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A new prescription; Clearwater Health Services to partner with Sanford Health

Clearwater Health Services located in Bagley and Clearbrook will be under new leadership starting Friday.

The Clearwater County Board announced Wednesday it signed a six-month management agreement between Clearwater Health Services and Sanford Health of Northern Minnesota in Bemidji.

Once approved by Sanford the contract will be effective Friday, April 1. CHS includes the county's Memorial Hospital in Bagley, with the attached CHS clinic, the Clearwater Ambulance Service and the CHS clinic in Clearbrook.

As part of the agreement Sanford Health will provide CHS with management and consulting for six months. CHS will remain under ownership by the county board and will be governed by the CHS board of directors. Further assessment will determine the future of the relationship between Sanford and CHS.

For several months, Clearwater Health Services has been involved in a controversial deal regarding a contract for deed struck two years ago between the county commissioners to sell the county's Clearwater Health Services to Cocoon Holdings, owned and run by brother physicians, Drs. Tom and Mark Peterson, who founded the Aurora Medical Park in Grand Forks, N.D., as well as Monarch Management that runs CHS.

In early February, the CHS board sent an official notice of default to Cocoon Holdings and Monarch Management after the Grand Forks firms failed to meet a deadline to pay off a contract for deed amounting to about $3.8 million.

Cocoon Holdings has until midnight Thursday, April 7, to come up with the money to purchase the heath facilities. Monarch Management's management contract ends at midnight tonight.

"Technically, even though Sanford takes over management Friday, next Monday Cocoon could walk in with a sack of money and own it," David Johnson, a member on the CHS board of directors and county board member, said in a telephone interview. "I don't think that will happen, though."

"We're in a process of getting things handled," CHS board and county board member John Chevalier said over the phone. "Everything is in turmoil because we had to wait until the very last day to see if (Cocoon Holdings) would come up with the money."

According to Johnson, the new leadership brought in by Sanford Health will include staff members who are already familiar with CHS.

"They were there when (CHS was) managed by MeritCare, several years ago," Johnson said. "That was actually quite satisfactory. I have no reason why it wouldn't be the same again."

County board and CHS board member Duane Hayes said the county is still looking at selling the health facilities.

"We just have to have someone step in to have licensure in the short term," Hayes said. "We'll go on for request to purchase."

Benefits of the partnership could include continued availability of local care, access to additional services and doctors, efficiencies that come with being part of a larger health system such as management/consulting services and readily available expertise to help address today's increasingly complex health care environment.

Bagley, population 1,392, is located 28 miles west of Bemidji and 110 miles northeast of Fargo-Moorhead. The Memorial Hospital is a 25-bed critical access hospital owned by Clearwater County and established in 1949. Clearwater Health Services employs approximately 80 people, serving residents of Clearwater County with a combined county population of approximately 8,250.

Sanford Health of Northern Minnesota, inclusive of Sanford Bemidji, has more than 1,450 employees, 75 doctors and 118 acute care beds and is part of the Sanford Health system based in Fargo, N.D., and Sioux Falls, S.D. Sanford is the largest, rural, not-for-profit healthcare system in the nation with a presence in 111 communities in eight states.

"Providing access to quality health care for patients, close to home, is an important piece of Sanford's philosophy. This partnership has the potential to do exactly that," Paul Hanson, president of Sanford Health of Northern Minnesota stated in a press release.