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UW Health at The American Center

UW Health plans to build a large specialty clinic next to UW Health at The American Center, pictured, which opened in 2015 and includes a 56-bed hospital.

UW Health plans to build a $255 million clinic, on land with room for additional expansion, next to its hospital that opened three years ago on Madison’s Far East Side.

Construction of the new clinic at the American Center Business Park is expected to start in 2020, with the building opening in 2023, Dr. Alan Kaplan, CEO of UW Health, said Wednesday.

The facility will offer specialty services, such as cardiology, dermatology, oncology and ophthalmology. It will be the organization’s third hub for specialty care in Madison, joining UW Hospital on the Near West Side and the West Clinic on the Far West Side.

The new clinic will free up space at UW Hospital, which is crowded, and incorporate new technologies such as wireless monitors and computerized patient message boards, Kaplan said.

“We are designing health care for 2050,” he said. “It will really help us take all the innovation, all the capabilities, we have and put it into a 2050 picture.

“In order to survive, to be sustainable, to be relevant, to craft the future of health care, we’re going to have to invest,” he said. “This is the right kind of investment.”

UW Health plans to issue nearly $9 million in bonds to purchase 28 acres of land next to UW Health at The American Center, which opened in 2015 and includes a 56-bed hospital.

The new parcel will be used to build a parking structure and the new clinic, to include 350,000 square feet of space on six floors. That is about two-thirds the size of the nearby hospital complex but much smaller than UW Hospital, which has 1.7 million square feet.

Other facilities, involving up to 750,000 square feet of space, could eventually be built on the clinic site, Kaplan said. The hospital complex also has room to expand, UW Health officials have said.

Some other UW Health clinics around the Madison area could be upgraded, replaced or closed as UW Health and UnityPoint Health-Meriter, which formed a joint operating agreement, assess their need for ambulatory care, Kaplan said. UW Health currently has about 1.3 million square feet of outpatient clinic space in Dane County.

Among the facilities that could be closed are clinics UW Health and Meriter built across the street from one another in Monona and Windsor in 2011, when the organizations were feuding. Kaplan called them “redundant.”

As part of the joint operating agreement, UW Health has avoided about $120 million in inpatient capital costs by shifting some patients to Meriter and using its operating rooms, Kaplan said. Cardiac services have been consolidated at UW Hospital, and non-chemotherapy infusion services were moved to Meriter.

The bonds to be issued for the American Center land are part of $350 million in bonds UW Health plans to issue this year. About $175 million is to refinance existing bonds and $25 million is to consolidate a short-term loan.

Some $120 million is for an addition and renovations at SwedishAmerican in Rockford, Illinois, which became part of UW Health four years ago. Another $21 million is for improvements at UW Hospital, such as replacing the roof, upgrading emergency generators and expanding the burn unit.

UW Health, which a year ago announced a plan to trim $80 million from its annual budget of about $3 billion, has achieved $72 million of the savings, in part from job reductions through attrition, spokeswoman Lisa Brunette said.

The system has the full-time equivalent of 15,680 employees, down from 16,000 a year ago. Its operating margin in fiscal 2018 was 3.8 percent, up from 0.6 percent in 2017.

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