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UCI Med Center has a new CEO, who’s planning a new hospital

UCI Medical Center Chief Executive Ralph Cygan just nabbed $235 million in state money to build a new hospital and says he plans to turn to the business community and other donors for additional funding.

“We feel fortunate to have gotten $235 million,” said Cygan, a practicing internist who became UCI Medical Center’s permanent chief executive in September. “But we definitely will have a funding shortfall. We will have to look at a variety of options for filling in the gap.”

Cygan has served as interim chief executive since April, after Mark Laret’s departure from the University of California, Irvine’s hospital in Orange. Like other state hospitals, UCI Medical Center has to meet state seismic standards either through retrofitting or by constructing a new facility. Considering cost and the disruption retrofitting would cause, UCI Medical Center is opting for a new hospital in Orange.

“I think $235 million is a great down payment,that’s close to a quarter of a billion dollars,” Cygan said. “But hospital construction is very expensive.”

The project faces a shortfall of between $50 million and $75 million, Cygan said, depending on what UCI Medical Center ultimately decides to build. The 205-bed UCI Medical Center plans to explore local, state and federal funding options, he said.

“Finally, we will, of course, go to our donor community,” Cygan said. “The UCI campus has been very successful in the last few years in raising money from the community, particularly the medical school.”

UCI overall raised more than $80 million last year. The medical center is in the “very early stages” of looking at a capital campaign that would stretch out over a five- or six-year period, Cygan said.

UCI Medical Center is Orange County’s third-largest hospital and serves as a teaching facility for UCI and as the county’s hospital. In 1999, UCI Medical Center earned $12.7 million from operations, which was up 18% from 1998. Net patient revenue in 1999 was up 8% to $218 million.

The improved finances come after a period of budget deficits and a bruised reputation from 1995’s fertility clinic scandal.

Last year, Cygan said UCI Medical Center provided a little more than $40 million in charity care. The hospital provides around 28% of care paid for by Orange County’s indigent adult healthcare program and between 20% and 25% of MediCal care in the county, he said.

“Add those three together and we are a major provider of underinsured care in the county,” Cygan said.

While UCI Medical Center plans to raise more money, it has a solid starting point compared to other California hospitals. The medical center received the largest portion of $600 million in state funds for five University of California-owned medical centers to meet the state’s hospital earthquake safety regulations. UCI Medical Center’s share came out to $235 million, or 39% of the total.

“We successfully competed with our sister campuses,” Cygan said.

By contrast, UCLA Medical Center received $180 million and University of California, Davis, Medical Center received $120 million. The remaining funding, Cygan said, was divided among University of California, San Francisco, and University of California, San Diego.

“What that reflects is that we have great need here at UCI Medical Center,” Cygan said. “Our main hospital facility, Building 1, which contains all our intensive care units and all of our acute-care facilities, including operating rooms, is the building we will be replacing.”

Depending on fundraising, the new UCI Medical Center main building could have around 320,000 square feet of space, compared to the current main building’s 180,000 square feet. The new facility is going to face Chapman Avenue, near the Santa Ana (I-5) Freeway, and link to the center’s tower, which the medical center plans to retain with some retrofitting. Officials are undecided as yet whether to demolish or retain Building 1, which houses the current hospital.

Cygan said he believes that ground will be broken in about three years, citing planning work and Office of State Health Planning and Development approval. He said he expects construction to take another three years. When the new building is done, it will supplant a facility that was built in the 1960s and was acquired by UCI from the county in 1976.

Earthquake safety became a big concern for hospitals in the wake of the 1994 Northridge earthquake, which damaged several hospitals, including UCLA Medical Center. In addition to state funds, UCLA Medical Center also received $450 million from the Federal Emergency Management Agency for its new hospital project.

California’s seismic safety law has two major provisions: All hospitals built before 1973 must conduct a seismic evaluation and submit a compliance schedule to the state by January 2008. By January 2030, all acute-care hospitals must be self-sustaining for 72 hours in the event of a major earthquake.

The law gives hospitals the option of retrofitting facilities, but Cygan said that would not work for UCI Medical Center.

“It became clear to us that a new hospital building was a much better way to go,” he said.

A new hospital would be more cost-effective and less disruptive for patient care, Cygan said.

“You really can’t retrofit a building while you take care of patients,” he said, adding UCI Medical Center officials were able to convince the state and UC President Richard Atkinson that it was a better investment to build a new hospital.

More money will mean expanded operating rooms and other facilities but not more beds, though. Instead, the $235 million will allow 180 of the hospital’s current 205 beds to be replaced, he said. n

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