Work on new Wishard Hospital in Indianapols set to start next week

J.K. Wall, The IBJ

jwall@ibj.com

After winning overwhelming taxpayer support for building a new hospital, officials at Wishard Health Services said demolition work will begin as early as next week and construction could start as early as March.

And the sale of up to $703 million in bonds to finance the massive project will occur before year's end, if all goes according to plan.

"We are prepared to start the construction process immediately," said Matt Gutwein, CEO of the Health and Hospital Corp. of Marion County, which owns Wishard. "Time is money. The faster we can do this in a responsible way, the lower the cost will be to Wishard."

In a Tuesday referendum, about 83 percent of voters approved taxpayer backing for the bonds. According to unofficial results from the Marion County Election Board, about 84 percent of precincts had reported results as of 11:40 a.m. Wednesday. More than 58,500 people voted-a 12-percent turnout of eligible voters.

Wishard's parent organization plans to sell bonds to finance the $754 million hospital just west of downtown. Wishard's current facility includes a series of 17 buildings that are on average 60 years old.

Taxpayers agreed to back Wishard's bonds after Gutwein and his team promised they would have more than adequate cash to pay them off without additional tax revenue. The hospital corporation has saved up $150 million in advance, is trying to raise $50 million in private donations, and built up surplus cash flow by expanding a profitable network of nursing homes and aggressively cutting costs at Wishard.

The new Wishard hospital complex will be built on land currently owned by IUPUI. The hospital corporation will exercise a land-swap option agreement today with Indiana University. The agreement calls for Wishard to take control of the hospital site right away, and then gradually cede ownership of its current hospital site over the next four years.

The new hospital is scheduled to be finished in December 2013.

The land Wishard will receive is dotted with the structures of the old Larue Carter psychiatric hospital facility and the former State Department of Health building, all of which will be torn down.

Wishard has hired a firm to do environmental remediation of the asbestos and other contaminants in those buildings. That first step of demolition work is being planned this week and will start next week. Gutwein hopes demolition is done by March.

Meanwhile, Wishard officials are preparing a request for proposals, to be issued by the end of November, to choose a construction firm to build the hospital complex's first building, a parking garage. They hope to choose a construction firm by year's end.

"Then you will start seeing buildings come out of the ground in March," Gutwein said.

The hospital corporation is relying on its New York-based financial advisers, Crowe Horwath and Citigroup, to help it decide when to launch its bond sale-as well as the amount of bonds to sell and at what interest rate.

Gutwein is eager to do that soon because bond investors are demanding historically low rates right now.

"The rates are as favorable as we could ever reasonably expect right now," he said, noting that Wishard can save more than $300 million, compared with historically typical bond rates. "Our goal is to move right now."