St. Paul's Regions Hospital seeks big expansion

Regions Hospital is seeking state approval for an expansion that officials say is needed to serve an aging population in a facility that is already near capacity.

By 2040, the large medical center in St. Paul said it wants to add 100 beds and the equivalent of 950 full-time workers, according to a filing this month with state regulators. The figures represent increases of more than 20 percent in the current bed and employee counts.

Ultimately, approval for the project must come from the Legislature, which hasn't been asked for such a large expansion of medical/surgical beds and maternity capacity since it approved the construction of Maple Grove Hospital more than 10 years ago.

"Most of the moratorium exceptions that have been granted in the last 10 years or so have generally been for mental health care services," said Matt Anderson, a senior vice president with the Minnesota Hospital Association.

Minnesota established in 1984 a moratorium that blocks the expansion of existing hospital capacity without legislative approval. Legislators were concerned about the possible impact on health care spending, since each licensed bed can represent a significant expense in terms of staffing, technology and use of health care services.

At Regions, hospital officials said they would not need to expand the footprint of its existing campus to accommodate much of the proposed growth. And they contend the expansion won't add to overall health care costs, since Regions is part of the integrated system at Bloomington-based HealthPartners that includes a health insurance company and a commitment to holding down expenses.

Plans call for 60 new medical/surgical beds in space the hospital vacated as part of a campus expansion project that was completed in 2009. Another 20 beds would be placed on a vacant floor within the hospital's new tower for mental health patients, which opened in 2012.

The remainder of the beds would be used for maternity care, with most allowing for better flow of patients through the unit as opposed to growth, said Heidi Conrad, the hospital's chief financial officer. Separately, the hospital is considering a plan for building a new center for mothers and babies, said Megan Remark, the chief executive at Regions.

The proposal for more maternity space comes just a few months after St. Joseph's Hospital, which also is located in downtown St. Paul, closed its unit.

That closure, plus population growth, leads Regions to believe the hospital "needs an additional two licenses to increase services for mothers and babies and 18 licenses to transform our model of care," according to its filing this month with the Minnesota Department of Health.

Regions said it is unique among hospitals in downtown St. Paul in using more than 90 percent of its licensed beds — a ratio that hospital officials believe will increase to 100 percent next year. That contrasts with utilization rates of 72 percent at nearby United Hospital and 60 percent at St. Joseph's Hospital, according to the regulatory filing.

"Regions is one of the only hospitals using all of our bed licenses," Remark said. "The other hospitals in the immediate east metro have an opportunity to grow by putting more beds that they have licenses for into use."

A spokesman for Minneapolis-based Allina Health System, which owns United, did not comment. A spokeswoman for Minneapolis-based Fairview Health Services, which owns St. Joseph's, did not immediately comment.

The Regions proposal will be reviewed by the state Health Department, which will make a recommendation to legislators about whether the project is in the public interest. The hospital hopes the Legislature will pass a bill granting an exception to the moratorium during the 2018 session, which ends in May.

The goal would be to gradually renovate space to add beds, starting in about a year to 18 months, Remark said. The timeline for bringing all beds into service stretches to 2040, according to the regulatory filing.

Market-share figures from Regions show the hospital has been gaining patients in recent years, as market share has slipped for St. Joseph's as well as St. John's Hospital in Maplewood. Both of the Regions rivals were operated by St. Paul-based HealthEast until it merged into Fairview earlier this year in the wake of somewhat weakened financial performance.

Regions officials, however, downplay the magnitude of the recent market-share shifts, and said they don't expect to grow going forward by taking patients from other hospitals.

"We truly believe that when you look at the data … you look at the population growth and the aging of the population, in total the east metro is going to need more beds," said Conrad. "We think St. Joe's and United are going to need to be a part of the solution."

Health Department figures show that Regions in 2015 ranked eighth among the 10 largest hospitals in the state in the number of licensed beds, and had a relatively high utilization rate for those beds. At the time, seven of the state's largest hospitals were using less than 75 percent of their licensed beds, while the ratio exceeded 90 percent for Regions and two others.

Overall, hospitals in Minnesota aren't using about 30 percent of their licensed beds, said Anderson of the Minnesota Hospital Association. So, not many hospitals have been expressing frustration, he said, about their bed capacity.

At Regions, officials say they have been "running hot" for quite a while now — meaning operating with a high occupancy rate.

"Running hot is kind of our new normal," said Remark, the hospital CEO. "Having a little bit of flexibility just continues to make sure that you can accommodate when volume spikes up."

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck