The city-owned hospital in Virginia, Minn., will affiliate with Essentia Health Services under a deal approved Tuesday by the City Council.
The city will lease Virginia Regional Medical Center to the Duluth-based health care provider for 20 years in exchange for its promise to immediately transfer $7 million to the hospital and within five years add $7 million in payroll, said Mayor Steve Peterson.
The hospital, Virginia's largest employer, has suffered from weak revenue, difficulty recruiting physicians and outdated facilities and equipment.
Essentia, a nonprofit corporation with 17 hospitals and 64 clinics across the Upper Midwest, already operates a clinic next to the Virginia hospital, and some council members said it made sense to have the same corporate partner at both facilities.
Peterson and Council Member Nevada Littlewolf argued against affiliating, citing Essentia's failure to keep promises to improve the clinic. Peterson confirmed that he publicly told Essentia officials that if they don't take care of the hospital, he would become their "worst nightmare."
