An $800 million project announced Thursday would replace Duluth’s biggest hospital while also making renovations to related facilities across its downtown campus over the next four years.
Duluth-based Essentia Health said it will build a new St. Mary’s Medical Center plus a clinic building and an outpatient surgery center as part of a plan called “Vision Northland,” which hospital officials say is the largest private development in Duluth’s history.
The health system plans to spend $675 million on new facilities that span 800,000 square feet, plus $125 million for renovation of existing buildings, site preparation and financing costs.
“Our facilities that we’re currently using were built many years ago,” Dr. David Herman, the chief executive at Essentia Health, said in an interview. “We’re making our facilities work right now. But as we look forward ... our facilities likely will not be able to support the future practice of medicine much longer.”
The development is the largest in a string of hospital projects in Minnesota announced over the past year or so, including $217 million for improvements at Mayo Clinic’s St. Marys hospital campus in Rochester.
Between 2007 and 2016, the biggest health care capital expenditure reported to the Minnesota Department of Health was $281.8 million for facility construction and remodeling at Children’s Minnesota, the state’s largest pediatric hospital. Mayo Clinic in 2001 added more than 1.5 million square feet of space at a cost of nearly $500 million.
In December, Essentia Health first announced a strategic planning effort that included transforming the health system’s campus in Duluth. Details were made public this spring as state and local officials tried, but failed, at the Legislature to connect the hospital project to a broader economic development initiative like the state’s Destination Medical Center effort in Rochester.
Thursday’s announcement signified that the health system’s board of directors has signed off on the $800 million investment, according to a spokeswoman.
Essentia Health runs 15 hospitals and 75 clinics across Idaho, Minnesota, North Dakota and Wisconsin. With about 15,000 employees, Essentia in 2017 posted $151.4 million in net income on about $2 billion in revenue.
The health system said it is still finalizing schematic designs and a master construction plan. Project completion is expected in 2022. It would reduce Essentia Health’s overall footprint in the eastern portion of downtown Duluth in hopes of spurring new development.
Herman, the chief executive, said Essentia in Duluth was built over many years through a series of mergers that brought together St. Mary’s, the Duluth Clinic and Miller-Dwan Medical Center. Those three facilities and related buildings create a campus that currently spans about six bocks, Herman said.
The replacement hospital for St. Mary’s would be built within Essentia’s existing campus footprint, but two blocks closer to Lake Superior. The health system on Thursday released a rendering that suggests the new facility would offer sweeping views of the lake, although officials cautioned against taking the picture too literally since details might change.
The price tag for the new hospital is big, but Essentia Health officials believe it’s more effective to build a new facility than to keep renovating the existing hospital, portions of which date to the 1920s.
Modern hospitals have bigger operating rooms that can better house equipment and cooling systems that can handle the heat given off by the many computer systems that now run in ORs, Herman said. Currently, many of the hospital rooms at St. Mary’s are double occupancy, whereas the new facility would offer more private rooms for patients.
“When you look at the requirements for equipment and keeping people close together, there was no real way to be able to do that in the old medical center,” Herman said. “As a matter of fact, as we redesigned new operating rooms we had to decommission the floor right above them to make the operating rooms taller in order to accommodate the equipment and the lighting that’s required for the modern operating room.”
With a new building, Essentia Health plans on incorporating not just the latest in health care technology, but also consumer technology like the “smart speaker” called Alexa from online retail giant Amazon.com Inc.
“All of our hospitalized patients can choose the meal that they want,” Herman said. “Does that require somebody being at the other end of the phone, or can you just use a technology like Alexa to be able to order your meal?”