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Mercy Hospital plans major expansion

Phase One of Mercy Hospital's expansion project involved moving the Wellness Center out of the hospital building and into a renovated facility in Moose Lake's downtown corridor (above). The move freed up space in the hospital for part of its expansion and renovation project, set to be completed in June 2015. Wendy Johnson/

The complexion of the Moose Lake medical community is about the change in a big way. Mercy Hospital has been selected to receive $38 million in loans from the United States Department of Agriculture (USDA) Rural Development for a major building and renovation project that will create a 116,400-square-foot facility.

Mercy's Board of Directors voted to accept the loan and proceed with the project at its Oct. 4 meeting. The project will now move into the final design phase, with construction expected to start in May or June 2013.

The project represents a major step into the future for the locally operated facility, which has a primary service area of some 13,000 people.

The original hospital facility was built in 1961, and the nursing home was added a couple of years later. Numerous construction additions were completed over the years.

Keith Carlson, Mercy's director of support services, said in recent years the organization found it was challenged financially with the nursing home operation and the draw it was having on reimbursements, so in 2010 they decided to spin off the nursing home operation to Augustana Care Corporation.

"That allowed us to create a balance sheet that would support moving forward with a major construction project like this," stated Carlson.

Among one of the hospital's greatest needs that was identified was the emergency room, which Carlson said was in dire need of an upgrade, with confidentiality a major issue since the patient areas were only divided by curtains. The laboratory was still a 1976-designed facility, and though the hospital was able to update and stay current with technology along the way, the physical space was no longer large enough to accommodate those upgrades.

The hospital board wanted to approach the expansion as a team concept, so they contracted with BWBR, an architectural firm from St. Paul. The firm brought on board a consultant, Wipfli, to do extensive interviews with staff to assess their needs and determine which spaces needed to be located next to each other to best deliver care to patients.

As Phase One of the resulting master plan, the hospital decided to look at moving their public fitness center out of the hospital to a downtown location they acquired on Arrowhead Lane. That project, completed in early 2012, involved updating that building to turn it into a state-of-the art fitness facility, which also housed the hospital's home care offices. It was well received by the public from the start, but only three months after it was opened, it was flooded during the June storms, requiring numerous repairs before reopening for business.

"It's kind of our pride and joy because we think the future is wellness, keeping people healthy," said Jason Douglas, Mercy CEO.

By moving the Wellness Center, it freed up some space much-needed by the hospital and encouraged the hospital to look further into the future.

"Over the past couple of years we have been in the process of strategic planning and we realized facility needs were one of our highest priorities," said Carlson.

There were two primary drivers in moving ahead with an expansion, Carlson added. One was the hospital's patient satisfaction scores, which he said were "less than satisfactory" - not related to patient care but rather to noise and congestion due to the way the building is laid out.

"Every department was pretty much isolated from the others," he explained. "Though we're concerned about its impact on the staff, we were really concerned about the patients. To take a patient from ER to the lab and then to surgery involved a lot of moving. Now, we'll have all of those spaces right next door to each other."

Another of the primary drivers for the expansion project was the availability of USDA funding.

"The USDA had some $1.3 billion set aside for community building projects," explained Carlson. "The interest rates [3 percent] were very good, and the repayment terms they were offering were 40 years, so it was really an attractive financing package."

At that point, the hospital board, which had been looking at numerous funding mechanisms, decided to pursue funding through the USDA. The intensive application process took six months from start to finish.

"The stars aligned and we were fortunate enough to be successful in being selected for this loan program," said Carlson. "We're very excited and the community is very excited."

The hospital was selected to receive $30 million in the form of a direct loan from the USDA and $8 million in a guaranteed loan through a private lender, which in their case will be AgStar. Some of the loan money will be used to refinance the hospital's existing debt at the lower interest rate offered by the USDA, and $26 million-plus will go toward the expansion project.

The hospital is currently in the processing of bringing a general contractor on board as part of the team in order to move on into design development, slated to be completed in January 2013. Start of construction will take place this spring and completion is slated for June 1015.

(Editor's Note: In next week's Pine Journal, read about what the Mercy Hospital expansion will include and more details about what types of patient care it will offer.)