Lawmakers approve the expansion compromise at St. Paul's Regions Hospital

Lawmakers approved an expansion plan at Regions Hospital in St. Paul that would provide licenses for 55 more inpatient beds, a relatively rare example of new hospital capacity in Minnesota for patients with medical and surgical needs.

Late last year, Regions put forward a plan for 100 additional beds, saying it was straining with capacity limits and needed more room to handle growth in the east metro area.

Allina Health System, which operates nearby United Hospital, and Fairview Health Services, which operates St. Joseph's Hospital in St. Paul, both raised concerns about the plan, citing long-term trends that are pushing more patients to receive care outside hospitals.

In the end, the health systems and Bloomington-based HealthPartners, which runs Regions, struck a deal that the state House and Senate codified with overwhelming votes on Saturday, although some lawmakers raised concerns about the process.

"We are pleased to have received such strong bipartisan support for our bed request," a Regions spokeswoman said Monday in a statement. "We're now waiting for Gov. Dayton's signature. And, given the changes to the legislation, we need time to adjust our plans accordingly."

Since 1984, Minnesota has had a moratorium that blocks the construction of new hospital beds due to concerns that excess capacity can run up health care costs. Hospitals can seek exceptions to the law, and lawmakers have granted waivers for the construction of Maple Grove Hospital more than 10 years ago and smaller bed requests over the past decade for mental health patients.

Requests trigger a review by the state Health Department, which examined the earlier 100-bed proposal from Regions and issued a preliminary finding that it wasn't in the public interest. But there wasn't time for a review of the final 55-bed measure.

Sen. Michelle Benson, R-Ham Lake, carried the bill in the Senate and presented lawmakers on Saturday with a letter signed by executives at Regions as well as Allina and Fairview, both of which are based in Minneapolis.

The agreement called for Regions to receive licenses for another 55 beds, including 15 for mental health patients. In addition, the letter calls on Regions to add five "observation" beds for mental health patients who can be seen in short stays, although that portion of the agreement was not included in the final legislation.

"We're going to decide tonight how to help a hospital operate," Benson said during Saturday's floor debate. She called Regions "a hospital that has a nation-leading burn center and stroke center, that's won awards for their quality — a hospital that exists as a Level One trauma center and needs capacity in order to continue."

The House voted unanimously to pass the bill, while Senate approval came in a 61-5 vote. Among those voting against the plan was Sen. Tony Lourey, DFL-Kerrick, who argued that legislators should wait for a final report from the Health Department.

"What we have before us here is a letter … where the three major industry players got together and, you know, carved up the marketplace in a way that works for the major industry players," Lourey said. "There's a pretty good argument to be made that that's not really what the Legislature is looking for in a public interest review — a public interest review is about the public interest, not the big market players' interests."

Benson said that even if the Health Department had completed a public interest review on the final plan, the ultimate decision still would rest with legislators. In its preliminary review, the Health Department suggested that a smaller number of beds might be appropriate for Regions but did not specify a number.

Sen. Jeff Hayden, DFL-Minneapolis, said he had concerns about the process for evaluating bed expansion proposals but supported the bill nonetheless. He cited the "sense of urgency" at Regions, where hospital officials have described patients backing up in the emergency room while waiting for beds to open upstairs.

Sen. Scott Jensen, R-Chaska, said he would vote for the bill despite his concern that it wouldn't help control costs in the health care system. Citing the rationale for the moratorium, Jensen said, "When we're doing this, we're growing the pie."

It's not clear exactly how much Regions might spend to create the new capacity.

The hospital's original plan for adding 100 beds didn't require new construction but called for renovation of existing space plus building out shell space. Regions estimated spending $1.26 billion on operations and staffing between 2018 and 2030 — a figure that could feasibly grow to $2 billion after factoring construction and equipment costs, the Health Department concluded.

Sen. Jim Abeler, R-Anoka, voted in favor of the final agreement and thanked the rival health systems for negotiating a compromise to an issue he said lawmakers struggled to evaluate.

Going forward, Abeler called for improvements to the public interest review process. With the Regions proposal, he said, the Health Department had to assume that nearby hospitals could easily put more of their beds into service for patients, when in some cases they lack the physical space to do so.

In debate over the past several months, some of the strongest concerns about the Regions proposal have come from sisters with the religious order that founded St. Joseph's Hospital in St. Paul. They worried that an expansion at Regions would prompt Minneapolis-based Fairview to close St. Joseph's, which is the state's oldest hospital and has had relatively weak financial performance.

Abeler addressed that concern on the Senate floor, saying: "I hope that by signing this letter, that Fairview … [is] committing to continue that extremely worthy service — that St. Joe's can continue to serve St. Paul."

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck