Milwaukee Regional Medical Center reaches agreement with county to purchase land

Children's Hospital of Wisconsin

Milwaukee County and four of the Milwaukee Regional Medical Center member organizations have reached initial agreements for the members to purchase the county land they lease on the Wauwatosa campus.

Children’s Hospital of Wisconsin

The organizations that have signed option to purchase agreements include BloodCenter of Wisconsin Blood Research Institute, Children’s Hospital and Health System, Froedtert Hospital and the Medical College of Wisconsin.

The Milwaukee Regional Medical Center campus, which is located south of Watertown Plank Road, north of Wisconsin Avenue, east of Interstate 41 and west of Windsor Court, is one large parcel, owned by Milwaukee County. Currently, each member organization has a long-term lease agreement and makes annual payments to Milwaukee County.

Under the land purchase agreements, MRMC organizations will assume the costs of ownership, relieving the county of responsibility and expenses for infrastructure improvements, maintenance and campus operations. Existing lease payments will be converted into the purchase cost for each property and the organizations will continue to make monthly payments to the county. The county will receive annual payments ranging from $309,000 to $1.2 million from the MRMC members for the next 82 years, according a report from the Department of Administrative Services. The transactions are expected to close this year.

The Milwaukee Regional Medical Center was formed in the late 1960s, originally including the former county hospital and a few other county health-related services, and has since developed into today’s medical campus. The existing  leases were first signed in the 1970s and have been amended dozens of times to accommodate development over the years, said Teig Whaley-Smith, director of administrative services for the county.

Children’s Hospital, the largest leaseholder of the organizations, currently leases a total of about 55 acres from the county, followed by Froedtert (48 acres); MCW (33 acres) and BloodCenter (4.5 acres).

As the campus has developed, county staffing and funding for operations and maintenance of roads, landscaping, street lighting and traffic signals have struggled to keep pace with the medical center, county officials said. Also under the existing lease agreements, the county had “massive liabilities,” including being on the hook to repurchase the campus’s $1.6 billion of infrastructure when the leases expire in about 80 years, and having to contribute to all the infrastructure that serves the campus, Whaley-Smith said.

Milwaukee County Executive Chris Abele said the county agreed to those conditions years ago, not anticipating how much development would occur.

“This is a win-win situation for the county and for these partners who have heavily invested to build the MRMC campus into a set of world-class health care facilities,” Abele said. “Having MRMC partners own the land they’ve built on empowers them to continue to invest in creating and maintaining innovative facilities. In exchange, the county receives income from the sale of the land and reduces long-term liabilities that were built into the leases.”

MRMC Executive Director Bob Simi said the organizations’ ownership of the land will simplify management of the campus and expedite decision-making related to infrastructure.

“The time is right to move from leasing to ownership,” Simi said. “Just as for a homeowner, ownership strengthens commitment. The MRMC members are deeply committed to continuing the public benefit that began on this campus when it became the County Grounds more than a century ago. Their dedication is demonstrated by the billions of dollars they have invested to develop the campus into a major hub of medical expertise, economic value and employment growth.”

The Milwaukee County Behavioral Health Division, also located on the campus, is not part of the transaction. The BHD is in a multi-year process of shifting services off its aging, over-sized campus and into community-based care. It has selected Universal Health Services Inc. to run a new acute-care psychiatric hospital that would replace the hospital currently located at the Mental Health Complex on the MRMC campus.

Curative Care, also located on the MRMC campus, is also not involved. County officials said the organization “has a long-standing relationship with the county and MRMC and is working with partners to ensure a successful future for Curative on campus.”

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