The University of Kentucky is in final negotiations with Shriners Hospitals for Children to build a facility for the charitable organization on South Limestone across the street from UK's new patient bed tower.
It's not clear what would happen to the Shriners hospital on Richmond Road, but C.J. Parrish, spokeswoman for Masonic Homes of Kentucky, confirmed Tuesday that the organization has had informal discussions with Shriners officials about buying the 29-acre property for a seniors community.
Michael Karpf, UK's executive vice president for health affairs, said the UK Board of Trustees would have to approve the development plan at its meeting next week. At that point, Shriners and UK could enter into an agreement for a long-term ground lease to make way for a roughly $50 million, 100,000-square-foot building on the block between Conn Terrace and State Street.
Shriners would pay for the construction, and UK would lease back 50,000 square feet for an ophthalmology clinic. UK already owns 10 of the 14 buildings on the block; the university is negotiating to acquire the other four.
Shriners Hospitals for Children-Lexington, one of 22 Shriners hospitals around the country, was founded in 1926 at Good Samaritan as a hospital for children with polio. Today, the Richmond Road facility focuses on pediatric orthopedics, with two surgical suites and 50 hospital beds. Like all Shriners hospitals, it is funded through donations raised by the central Shriners administration.
In recent years, care for 10,800 patients the hospital sees each year has changed from in-patient to outpatient, making the 50 hospital beds obsolete, said Anthony "Tony" Lewgood, the hospital's administrator.
The new facility would have two operating suites, and clinical and rehabilitation space but no patient beds. Any in-patient operations would be done at Kentucky Children's Hospital across the street.
"This really plays to both our strengths," Lewgood said of the potential deal. "Through the affiliation, we'll have a stronger partnership for our patients."
Lewgood said the facility would be funded through Shriners Capital Investment, part of the Shriners International headquarters in Tampa, Fla. Any sale of the Shriners property would have to be approved by the national board.
The new facility would be on prime real estate for UK HealthCare's continued expansion.
"We're doing this because Shriners is a wonderful organization and we feel if we don't accommodate them, there's a serious possibility they would leave town, and that would be a loss to the community," Karpf said. "This strengthens pediatric orthopedics, their surgeons are our faculty, and it has minimal financial impact on us."
He said the deal could provide UK HealthCare with a new ophthalmology wing more quickly.
Urban County Councilman Bill Farmer of the 5th District said he learned of the possible Shriners move about 10 days ago when he was briefed by a staff person from UK President Eli Capilouto's office.
Farmer said Shriners would be a top item on the agenda of an annual meeting he is arranging with the six neighborhoods in his district. He said it is important to have a public conversation among the neighbors, Shriners, UK and Masonic Homes about the future of the property.
Meanwhile, Shriners and Masonic Homes will continue their discussions.
The non-profit Masonic Homes of Kentucky predominantly provides housing, skilled nursing and short- and long-term rehabilitation services for older individuals. It has campuses in Louisville, Shelbyville and Taylor Mill in Kenton County.
The Shriners site on Richmond Road would be suitable for a seniors community, Parrish said.
"Lexington is obviously a large market where we do not have a presence," she said. "It's an area where we have considered opening a facility."
The Shriners hospital has been a good neighbor through the years, said Ike Lawrence, who lives near the property.
"I hope if it's a done deal, a suitable tenant will be found for that property and there will be a seamless transition," Lawrence said.
"Obviously the neighbors don't want that property developed," he said. "We want to keep the sledding hill the same and the lawn as a place to gather to watch Fourth of July fireworks."
Linda Blackford: (859) 231-1359. Twitter: @lbblackford