Granite Falls Health to become Avera Granite Falls next year under lease agreement

Granite Falls Health will become Avera Granite Falls on Jan. 1. The city will lease the Granite Falls Health facilities and real estate to a nonprofit entity wholly owned by Avera Marshall.


GRANITE FALLS — City Council members in Granite Falls approved an agreement Monday to lease the municipal hospital and health care system to Avera Health of Marshall.

As of Jan. 1, Granite Falls Health will become Avera Granite Falls. It will be a nonprofit entity wholly owned by Avera Marshall, according to Tom Kooiman, chief executive officer of Granite Falls Health.

Council members approved two 30-year leases as part of the agreement. They also approved moving ahead with the purchase of 30 acres of farmland adjacent to the city-owned nursing home that opened in 2015.

The hope is that at some point in the future, Avera will build a new facility on the site to replace the current hospital and clinic. Granite Falls Health operates a 25-bed, critical care hospital and medical clinic in a facility opened in the early 1980s.

Under the terms of the lease agreement, Avera Health will take over all of the financial risks past, present and future, Kooiman said. Lease payments will retire the approximately $12 million in debt for the nursing home project.


The city of Granite Falls will continue to own all of the Granite Health real estate and facilities and lease them to the new entity which will operate the hospital, clinic, ambulance, home health and other services.

Kooiman said the city pursued affiliation with a larger health care system to assure that health care services and access remain in the community, as well as the associated jobs. “We believe this is the best way to preserve jobs,” he said, adding that it is possible the roles of some positions will change.

The affiliation also meets a goal of retaining local autonomy, according to the CEO. The new entity will be governed by a board of directors that is expected to include three current hospital board members, Lavonne Koenen, Mark Jensen and Mark Henderson; medical staff member Dr. Mark Eakes; City Council representative Joe Fagnano; hospital CEO Kooiman; and Avera Marshall representative Sister Lucille Welbig.

The action follows a nearly two-year process in which Granite Health looked at its long-term needs. A task force determined that the health system needed to affiliate with a larger system to remain financially stable due to the changes occurring in the industry, Kooiman said.

Granite Falls Health issued a request for proposals earlier this year, and in September the city approved a non-binding letter of intent to affiliate with Avera Health. The action on Monday finalizes the agreement with Avera Health, and it becomes effective at the start of the new year.

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Tom Kooiman

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