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Fletcher Allen Seeks Big Land Purchase

Burlington — Fletcher Allen is seeking approval to purchase 130 acres of land and five office buildings in South Burlington.

Fletcher Allen Health Care this week submitted a certificate of need application to the Green Mountain Care Board, outlining a $52 million plan to purchase the 91.35-acre Mountain View Business Park off Hinesburg Road and an adjacent 38-acre parcel known as O’Brien Farm.

If the deal goes through, said Dave Keeley, director of finances and planning at Fletcher Allen, the property will provide space for the future expansion of outpatient services, which are projected to grow in the next decade. Development would also allow for more inpatient space at the hospital’s main center in Burlington.

“When the need is there, we’d have the resources available (to expand),” Keeley said. “We’ve got the capacity to develop a more cohesive plan rather than build something and then in five years build something else 5 miles up the road.”

The hospital has considered buying additional real estate since 2002, Keeley said, and found that low interest rates offered an opportune time to make the purchase. Fletcher Allen has no immediate plans to build new facilities at the site.

“A lot of the property is for future use,” senior media relations strategist Mike Noble said. “That helps us preserve the medical center for inpatient use — the outpatient services that don’t need to be closely related to the inpatient services can be moved. But specifically what and when, we don’t know yet.”

The certificate of need, which must be filed when project costs exceed $3 million, includes only the purchase of property — not development or construction.

Vermont’s aging population, improved medical technology and increased noninvasive procedures, and Fletcher Allen’s large service in Vermont and northern New York, have contributed to the growth in outpatient service. That will continue to grow, officials say.

Keeley said many hospitals don’t plan far enough into the future to adapt to those kind of changes. “We’re trying to break that paradigm and get into a longer-term vision,” he said.

Fletcher Allen said it will make a 15 percent down payment on the total $52.6 million price tag, which includes purchase and acquisition costs, and take out a mortgage to cover the rest.

The acquisition, Keeley said, is expected to pay for itself within 19 years.

Fletcher Allen now leases two of the five office buildings, housing the orthopedic specialty center, the outpatient cardiology clinic, cardiac rehabilitation, endocrinology and the pain clinic.

“We’re already paying a substantial amount on the buildings we lease,” Keeley said. “If we mortgage it at a lower interest rate, we’ll have a very quick return on the properties we lease.”

Fletcher Allen will acquire the land from property owner Pizzagalli Properties LLC, pending Act 250 and other permitting necessary for future development.

Fletcher Allen is simultaneously undertaking an unrelated $30 million project, replacing inpatient facilities on the UVM campus in Burlington. The hospital intends to submit a certificate of need request in September and has begun accepting donations for the renovations.

The Green Mountain Care Board received Fletcher Allen’s application Tuesday, said Mike Donofrio, general counsel to the board. From here, he said, the board will undergo a two- to six-month review process, to examine the application, respond to the applicant with a list of questions and concerns, prepare a recommendation for the board and host a public hearing. The criteria for approval include cost, the state’s need for the project and the overall contribution to the public good.

“We strongly recommend that it be approved,” Keeley said of the board’s decision. “We believe that it will have a favorable impact on health care costs. That’s something we’re going to have to demonstrate to the GMBC — that it will pay for itself, that it gives us the necessary facilities, that the alternative would be going out leasing more properties and those alternatives are more expensive.”

Although he couldn’t comment on the specific case, Donofrio noted that historically, “most (certificates of need) where someone gets to the point of getting in an application are passed. But it’s not like a court case,” he added. “Past precedent doesn’t dictate what happens in a present case.”