The emergency room at St. Joseph's Hospital will stop taking patients at 7 a.m. Wednesday, despite lobbying from neighboring hospitals to delay a closure that will shake up medical care in the east metro.

The move is the latest cutback by Fairview Health Services to close a multimillion-dollar shortfall that existed even before the COVID-19 pandemic gutted hospital revenue across Minnesota.

St. Joseph's, a St. Paul institution for 167 years, could be set to entirely shut down as a hospital by the end of 2021, though Fairview leaders pledged to maintain its inpatient treatment of COVID-19 as well as mental and chemical dependency health issues for as long as needed.

Dr. Will Nicholson said it's too simplistic to view such changes like the removal of pieces from a game board, because the health system is investing in other forms of care that might keep patients healthier and out of hospitals.

"We're not trying to win the game of health care," said Nicholson, Fairview's vice president of medical affairs for its east metro hospitals. "We're trying to deliver the best care possible. So we need to look at that board, with the way things have always been, and we have to look at that differently."

St. Joseph's ER was seeing a greater share of patients who were homeless and primarily seeking shelter or had mental health or chemical dependency problems. Nicholson said Fairview is addressing that population with new services so they won't need emergency care — including leasing Bethesda Hospital, the former long-term acute care facility in St. Paul, to Ramsey County for conversion into shelter housing.

The health system also is creating new EmPath units, starting at Southdale Hospital in Edina, to provide better treatment and management of mental health crises than is possible in ERs.

While modernized health care that improves outcomes is the goal, it was born of financial necessity. Fairview reported a net operating loss of $152 million in the first nine months of 2020, compared with a loss of nearly $60 million over the same time frame in 2019.

Fairview took on the money-losing St. Joseph's as part of a 2017 merger with HealthEast and hastened its losses by concentrating more inpatient psychiatric services there.

St. Joseph's posted a loss on hospital operations in 2018 of nearly $44 million, by far the largest loss among hospitals in the state, according to the most recent publicly available data from the Minnesota Department of Health.

Fairview also took on ambitious financial obligations in 2019 through its M Health Fairview branding partnership with the University of Minnesota. The health system committed 0.15% of hospital and clinical revenue and a fixed payment of at least $45 million per year to the U and $31 million to the university's academic physicians group practice, according to financial records.

While leaders of nearby St. Paul hospitals said they understand the financial constraints, they sought a delay of the ER closure because they worried about reducing emergency access amid the COVID-19 pandemic and a surge in mental health patients.

St. Joseph's operated symbiotically with the competing Regions and United hospitals in downtown St. Paul, where their leaders helped form an east metro mental health task force to come up with common solutions to the rising number of patients with psychiatric crises going to emergency rooms.

"Emergency department capacity is already strained without the impact of having one fewer to serve the emergency care, COVID-19 and mental health needs of the community at a time of increased needs," said a written statement from Allina Health, which operates United.

ER doctors at neighboring hospitals had already noticed an increase in patient activity, even as St. Joseph's saw its daily number of ER patients drop from 80 to fewer than 25.

"We are disappointed St. Joe's still plans to close," said a written statement from HealthPartners, which operates Regions. "We're working hard to prepare for a potential increase in patients that may result."

Fairview leaders met in fall 2019 to address revenue shortfalls and recommended the closing of Bethesda and St. Joseph's as solutions. They initially cut the number of beds at Bethesda by half, reserving the balance only for M Health Fairview patients, before repurposing the hospital as one of the nation's only COVID-only hospitals. Bethesda's closing this fall resulted in the transfer of its COVID-19 treatment capacity to St. Joseph's.

Fairview is courting other community and hospital groups to convert St. Joseph's campus into outpatient and community health services. The health system will open a transition services program at St. Joseph's in January that among other things will serve as a bridge for patients who are ready to leave inpatient psychiatric care and return to their communities with outpatient support.

The Sisters of St. Joseph of Carondelet founded the hospital in 1853 to address a cholera epidemic and ardently defended its importance to the community in the past. The order did not oppose the latest moves by Fairview and has been discussing the expansion of its charitable St. Mary's Health Clinics on the hospital site.

The new EmPath units should reduce the need for psychiatric patients to go to ERs, where they would sometimes get stuck for days until space in inpatient units or appropriate mental health services opened up, said Dr. Allison Holt, Fairview's chief of behavioral health services.

Instead of isolated ER bays, patients will sit in comfortable recliners in a common room where mental health professionals will try to address their crises and keep them from needing inpatient psychiatric care.

Holt said hospitals from outside M Health Fairview will still be able to admit patients to psychiatric beds at St. Joseph's next year, and that collaborations between competing systems on mental health care reforms will continue.

Jeremy Olson • 612-673-7744