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Rice Hospital in Willmar, Minn., approves joint venture with ACMC

WILLMAR -- Under a proposal approved Wednesday by the Rice Memorial Hospital board, anesthesia and sleep laboratory services will be folded into Willmar Medical Services, the joint venture co-owned by the hospital and Affiliated Community Medical Centers.

The move is expected to make these services more efficient, reduce costs and duplication, and set the stage for initiatives to enhance quality.

Formal discussions about transferring the two services to Willmar Medical Services had been taking place since last fall.

"We sought out input from lots of stakeholders in this process," said Mike Schramm, chief executive of Rice Hospital.

"We believe that for the right reasons this makes sense. Both parties' interests are aligned."

The deal calls for Rice Hospital to transfer inpatient and outpatient certified registered nurse anesthetist services performed at Rice, facility fees for outpatient anesthesia performed at Rice, and all facility fees for sleep lab services performed at Rice.

ACMC will transfer all anesthesia physician professional services performed at Rice and at the Willmar Surgery Center, all sleep lab physician professional services performed for patients at Rice, and all CRNA professional services performed at the surgery center.

The expansion of Willmar Medical Services to include anesthesia and the sleep lab is being capitalized with $1.14 million in net equity contributions from each of the two partners.

Officials at Rice and ACMC hope to have all the legal documents completed soon. The transfer of services is scheduled to take effect around May 1.

Hospital board members approved a raft of agreements Wednesday addressing the details: the net equity contributions from each party, professional services agreements for the certified registered nurse anesthetists and anesthesiologists, and an amendment to the Willmar Medical Services partnership agreement that includes the addition of anesthesia and sleep lab services.

The physicians and CRNAs will remain employees of their respective entities, at least to begin with, and will have their services leased to Willmar Medical Services. At some point, however, the CRNAs will likely become employees of Willmar Medical Services.

Schramm said the streamlining of anesthesia services and the future growth of surgery in the community have been under study for some time.

Historically, anesthesia services have been split between ACMC, which employs the anesthesiologists, and Rice, which employs the majority of the CRNAs. A consultant brought in to study the service and identify opportunities for enhanced efficiency concluded that without a change in structure, any chances for streamlining would be limited, Schramm said.

The services themselves were functioning well, but the hospital and ACMC saw an opportunity to enhance them with even closer cooperation, said Dr. Ronald Holmgren, president and chief executive of ACMC.

"I just think we're going to do it better," he said in an interview. "It's efficiency and cost savings that we're seeking. It's a whole new approach."

Other services provided jointly through Willmar Medical Services include the outpatient Willmar Surgery Center, the Willmar Regional Cancer Center, medical imaging and outpatient diabetes education. The entity has 200-some employees. Profits and losses are shared 50-50 by the two partners.

Both financially and clinically, the model has been a success, Holmgren said. "I think we'll look for more opportunities in the future."

Anne Polta

Anne Polta covers health care, business/economic development and general assignment. Her HealthBeat blog can be found at Follow her on Twitter at @AnnePolta.

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