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N.D. Blues president says insurer won't deal with new facility

GRAND FORKS, N.D. - North Dakota's largest insurer says a hospital being built here is not needed and it won't contract with the hospital.

Construction has begun on the Aurora hospital in south Grand Forks. It is expected to be finished by fall 2009.

Mike Unhjem, president and CEO of Blue Cross Blue Shield of North Dakota, said the new hospital would mean duplicate services and higher insurance premiums.

"When we look at the economics of it, we have come to the conclusion that the hospital that Aurora is planning to build is absolutely unnecessary," Unhjem said. "With all the concern for increased costs in health care and the increased premiums our members are already seeing, we can't be a part of exacerbating that problem by contracting with another unnecessary facility that we know is going to ultimately do nothing but increase the overall cost of care in northeast North Dakota."

Blue Cross Blue Shield pays out about 80 percent for noncontracted hospitals compared with what it would reimburse for a contracted hospital.

"Right now Aurora officials are focusing on building plans and developing policies and procedures," said Aurora spokeswoman April Steffan. "They are not focusing on insurance issues yet."

The Blues will continue to cover services at the existing Aurora Medical Park and other Aurora facilities with which it contracts.

The new for-profit Aurora hospital will have 66 beds and 200 staff members, plans filed with the city show.

Not-for-profit Altru Hospital, which has 262 active acute-care beds including its nursery and neonatal intensive care unit, is currently the only hospital in Grand Forks.

"All of our analysis says the area has a surplus of hospital beds, including in Grand Forks," said Dennis Reisnour, administrative director of corporate development at Altru Health System.

Unhjem cited a survey compiled by the American Hospital Directory and reviewed by Blue Cross Blue Shield, which found Altru's 206 medical and surgical beds were about 60 percent occupied in late 2005.Unhjem also cited the region's declining population as a reason not to add more hospital beds.