at some point, and that point may be upon us, we need to look at developing an academic medical center in Southern Nevada."

He added that at this time "We do not have the money to support the whole project," and "We do not have the level of experience and expertise to undertake a project of such magnitude."

Goodman, a chief proponent of bringing an academic medical center to downtown, said talk of a 50-50 split in costs and profit is part of the "evolving" negotiations, which he said will continue to bring changes to any agreement.

Dr. Ron Kline, president of the Clark County Medical Society, said the shift to an equal share of all the expected costs "is a good starting point," but his group would still rather see a medical center funded entirely with local dollars.

"There is no disagreement over the need for an academic medical center," Kline said. "But it may be better to have it locally funded and locally controlled. The University of Pittsburgh is not altruistic; they're coming here to make money."

The Pittsburgh center's original proposal called for a board of directors made up of local and Pittsburgh officials to oversee the center, which would be run by Pittsburgh staff.

Kline said the $250 million proposed to pay for part of a new center in partnership with Pittsburgh could instead be used to build a smaller center wholly owned and operated by Nevadans.

Goodman and Kline met Thursday to discuss the medical center project, and Kline said they both asked that the other go into future talks with an open mind, looking at a possible partnership with Pittsburgh, or doing the project without out-of-state help.

The mayor said he will also make sure the local doctors, represented by Kline, are invited to future meetings with representatives from the Pittsburgh center.

Rogers said Kline's suggestion is flawed because, as he put it: "Where are we going to get the $250 million?"

With the Pittsburgh center offering what's probably more than $250 million, Rogers said there is a better chance of raising the other $250 million here.

"If you came to me with a project and said there was an outside party willing to invest $250 million, I would say that's probably a good investment," Rogers said. "But if you came to me and said 'We've seen some pictures and want to do this and we've never done it before,' I don't think I would do it."

Rogers also said that he believes the private sector will be called on to fund most of the local contribution to the project.

Jim Lenhart, vice dean of the University of Nevada School of Medicine, said the Pittsburgh center's involvement would also bring a better medical center faster.

"The question has been asked, 'Why do we need Pittsburgh?' Well, if you want it tomorrow you need an institution with a level of expertise that could make it happen tomorrow," Lenhart said, adding that by tomorrow he meant within five years.

"But if we want to wait 20 years then we could do it on our own."

Lenhart, who traveled to Pittsburgh with Rogers earlier this week, said it is important to remember that they are early in their discussions with the Pittsburgh center.

He said a formal agreement is probably still months away. Rogers said a formal agreement could be six months away.

"There is so much to be worked out," Lenhart said. "It's a huge, huge project and a complicated one. We've got a lot of work to do."