Study: Relocation of UAB Medical West to Hoover would create 576 new jobs, have $100 million economic impact

The relocation of UAB’s Medical West hospital from Bessemer to Hoover likely would lead to the creation of 576 new jobs and have an economic impact of more than $100 million per year after five years of operation, according to a study presented to the Hoover City Council tonight.

Plus, another 1,700 jobs would be created for two years of construction, having an additional $355 million impact, said Keivan Deravi, an economics professor from Auburn University at Montgomery.

Medical West has indicated it wants to relocate its hospital to somewhere along the Interstate 459 corridor in western Jefferson County. The hospital bought property in McCalla at Exit 1 off I-459, but Hoover Mayor Frank Brocato approached hospital officials about relocating to Hoover instead.

Brocato said he would like to see Medical West relocate to vacant land along the interstate right next to the Stadium Trace Village shopping center under construction off John Hawkins Parkway.

Medical West CEO Keith Pennington tonight said the only two sites under consideration right now are the land the hospital already owns in McCalla and the site being proposed by Brocato.

Brocato is proposing the city provide $20 million to help with land acquisition and development costs as an incentive to lure Medical West to Hoover, and Pennington said that would certainly make the Hoover site more attractive.

Medical West’s current hospital facility in Bessemer has 310 beds, but it is aging and in need of significant renovations and upgrades, according to the economic impact study conducted by Deravi. Relocating the hospital to another location is the alternative being pursued.

Medical West is proposing to build a new hospital with 220 private in-patient care beds with allocations for obstetrical/nursery and pediatric care, acute care, intermediate care, critical care and neonatal intensive care, according to Deravi’s report. The new hospital would include imaging/diagnostic services, surgical services, emergency services, in-patient treatment and other support functions.

The total cost of the facility would be $412 million and include 500,000 square feet, including a parking deck and medical office building that would be constructed next to the hospital, Deravi’s report said.

The hospital now employs about 1,000 people and would be expected to add 181 full-time jobs over the first five years of operation due to the new facility and expected growth in the health care sector, according to Deravi’s report. Another 396 jobs would be created as a result of the ripple effect in the economy, for a total of 576 total new jobs, he projected.

Those new jobs likely would not occur if the hospital were to continue operating at its present location in Bessemer, he said.

The operation of the new hospital at a new location likely would generate $27.8 million in new economic activity in its first year of operation and $101.5 million in new economic activity by the fifth year, Deravi’s report said.

The expected average annual addition to the city’s economic output is projected to be $23 million per year. Sales and property taxes for the city of Hoover would grow by $1.2 million per year during construction of the hospital and by $2.2 million by the fifth year of operation, Deravi predicts.

Deravi emphasized that his projections are all based on new jobs and new economic activity that would be generated by the hospital relocation and do not include existing jobs and economic activity already taking place as a result of the facility now in Bessemer. He also told the City Council that all of his predictions are extremely conservative.

Greg Knighton, Hoover’s economic developer, told the council that Deravi is a very well-respected economist who has worked on economic development studies for projects such as Mercedes-Benz, Honda, Hyundai, Airbus and the new Grandview Hospital on U.S. 280.

Brocato tonight said he would not have approached Medical West about coming to Hoover if it weren’t already looking for another hospital location.

“UAB will not be leaving Bessemer without health care,” he added. Hospital officials already are contemplating options for how they might continue to utilize the Bessemer facility for outpatient services and new services, he said.

The site being considered in Hoover would allow them to serve all of Hoover and western Jefferson County with a world-class hospital, Brocato said. And it would be the largest project in Hoover since the Riverchase Galleria, he said.

“We believe the economic impact will be phenomenal,” he said. “This is a $412 million project with over 1,000 jobs coming with it.”

It also will help Hoover fulfill its desire to diversify its economy from its heavy retail base and greatly improve the quality of life with more convenient access to health care, Brocato said.

“In cities all across America, medical institutions are considered anchor institutions. They play a major role in the social and economic vitality of the city,” Brocato said. “Strong hospitals invest back into the areas that they serve. UAB is a shining example of that, and we want to be their partner.”

The U.S. Bureau of Labor Statistics predicts that through 2024 the health care sector will grow more than any other sector of the economy, the mayor said. “Adding UAB Hospital will have an incredible, positive impact on our community and our neighbors that surround us.”

Brocato said the initial proposed access for the hospital would be through the Stadium Trace Village shopping center. In the long term, he’d like to see a direct link between Interstate 459 and the hospital, he said.

Regardless of what happens with the hospital, he is committed to find an alternative way into and out of the adjacent Trace Crossings community, he said

Derrick Murphy, chairman of the City Council’s Economic Development Committee, said the council now can take time to digest the economic impact study and ask more questions in the coming weeks. “Now it’s time for us to do our due diligence and get in the weeds and find out what’s best for the city of Hoover,” he said.

Councilman Mike Shaw said he’s like the city to explore other potential partners that could help with an incentive offer, such as the state, Jefferson County or Alabama Power.

Deravi said the state isn’t likely to invest in incentives for a service industry because the state primarily does incentives for manufacturing projects. The county might be a good potential candidate, he said.

Brocato said he has asked Jefferson County Commission President Jimmie Stephens for assistance with this project.

Stephens, who attended tonight’s council meeting but was not present for the Economic Development Committee meeting in which the economic impact study was presented, said it would be difficult for the county to contribute to an incentive package for a relocation project within the same part of the county. “It will be a tough sell,” he said.

However, he wants to review the economic impact study and see what it has to say, he said.

Councilman Casey Middlebrooks asked what kind of impact the hospital would have on property values of nearby residents, and Deravi said it should lead to a moderate increase in property values in the beginning and more of an increase by the fifth year.

Councilman John Lyda noted that Deravi’s study does not factor in the cost of providing services to a facility of this magnitude or the cost of lost opportunities, such as if the same property were developed with a $412 million retail project that would pay property taxes.

Lyda also said he’s honored that UAB Medical West would consider relocating to Hoover but said he could argue that the hospital wants to be in Hoover and should be paying Hoover to be able to come to the city. The customer mix in Hoover is more attractive than in either McCalla or Bessemer, from a paying customer standpoint, he said.

Councilman Curt Posey said he would like to hear more directly from Medical West about their plans and look closer at how location of the hospital at that site would impact the Trace Crossings community, particularly from a traffic standpoint.

As a part of the broader metro area, he’d also like to make sure that the facility in Bessemer would be reutilized in an adequate way, he said.

Council President Gene Smith asked the mayor what kind of timeframe he foresees needing an answer from the council. Brocato said he doesn’t have a firm timeframe in mind, but he wants to be sensitive to Medical West’s needs.

“They have to go through a lengthy process regardless of where they land,” he said. “We want to be able to get them on that road as quickly as possible.”

This story was updated with additional comments from the mayor, council members, Jefferson County Commission President Jimmie Stephens and Auburn University at Montgomery economics professor Keivan Deravi at 10:09 p.m.