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A Site Selection Web Exclusive, November 2012
WEB Exclusive story

Serving Those Who Served

Eleven billion dollars in construction activity places the VA square in the
middle of biomedical districts across the United States.

The VA’s $1.2-billion Project Legacy (left) is a multi-building campus covering twelve city blocks totaling 29 acres (11.7 hectares) in New Orleans. Total gross square footage of the project is approximately 1.6 million sq. ft. (148,640 sq. m.) plus an additional 800,000 sq. ft. (74,320 sq. m.) of parking structure. The forthcoming $1.1-billion, 424-bed University Medical Center, situated on 34 acres (13.8 hectares, right) next door to the new VA facility, is expected to open in 2015. This photo was taken from yet another partner institution in growth mode, the Louisiana Cancer Research Consortium.
Robert L. Neary, Jr., serves as the acting executive director of the Office of Construction & Facilities Management (CFM) at the Department of Veterans Affairs.
Robert L. Neary, Jr., serves as the acting executive director of the Office of Construction & Facilities Management (CFM) at the Department of Veterans Affairs.

he largest integrated health care system in the United States is in the midst of the biggest infrastructure improvement program it’s seen since the end of World War II.

It’s the Veterans Health Administration, which, along with the Veterans Benefits Administration and the National Cemetery Administration, comes under the purview of the Office of Construction & Facilities Management (CFM) at the Department of Veterans Affairs. Replacement plant value of VA facilities exceeds $56 billion, with new construction and major improvements approaching $1 billion in project value per year.

Robert L. Neary, Jr., serves as the acting executive director of CFM, which is responsible for the planning, design, and construction of all major construction projects greater than $10 million. In addition, CFM acquires real property for use by VA elements through the purchase of land and buildings, as well as long-term lease acquisitions. CFM also manages facility sustainability, seismic corrections, physical security and historic preservation of VA's facilities.

Neary, who’s worked with the VA since 1970, says the VA’s busiest facility schedule ever was in 1951, when it had 50 hospitals under construction simultaneously. But since 2004, a major initiative has been under way to provide new facilities and improve older ones.

“Right now we’re working on about $11 billion of healthcare construction, including six new hospitals,” he says from his office in Washington, D.C.. One is in Las Vegas, which was completed this past summer but is seeing follow-up work. Others are rising in Orlando, Denver (Aurora, at the former Fitzsimons Army Medical Center site) and New Orleans, with facilities in the design phase for Omaha and Louisville.

Though less than 1 percent of U.S. citizens wear a military uniform today, there are 22 million U.S. military veterans, 3 million of whom have departed from the military since Sept. 22, 2001. Another 1 million will become veterans over the next five years.

CFM also has an active leasing program, Neary explains.

“We are working on about 35 major outpatient [clinic] leases, where a developer, contractor and architecture firm will design a clinic and lease it to the VA for 20 years.” Seven of those are characterized as healthcare centers, which are practically hospital-scale and offer such services as ambulatory surgery and a host of medical subspecialties.

Typical of that type of facility is the new VA Primary Care Annex developed by Duke Realty in Tampa, Fla., which broke ground on Nov. 16. The 106,000-sq.-ft. (9,847-sq.-m.) facility will house services currently provided by the nearby James A. Haley Veterans’ Hospital and enable the hospital to expand healthcare to more than 87,000 veterans in Pasco, Polk, Hernando and Hillsborough counties. In addition to primary care services, the two-story facility will offer women’s wellness, radiology, mental health services and dental services. It will include 775 surface parking spaces (down from 826 spaces announced in March). The VA will lease the space from Duke when construction is complete in early 2014.

Not far away, Florida-based University Corporate Park is building a mental health clinic for the VA, which will sign a 10-year lease. Another major mental health clinic is being developed at the VA Medical Center in Bay Pines, Fla. VA spent more than $8 billion in Florida in 2010 on behalf of the state’s 1.7 million veterans.  VA operates eight major medical centers in the state, more than 40 outpatient clinics, 24 Vet Centers and seven national cemeteries.

In April, VA Secretary Eric Shinseki announced the VA would add approximately 1,600 mental health clinicians as well as nearly 300 support staff to its existing work force of 20,590 mental health staff as part of an ongoing review of mental health operations.

Legacy Coming to Life

President Obama’s proposed budget of $140.3 billion for the VA, proposed last February, included $64 billion in discretionary funds, mostly for medical care, as more than 1 million active-duty personnel are scheduled to join the ranks of veterans in the next five years.

