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Published August 09, 2009, 12:00 AM

Merger includes big plans for Fargo

MeritCare would expand services
Agassiz Crossing has been a fallow field waiting for the day when MeritCare would expand its medical services to Fargo’s western edge.

By: Patrick Springer, INFORUM

Agassiz Crossing has been a fallow field waiting for the day when MeritCare would expand its medical services to Fargo’s western edge.

That day could arrive within the next five years – with a new facility ranging from $250 million to $350 million – if plans by executives involved in a Sanford-MeritCare merger slated for later this year materialize.

“Within 60 months I would like to see us breaking ground, certainly announcing a plan within a year,” Kelby Krabbenhoft, Sanford’s chief executive, told The Forum.

MeritCare’s emergency room and Roger Maris Cancer Center, for example, need more space but have no room for expansion at its downtown medical campus.

Krabbenhoft has also spoken of a possible freestanding children’s hospital in Fargo. Sanford, based in Sioux Falls, S.D., recently opened a new $65 million children’s hospital at its main medical center.

Years ago, MeritCare acquired a parcel of land, Agassiz Crossing, immediately south of Interstate 94 between 45th Street in Fargo and Ninth Street in West Fargo, to have in reserve for future development.

Even before the possibility of a merger with Sanford emerged this spring, MeritCare launched a comprehensive review of its future facilities and space needs.

One of the findings: Much of the downtown MeritCare Medical Center, part of which dates back to the early 1900s, would need to be rebuilt, not remodeled, by 2030 to 2035, said Dr. Roger Gilbertson, MeritCare’s chief executive.

The life expectancy of the downtown campus, according to architects and engineers, means significant upgrades would be needed in 20 or 25 years, he said.

“They told us you have to tear it down or replace it, or transition to a new location,” Gilbertson added. “That’s what we’re looking at.”

Because of the significant investment in the downtown medical center, however, and its strategic location near downtown Fargo and the heart of the metro area, the campus will continue to provide services, Krabbenhoft said.

Still, anticipating the need for more space, MeritCare bought Agassiz Crossing, with 109 acres available for future expansion at the location south of Interstate 94.

The health system has been planning how to best serve the needs of a population in its service area that is both growing and aging, creating higher demand for services, and the facilities to meet them.

“There’s been an extensive amount of work on what that might look like,” Gilbertson said of the two-year planning process that recently concluded.

Now, with the greater financial clout that would result from a merger, plans for capital improvements and expansions can progress “with some reality instead of merely a dream,” he said.

Given the volume of patients it sees, MeritCare’s emergency room should be much larger, Gilbertson said.

“We have about a third of the size we need for the number of people we see,” he said. “That’s why that is kind of the high priority for us.”

Executives for both health systems expect to complete their “due diligence” review of financial and legal issues by Oct. 1, hoping the two can merge before the end of the year.

During ongoing discussions, Krabbenhoft, Gilbertson and their executive teams have discussed how they can expand services in both Fargo and Sioux Falls.

Becky Nelson, Sanford’s chief of operations, noted that the health system has grown significantly in the 13 years since Krabbenhoft took the helm.

She listed major expansions, including expanded emergency, cancer and orthopedic centers, as well as a surgery tower and women’s health center. Since Dennis Sanford donated $400 million two years ago, it built a $65 million children’s hospital and launched an aggressive research program with the aim of finding a cure for childhood diabetes.

“I think you’ll see that replicated here in Fargo,” Nelson said.

In Sioux Falls, a combined Sanford-MeritCare would make it easier to build a new $90 million heart hospital, Krabbenhoft said, adding that the health system must also meet growing medical needs there as well.

Given declining revenue margins, Krabbenhoft said, health care providers that aren’t financially strong risk falling behind, with outdated buildings and equipment.

Sanford-MeritCare’s combined strength would make it possible to offer new areas of highly specialized care, such as head and neck surgery or maternal-fetal surgery, Krabbenhoft said.

The goal would be to add new specialty services in Fargo and Sioux Falls, he said, adding that a new program would likely have locations in both cities.

The goal, both top executives said, is to create a combined health system that will be recognized as a regional center of excellence for a service territory covering 100,000 square miles in five states.

“It’s not going to be easy,” Krabbenhoft said. “It’ll be a bit of a trick.”

Asked whether it would be more difficult for MeritCare patients to obtain referrals to see specialists outside the health system’s network, Gilbertson responded:

“Nobody forces patients anywhere they don’t want to go. Our job will be to create a place of such sophistication and brand that people will seek it. I think we have that now in some cases. This is not going to result in some forced process.”

Readers can reach Forum reporter Patrick Springer at (701) 241-5522