Local doctors and the city hospital in Willmar have approved plans to create a nonprofit health system that would be a subsidiary of St. Cloud-based CentraCare Health.
Set to be finalized in early 2018, the agreement includes a commitment for $32 million worth of improvements over 10 years at Rice Memorial Hospital, which is owned by the city of Willmar.
The hospital along with a large group of physicians in the region known as ACMC Health announced agreements this week to create Carris Health, which will operate as a CentraCare subsidiary.
Among other things, the new system should allow doctors and the hospital to transition to a new electronic health record system that will help standardize care for higher quality and efficiency, said Dr. Ken Holman, the chief executive at CentraCare, in an interview.
"Right now, there are different [electronic health records], so there's duplication of record keeping and inaccuracies of record keeping," Holmen said. "There is not much standardization of care … and we all know that standardization of appropriate care — right place, right time — is really important."
Health economists have questioned whether mergers that result in bigger systems of doctors and hospitals give health care providers market power that lets them drive up prices. But Holmen said the goal with Carris Health is not to extract bigger payments from health insurers.
"Our board is a regional board, they're a community board," he said. "It's made up of local business people. They're concerned about the cost of health care just like any citizen would be, or any patient."
CentraCare is one of the 10 largest health systems in Minnesota, with six hospitals and 30 clinics in central Minnesota. As of June, approximately 314 physicians and 115 advanced practice providers were on staff at CentraCare's clinic system, according to a financial statement.
ACMC Health operates 10 clinics and two surgery centers. The group's 955 employees, including 180 physicians and advanced practice providers, "will ultimately become employees of Carris Health," according to a news release announcing the agreement.
"Under the agreement, Rice Memorial Hospital assets will continue to be owned by the city of Willmar and retain its name," the groups said in a statement. "The organization's 1,321 staff and physicians will become employees of Carris Health."
Rice Memorial is one of only a half-dozen Minnesota hospitals with annual revenue of roughly $100 million or more that are still independent of the other systems, analysts say. ACMC is a multi-specialty clinic with Minnesota locations ranging from Willmar and Marshall to Redwood Falls and Litchfield.