Among the areas of the U.S. seeing the largest rise in veteran population under 25 is the south-central U.S., where the $1.2-billion VA hospital in New Orleans is under construction along Canal Street, directly alongside another billion-dollar hospital from Louisiana State University. Together, the two hospitals — both of which came about in part because predecessor facilities were hit hard by Katrina — are projected to generate $1.26 billion in annual economic impact. Overall healthcare industry and private-sector investment in a 1,500-acre (607-hectare) area known as BioDistrict New Orleans are expected to generate $9.6 billion in personal earnings over the next 20 years and create more than 19,700 total jobs in the New Orleans metropolitan area.

Neary projects the equivalent of 3,000 full-time construction jobs in New Orleans for the VA facility, known as Project Legacy, “then, down the road about 2,300 permanent jobs in the medical center, when it’s up and operational.”

But the real impact, he says, comes from the flow of money through the area, e.g. when a contractor buys copper, or pays its workers. “From most of the statistics I’ve seen,” he says, “$1 billion of construction equates to about 25,000 jobs. At this hospital in New Orleans, it’s about $600 million worth of construction.”

Neary says Project Legacy is going well after some delays getting started, as the state and the city procured the site and made it available to the VA. Approximately 100 homes were relocated for the project.

“There was a lot of work with the city and the state in acquiring the site,” confirms Mark Brideweser, the VA’s project executive. “We were not in charge of the movement of the houses, but glad the city was able to move those and get them reutilized. Most of those are within 10 blocks — at least 70 have been placed in various vacant lots and are being reused and refurbished.”

Brideweser says his team convenes a town hall meeting once a month, addressing community concerns about traffic and other matters that accompany such a major undertaking. “Having these meetings over the past two years really builds a sense of trust,” he says. Casting as wide a net as possible is important, he says, “because in the end it facilitates communication and calming of fears. If you have everyone at the table, rumors can be cut off pretty quickly.”

The fact that the hospitals are on the edge of a neighborhood will play into the biomedical neighborhood concept.

“There will be shared services, and within this great biodistrict, medical schools, the cancer research center and the research on our site,” says Brideweser, noting the unique assets that have been in New Orleans but have not coalesced effectively until now.

Indeed, the coalescing is proceeding, says Jim McNamara, president and CEO of BioDistrict New Orleans.

“Our first collaboration is with Tufts University,” he says, oriented toward commercialization and intended to bring pharmaceutical investment into the university. Two potential partnerships involving pharmaceutical companies are in play. “We’re in joint discussions now, in areas like wound healing,” says McNamara, noting that Tufts comes from perhaps the world’s leading biomed cluster in Greater Boston. “There is a great deal of interest, particularly as the VA gets built.”

Aligned for the Future

Among the unfolding plans by Greater New Orleans, Inc., is the growth of the city’s medical corridor. GNO also aims to attract environmental companies to solve energy, waste and water challenges for other businesses and for communities.

Such goals inevitably run up against (and paradoxically benefit from) the health challenges and environmental damage legacy wrought by decades of chemical and energy industry activity along the state’s industrial corridor. But like states such as North Carolina and Kentucky — which have derived biomedical cluster-building efforts in some cases directly from their tobacco legacies and funds — the opportunity may be there for Greater New Orleans to directly confront the environmental and healthcare legacy of its region, and in so doing cultivate business centers of expertise and discovery.

Just down the street from the two-hospital construction zone sits the New Orleans BioInnovation Center, a LEED-Gold-certified incubator launched from pre-Katrina legislation passed in 2002, but which, like its brethren buildings, started from scratch after Katrina. Its partners include LSU, Tulane, Xavier University and the University of New Orleans. Today, buoyed by $47 million in state funds and a new emphasis on IP commercialization among the schools, it’s home to four capital companies and has provided support to 50 different emerging technologies in the past 18 months, helping them secure $2.3 million in various small business grants and loans, leading to total equity-based funding of about $14 million.

According to Greater New Orleans, Inc., Xavier University in New Orleans graduates more pre-med students that actually attend medical school than any other university in the country.

Across the street from the two hospitals is the Louisiana Cancer Research Consortium (LCRC), funded since 2002 with approximately $10 million a year from a tobacco tax, and home to some 150 clinical trials in 2010. In the midst of its own expansion with new biosafety labs, the $102-million, 180,000-sq.-ft. (16,722-sq.-m.) facility has welcomed $150 million in grants to date. Dr. Prescott Deininger, co-director of the LCRC and affiliated with Tulane, says the facility is aiming to host up to 35 research groups initially, and another 10 when build-out is finished.

