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CCM Health increasing budget for new VA Clinic in Montevideo, Minnesota

Rising costs for construction and other challenges have led to an increase in the projected budget to construct a new clinic for the Veterans Administration. Its expected completion is being pushed back as well.

The Veterans Affairs Medical Clinic in Montevideo is located on the CCM Health campus. The 7,460-square-foot facility opened Oct. 7, 2002, and current plans call for a replacement facility to be ready for occupancy Nov. 1, 2022. Tom Cherveny / West Central Tribune
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MONTEVIDEO — A new Veterans Affairs Clinic in Montevideo will open later and cost more than originally expected, but the project otherwise remains on track.

The Chippewa County Board of Commissioners unanimously approved a request Tuesday by CCM Health to increase the overall budget for the project to $5 million. It follows earlier decisions by the Montevideo City Council and CCM Health’s own board of directors to do the same.

New projections show that it could cost an estimated $4,558,568 to construct an approximate 11,000-square-foot clinic for lease to the U.S. Department of Veterans Affairs, according to information provided to the County Board by Brian Lovdahl, CEO of CCM Health.

He told the county commissioners that it was originally estimated to cost $3,748,938 to construct the new clinic for Veterans Affairs.

“Unfortunately, as we (all) know, what’s happened to the labor issue, the supply chain issue, and (to) costs,” he told the commissioners.


Lovdahl and representatives of J & D Construction of Montevideo also reported that the plans for completing the project in March 2022 have been pushed back to Oct. 1, 2022.

CCM Health and the Department of Veterans Affairs approved an agreement for the new facility more than a year and a half ago. CCM Health will build the clinic and lease it to the VA for 10 years, with an option for a 10-year renewal. It will replace the current 7,460-square-foot clinic which opened Oct. 7, 2002, on the CCM Health campus.

Brian Lovdahl, CEO of CCM Health in Montevideo, Minnesota
Brian Lovdahl, CEO of CCM Health in Montevideo, Minnesota, is shown in this March 23, 2020, photo. Tom Cherveny / West Central Tribune file photo

Lovdahl said the agreement essentially “set in stone” the lease payments for the facility to be made to CCM Health by Veterans Affairs based on the original cost estimates. As a result of the projected increase in construction costs, CCM will see a reduction in the annual rate of return from the lease payments, but the venture remains profitable for the city- and county-owned health system.

The agreement requires that CCM Health pay all the upfront costs for developing the clinic. The VA will compensate the health system $2,124,102 when the project is completed. CCM will recover the remainder of the capital costs through the lease payments.

Lovdahl said the existing VA Clinic is probably past its life expectancy. The VA needs more space to deliver its services due to the many changes in how care is delivered today, he said.

The CEO said the VA will continue to provide the same range of services in a new clinic. It’s expected that it will continue to purchase services from CCM Health, such as radiology, as it does now, he told the commissioners.


CCM Health originally planned to build a new stand-alone facility. CCM Health and J & D Construction are now looking at developing a facility connected by a common hallway to the hospital. They are also exploring other options that could reduce construction costs, according to Lovdahl.

He said the planning process is ongoing and cost projections could change. Contractors are very busy right now and obtaining bids from them is proving challenging, making it difficult to develop firm cost estimates, he said.

CCM Health owns the building now housing the VA Clinic and is looking at possible uses for it once the new clinic opens. Current discussions are focused on possibly expanding employee day care services there, and providing overnight rooms for temporary staff assisting CCM Health. CCM Health currently provides day care services in a portion of the on-campus ambulance building and it currently leases four apartments in Montevideo to house temporary staff.

CCM Health and the U.S. Department of Veterans Affairs approved an agreement more than 1 1/2 years ago in which CCM Health will build a new clinic and lease it to the VA to replace the existing clinic, shown above. Tom Cherveny / West Central Tribune

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