Bloomington-based HealthPartners announced plans Wednesday to add the hospital in Hutchinson to its health system, a merger that would continue the consolidation drive among Minnesota's hospitals and clinics.
Hutchinson Health would retain its name and remain a distinct, locally governed operation as part of HealthPartners, which is both a health insurance company and a large operator of hospitals and clinics.
Earlier this year, independent hospitals in Grand Rapids and Willmar also announced deals for mergers or affiliations with larger health systems amid financial pressures that give advantages to large networks of hospitals and clinics.
"For small, rural independents, we see what's happening around us," said Dr. Steven Mulder, the chief executive of Hutchinson Health. "It's the financial stability. It's the economies of scale that come with a system partnership."
HealthPartners currently operates six hospitals in Minnesota and Wisconsin, including Regions Hospital in St. Paul and Methodist Hospital in St. Louis Park. The health system agreed to the partnership because Hutchinson Health shares the same goals for providing quality and efficient care for communities, said Andrea Walsh, the chief executive of HealthPartners.
"We are committed to increasing access to top specialists, technology and services in Hutchinson and central Minnesota," she said in a statement.
The frictions that can come after small hospitals merge with larger systems have been on display recently in Albert Lea, where the Rochester-based Mayo Clinic has proposed reducing services including obstetrics at the town's hospital. Residents of Albert Lea have loudly protested against the plan.
Asked if obstetrics could be eliminated in Hutchinson, Mulder said: "We would not at all foresee [that] happening in this partnership." He said he believed leaders at Hutchinson Health would collaborate with HealthPartners officials to determine where there are chances to grow or improve services.
About 700 people work at Hutchinson Health. Mulder said it would be "disingenuous" to suggest that there would be no changes for workers as a result of the merger, but he said there are no specific plans.
Walsh of HealthPartners said: "Our intention is to work together in the coming months to figure out what makes the most sense for Hutchinson Health and for the community."
Hospitals 'need a partner'
It's already been a busy year in Minnesota for hospital mergers and affiliations.
In June, Minneapolis-based Fairview Health Services merged with the St. Paul-based HealthEast system to create the largest hospital system in Minnesota in terms of hospital beds.
Among independent hospitals, the medical center in Willmar announced earlier this year plans for an affiliation with St. Cloud-based CentraCare. In January, the hospital in Grand Rapids announced it had completed a merger with Fairview.
The number of independent hospitals has been shrinking across Minnesota in recent years. In May, the Minnesota Hospital Association counted 109 hospitals that are owned, managed, leased or affiliated with a larger health system. At the time, there were 36 independent hospitals.
"They're kind of all coming to the same conclusion, which is in terms of the crucial issues that they face — like attracting and retaining doctors, and finding capital to make investments in facilities and equipment — that they need a partner," said Allan Baumgarten, an independent health care analyst in St. Louis Park. "It's a question of ... which of the larger systems will make for the best partner."
The HealthPartners-Hutchinson affiliation is expected to be finalized in 2018. HealthPartners completed a large merger with the St. Louis Park-based Park Nicollet system in 2013, and also merged in recent years with hospitals in Stillwater and western Wisconsin.
In fiscal 2015, Hutchinson Health posted an operating loss of $2.1 million on $94.6 million in revenue, according to figures from the Minnesota Hospital Association. At the time, HealthPartners had operating income of $103.5 million on $5.7 billion in revenue.
In 2016, Hutchinson Health saw considerable improvement in its financial performance, said Mulder, the Hutchinson chief executive. He added: "Financial considerations are a high-level concern, but not an immediate concern. ... This was not done out of a deteriorating financial situation."