“Katrina was very hard on us,” says Deininger. “We lost almost half our researchers and funding.” But he calls the rebuilding effort “tremendous,” and the center has attracted some $10 million in National Cancer Institute funding and $25 million in federal cancer-related research funding, as the LCRC serves the health disparities and disproportionate cancer incidence among the impoverished and African-American communities in its catchment area.

Collaboration and Education

Brideweser says the city and the Clark/McCarthy Healthcare Partners JV have worked well from the beginning on logistics, infrastructure planning, small business outreach and communications, including with the Louisiana Dept. of Transportation, which has oversight of Tulane Ave. (Hwy. 90) that proceeds the short distance to I-10 as it travels through the city.

The collaboration extends to work-force training.

“Right now we’re focused on work force development, and how we’re going to work with the community to hire the staff we need going forward,” says Karen Collins, community and public relations spokesperson for the Southeast Louisiana Veterans Health Care System. Collaborators include medical and teaching institutions, as well as Clark/McCarthy. As Brideweser explains, the contractor is not only taking small businesses through the process of how to apply for government work and be pre-qualified, but then following up with hands-on construction training and setting up a mentorship program, “so what’s going to be left is not just businesses that understand procurement, but individual tradesmen who have developed a trade in coordination with this job.

Among six major hospital projects from the VA is this just-completed complex in Las Vegas

Clark/McCarthy’s Construction Management University Building Blocks program has now graduated 49 individuals in two classes since fall 2011. The latest 24 graduates represent 19 companies including general contractors and subcontractors in the electrical, low voltage, plumbing, concrete, medical gas, and custodial trades.

The program dovetails well with a health IT work-force training partnership announced in mid-November by BioDistrict New Orleans and HIMSS, a 50,000-member organization focused on optimizing IT and management systems in the healthcare arena. The agreement focuses on educational, career support and online initiatives before and during the 2013 Annual HIMSS Conference & Exhibition to be held in New Orleans March 3-7, 2013.

“This new collaboration with HIMSS and BioDistrict New Orleans is positive news for our city,” said New Orleans Mayor Mitch Landrieu. “I am hopeful that this partnership will help to create new economic and workforce development opportunities in the hospitality, health IT and innovation sectors for New Orleanians.”

The educational process also occurs in the VA’s day-to-day work. Brideweser says he swaps lessons on a regular basis with his counterparts at VA hospital projects in Orlando and Denver.

Asked if there are synergies between the two hospital projects, Brideweser says so far he and his counterpart at UMC are finding sufficient labor for both projects. That may change as interior build-out work commences. Meanwhile, he and Neary both say the Clark/McCarthy JV is reaching out well to veteran-owned businesses and veterans looking for work.

“There are a lot of opportunities for veterans to get employment,” says Neary. “As we get into interior fit-out, we’ll have 1,200 to 1,300 every day on the job site.”

Learning Key to Location

In describing his team’s site selection process for hospitals, Neary says veteran population is the lead criterion, along with amenities for visiting families and proximity to medical schools. In Orlando, the VA considered half a dozen sites, and in New Orleans considered three responses to its advertisement for sites. He says the city had developed a visionary plan prior to Katrina.

“When Katrina happened, our facility was flooded, and it put us out of business there. The same thing happened at Charity Hospital. Studies the VA did suggested we could put it back on line for approximately $300 million, but it would still be an older building, so a decision was made to go the extra distance and replace the facility. LSU had been thinking about building a new hospital before the storm, and they had selected that site before the storm.”

Ultimately, partnering with universities may be the most crucial building block of all. The Orlando facility is across the street from the University of Central Florida’s medical school at Medical City, with a children’s hospital just down the street. In Denver, similarly, the University of Colorado has chosen to locate its hospital on the Fitzsimons campus, and the area children’s hospital has chosen to relocate there as well.

Neary says working with the neighbors is in the VA’s DNA.

“Right after World War II, General Omar Bradley was the head of the VA. He had the foresight to recognize the value of associating with medical schools. That brings tremendous opportunities to the VA, and is a real attraction to the finest clinicians and greatest doctors associated with university medical centers, who work at the VA as well. We have 151 hospitals, and 105 of them are affiliated with medical schools.”

Institutional ballast for the New Orleans BioDistrict includes the New Orleans BioInnovation Center (left) and Tulane University.

The Site Selection Life Sciences Report features exclusive and in-depth reporting and analysis on the most important life science projects and issues. Topics covered include pharmaceutical R&D and manufacturing, biotechnology, medical device manufacturing, health-care services facility trends, clinical research and other key life science sectors.


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