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North Country Health Services: Merger process begins with Sanford Health

The North Country Health Service Board of Trustees signed a letter of intent Wednesday and Sanford Health is expected to sign a similar document today to begin the three- to five-month-long process of merger.

The tentative name of the new joint health care entity will be Sanford Health of Northern Minnesota. Sanford Health already owns the former MeritCare Clinic as of November 2009, so when the merger process for NCHS is complete, the hospital and clinic will be members of the same corporation.

"We're a team now," said Dan Olson, clinic director.

Jim Bensen, NCHS board member, spokesman for the negotiating team that worked on the merger with Sanford, said his board initiated the idea of forming a partnership in October 2009. Board members considered various options but agreed in April to focus their efforts exclusively on Sanford.

NCHS President and CEO Paul Hanson said the board's vote to sign the letter of intent was unanimous.

He said the advantages to Bemidji, he said, are the expansion of services for such specialties as cardiovascular medicine, neuroscience and woman's health.

The fully integrated clinic and hospital in Bemidji will be a not-for-profit, community-based health care system. It will combine the experience of the two health care organizations, which will increase efficiency and lead to better coordination of patient care, according to a press release.

Bensen said the integrated health care system under the Sanford parent corporation will be governed locally as a nonprofit with a board of trustees. When a position on the main Sanford board opens, he said, Bemidji would have a representative there, too.

Joy Johnson, vice president of business and development for NCHS, said that the level of care will not change.

"Health care is local by its nature," she said.

Olson added that another benefit to the integration will be the ability for hospital and clinic to maintain electronic records that health care providers can access mutually. So if someone comes into the emergency room after hours, the physician can electronically look up the treatments the patient receives at the clinic.

"It would have been very difficult to get there if we weren't one organization," said Olson.

The partnership will also bring $75 million from Sanford to Bemidji through facilities, recruitment and technology throughout the next 10 years. A portion of the total investment, a $5 million gift, will be given to the NCHS Foundation, which will remain an independent 501c3 governed by a board separate from the NCHS/Sanford Health board.

Bensen said Sanford now has health care facilities in 110 communities with major hubs in Sioux Falls, S.D., and Fargo, N.D.

"We negotiated from the position that this would be a third hub in northern Minnesota in Bemidji," he said.

He said Bemidji could also benefit as an outpost for Sanford's extensive research branch, especially in the area of diabetes.

In all, he said, joining the two health care entities will be "better positioning us to lead in northern Minnesota by delivering innovative health care and expanding our capabilities in highly specialized areas of medicine."

All branches of NCHS, including the hospital, long-term care and senior mental health facilities will continue as parts of the whole.

"Joining with Sanford in a fully integrated model of care is truly a natural progression of our long-standing relationship." Hanson said. "With an eye toward the future, we are seeking new ways of improving health and access to care for people across the entire region, including key services like heart, cancer, orthopedics and neuroscience."

"With the current emphasis on health care reform calling for change, we are humbled by the opportunity to increase efficiency and be a model for health care delivery the rest of the nation will follow," said Kelby Krabbenhoft, CEO and president of Sanford Health in a press release. "This is the perfect time to pursue ways we can work together to grow and improve our services in northern Minnesota. We can add value for patients, be proactive in health care reform and attract talent, including doctors, nurses and other health professionals who will significantly advance the services we offer."

Throughout the next several months, Sanford and NCHS will work together on additional analyses, due diligence and communications to develop a final agreement and any necessary regulatory applications. They will also share their vision for the future as a combined organization and answer questions from stakeholders and the community, according to the press release.

"Our desire is to grow, and growth means jobs," Hanson said.

"This is virtually a gift to the community," Bensen said. "It's really a marvelous day for us."

"Once-in-a lifetime, once-in-a-career opportunity," Olson said.