UAMS approved for $85M NWA building; site to be determined

In March, the University of Arkansas System board of trustees approved an $85 million project in Northwest Arkansas proposed by the University of Arkansas for Medical Sciences (UAMS).

A 185,000-square-foot orthopedic and sports medicine facility will be built at a location to be determined. Marlon Blackwell Architects and DSC Architects will lead the building’s design. Nabholz Construction will be the general contractor. UAMS’ goal is to open the facility by 2023.

Chancellor Cam Patterson said UAMS plans to issue bonds to cover the cost, a change in course from a funding partnership proposed this past fall. In October, the board authorized UAMS to negotiate the terms of a letter of intent to pursue a new building lease agreement with commercial real estate development firm Cushman & Wakefield/Sage Partners in Rogers.

As part of the negotiated lease, UAMS would have the option to assume the outstanding debt at a mutually agreeable date or purchase the facility for $1 at the end of a 30-year lease term.

“It’s going to be a little cheaper for us to do this through the bond market than the lease deal we initially proposed to the board,” Patterson said in a recent interview. “Given where bond rates are right now, we feel like that is a better deal there.”

Patterson said Moody’s Investors Service recently reaffirmed the UA System’s Aa2 bond rating, the third-highest long-term credit rating that Moody’s assigns. The UA system includes the Fayetteville campus and 12 other two-year and four-year campuses across the state. The system had $3.2 billion in operating revenue in fiscal 2020 and enrolled over 53,000 full-time equivalent students in fall 2020.

UAMS is the state’s only comprehensive academic medical center. It established a Northwest Arkansas regional campus in 2007 in the former 323,510-square-foot Washington Regional Medical Center on College Avenue in Fayetteville but does not have a surgical center or hospital in the region.

Patterson said he expects to ask for board approval to go to the bond market at the next scheduled meeting May 26-27. The new orthopedic and sports medicine facility will include up to 12 operating rooms and a limited number of patient beds. The building’s specialty clinics will consist of sports performance, physical therapy, orthopedic, imaging, research and education.

In the past year, UAMS has bolstered its orthopedic practice in the region by hiring five surgeons: Wesley Cox, Patrick Brannan, Tyler CarlLee, Navin Kilambi and Chad Songy. They are performing surgeries at other facilities. A UAMS facility would create additional revenue.

“These surgeons are only able to generate professional fees for such cases; the technical/hospital-based part of the fee is collected by the facility where the surgery is performed,” UA System President Don Bobbitt wrote in a letter to the board this past fall. “If the cases could be performed at a UAMS facility, this technical fee would also be secured by UAMS, which would result in a projected $3 million to $4 million margin on the orthopedic practice alone.”

Amanda George, vice chancellor of finance and CFO at UAMS, said previously that UAMS’ orthopedic practice in Northwest Arkansas now runs at an annual deficit of approximately $3 million.

UAMS currently leases two sites in Lowell and Fayetteville to provide orthopedic clinical services. Those clinics would close once the new building opens.

UAMS was also announced recently as the new sports medicine provider for the University of Arkansas athletics department. At least one trustee referenced that fact after the March board meeting.

“That will be a great recruiting tool for athletes that we’re recruiting,” UA System trustee Steve Cox told the Arkansas Democrat-Gazette following the meeting. Cox is a Jonesboro businessman who played football for the Razorbacks. “I think you take an athlete by there and show them how they’re going to be taken care of, in that manner — that’s got to be big-time.”

Patterson told the Northwest Arkansas Business Journal the facility’s goal would be to serve patients elsewhere, not just in Northwest Arkansas.

“I suspect we will see competitive athletes from all over the country come to Northwest Arkansas and getting their care here,” he said.

UAMS is also building an $85 million surgical hospital in Little Rock. The project is being paid for by a bond issue approved this year by the University of Arkansas Board of Trustees.

With four floors providing more than 158,000 square feet in space, the hospital will be an extension of the UAMS Medical Center.