Allina merging hospitals in Anoka County

Allina Health System is merging under one license two acute care hospitals in Anoka County, as the Minneapolis-based system tries to eliminate duplicate services at the nearby medical centers.

Mercy Hospital in Coon Rapids and Unity Hospital in Fridley will continue distinct operations, but the smaller medical center in Fridley next year will take the name "Mercy Hospital — Unity Campus."

Last year, Allina moved labor and delivery out of Unity and shifted the business to a new maternity unit at Mercy. Now, the health system is spending $17.5 million to move mental health care service from Mercy to a larger, consolidated program at Unity.

"It's one hospital with two buildings," said David Kanihan, an Allina spokesman. "They're separate by 10 miles, but they're serving essentially the same market. The vision is to have very little duplication of services."

Both hospitals will continue to operate emergency rooms and offer some common services, Kanihan said, but the general idea is: "You can't do everything at both places."

A growing number of health systems are merging nearby hospitals under one license so they can operate the medical centers more efficiently, said Allan Baumgarten, an independent health care analyst in St. Louis Park.

It's possible that Anoka County residents will view the changes at Unity as something of a downgrading, Baumgarten said, as maternity programs often are seen as key for hospitals in developing lifelong relationships with patient families. Mental health services, meanwhile, don't usually command rich reimbursements from insurers, he said.

"This is a logical direction for hospitals that are geographically relatively close, and is something seen around the country," Baumgarten said.

Allina officials say they are going public this week with the plan, which they call "One Hospital, Two Campuses." They'll talk about it Tuesday at an event scheduled to commemorate the 50th anniversary of Unity Hospital.

Sara Criger, the president at Mercy Hospital, said the health system remains committed to Unity, which last year saw about 52,000 patients in its emergency room.

"Unity not doing OB was a big deal — hospitals in the metro area all do OB," Criger said, using the shorthand term for obstetrics. "So, that was a big decision, and not one we took lightly."

Allina officials believe shifting maternity care to Mercy last year improved obstetric services overall, Criger said. They hope for similar enhancements through a consolidated mental health service at Unity.

Mercy will eliminate a floor of mental health beds and send the business to renovated space at Unity where the hospital also offers addiction treatment. The change makes sense, Criger said, because about 60 percent of the hospital's mental health patients also have addiction issues.

"We are making a significant investment to improve access to mental health professionals and services," said Helen Strike, the president of Unity Hospital, in a statement.

Criger said the move will create needed space at Mercy, where some patients currently are sent elsewhere for care.

It's possible that some patients with medical and surgical needs currently treated at Unity will move to Mercy over time, Criger said, but there aren't specific projections for how many patients. It's also not clear whether other services will shift to Mercy, or what any changes might mean for the number of workers at each campus.

Allina is one of the state's largest health systems, with 12 hospitals and 64 clinics. In 2014, Mercy Hospital posted $60.8 million in net income on $408.9 million in revenue, according to the Minnesota Department of Health.

Unity meanwhile, posted a loss of $1.9 million on about $188 million in revenue.

When Allina was created as a health system about 20 years ago, managers saw the potential for market share gains through better collaboration between Mercy and Unity, said Keith Halleland, an attorney in the health care practice with Dewitt Ross & Stevens law firm.

The hospitals will begin operating under one license on Jan. 1, with changes in mental health services scheduled for early 2017.

"Patients are looking for a greater level of both knowledge and expertise," said Halleland, who did legal work on the creation of Allina in 1994. "If they think a place is getting a focus … that will help them, then they are more likely to go there."

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck