Updated: Rice OKs agreements to create new Carris Health in Willmar

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WILLMAR — The Rice Memorial Hospital Board of Directors approved a series of agreements Monday to create a new entity for delivering health care to the region in partnership with Affiliated Community Medical Centers and CentraCare Health.

The new entity, to be known as Carris Health, will go into operation Jan. 1 if all agreements are approved by all parties.

Members of the hospital board also voted unanimously to recommend approval of the agreements by the Willmar City Council, which has the final say over the city-owned hospital. The council is expected to take up the issue at a work session Nov. 6.

Hospital board members expressed optimism Monday for what they called a new model for providing comprehensive health care across the region.

"We've always had partnerships but this is a new day," said Doug Allen, chairman of the board. "It is a new approach."

"It's a win-win for all the stakeholders," said board member Ken Behm.

The affiliation will bring together the city-owned hospital and ACMC's regional physician group under the umbrella of Carris Health, a nonprofit subsidiary of CentraCare Health of St. Cloud.

Rice and ACMC say the joint venture will enable them to be stronger, better able to meet regional health care needs and better positioned to attract and keep physicians and a viable health care workforce.

Formal negotiations among the parties have been underway since letters of intent were signed in late May to pursue the affiliation.

The set of agreements approved Monday marked the first time the name of the new entity, Carris Health, has been shared with the public. Other than this, there were no significant changes from the draft documents presented at a public forum in September.

Among the key provisions of the transaction:

• The hospital will be leased to Carris Health for 30 years, with automatic renewal at 30 years and an option to purchase after 10 years. If the purchase option is exercised, a public referendum must be held subject to the terms of the Willmar city charter.

• Core services must be maintained at the hospital for the duration of the lease. These include inpatient beds, the emergency department, surgery, therapy services, ambulance service and obstetrics. Core services cannot be limited, reduced or eliminated without prior approval of the hospital board.

• Carris Health will make a capital investment of $32 million in the hospital over the next 10 years.

• Carris Health will be governed by a 10-member board; four members nominated by the Rice Hospital Board, four by ACMC and two by CentraCare. The co-CEOs of Rice and ACMC also will serve as nonvoting members. Two members of the Carris Health board of directors also will be appointed to the CentraCare board of directors.

• The Rice Memorial Hospital Board will remain intact with oversight responsibility, including a say in proposed capital improvements. The board also will have enforcement authority over the lease and operating agreement.

• Hospital employees will be hired by Carris Health for their same positions, subject to application and required background checks. They will receive credit for years of service and paid time off. Existing union contracts will be honored.

• The hospital will continue to operate under the name "Rice Memorial Hospital" and will retain its own nonprofit foundation, the Rice Health Foundation. The agreement preserves a piece of the hospital's history as well: It calls for the oil portraits of Albert and Sophia Rice and their son, Cushman Rice, whose estate funded the establishment of Rice Memorial Hospital in 1937, to remain on display at the hospital.

The agreements, which include the formal affiliation agreement and a lease agreement, total nearly 60 pages. Similar agreements with their own specific provisions are being finalized at ACMC.

Hospital board members said they accomplished one of their most important priorities: maintaining local care.

"We started with a vision and we're ending up with that vision. We do want local control and local governance," said member Andrea Carruthers. "We want operations to be right here in Willmar, Minnesota."

It took 18 drafts to reach the version of the lease agreement that came before the board Monday, said board member Jon Saunders.

"I can say with great conviction there was a lot of work put into blending three organizations and the City Council," he said. "It's been vetted and worked on. Health care is the biggest winner."

"The winners are the members of the community who benefit," Allen agreed. "That's ultimately our responsibility as a board."

See the documents from Monday's special meeting:

Willmar, CentraCare and Carris Health operating lease agreement may be viewed here.

The Rice board resolution, the affiliation agreement, the member control and operating agreement draft, and the guarantee agreement may be viewed here.