Abbott Northwestern planning new 10-story hospital building in Minneapolis

Allina Health System is planning to erect a new 10-story hospital building on the campus of Abbott Northwestern Hospital in Minneapolis, the latest in a series of construction projects at one of the state's largest medical centers.

The tower would replace a four-story parking garage situated at the center of the hospital campus, creating space for four floors of patient rooms as well as new surgery facilities and procedure rooms.

Abbott Northwestern is in the midst of large construction projects for a new central utilities plant at the north end of the hospital campus and a parking garage at its south end. While those projects have a combined price tag of about $200 million, Allina officials did not say how much the new hospital building is expected to cost.

"We are currently in the planning and design phase for the surgical and critical care pavilion," Allina said in a statement.

"Located on the current Abbott Northwestern campus, the new pavilion would enable us to optimize and expand essential services," the health system said. "The modern facility will offer an enhanced, patient-centric lobby, registration, 30 new operating rooms, expanded heart-health services and additional inpatients beds."

The announcement is the latest sign that Minnesota hospitals are picking up the pace of construction projects following financial shocks from the COVID-19 pandemic in 2020.

Earlier this week, Rochester-based Mayo Clinic announced plans for $785 million in hospital construction projects at medical centers in Jacksonville, Fla., La Crosse, Wis. and Mankato. Last year, Children's Minnesota and Fairview Health Services announced plans to create new spaces in St. Paul for psychiatric care.

Allina Health is one of the state's largest operators of hospitals and clinics. The Minneapolis-based nonprofit group runs or co-owns 11 medical centers, including United Hospital in St. Paul.

At Abbott Northwestern in Minneapolis, Allina hopes to begin construction on the new hospital building in late 2022 or early 2023. The health system this week filed paperwork for the new project with city officials. Documents show the new building would be located at the west edge of 10th Avenue S. and north of E. 28th Street.

Vehicle and pedestrian movement across the campus would change significantly, including new access points at the intersection of Chicago Avenue and 27th Street, and on 10th Avenue across from Andersen United Middle School. A new skyway would connect the parking facility being built south of 28th Street, and a new covered surface parking lot would be constructed at the east edge of campus.

"This project will help us transform our patient facilities and prepare us to provide care for the next 50 years—in a neighborhood we've called home for more than 140 years," Allina says in background materials on its website.

In 2021, Allina posted $132.9 million in operating income, significantly better than the previous year's operating loss when the pandemic for several weeks drove a shutdown for non-emergency care at hospitals across the state.

Last year's earnings — reported earlier this month — came on nearly $4.86 billion of revenue, which means Allina's margin stood at about 2.7%. The margin is roughly in the health system's usual target range for financial performance, although Allina says it wouldn't have seen earnings at that level without $58.9 million in special COVID-19 funding from the federal Coronavirus Aid, Relief and Economic Security Act.

"We're appreciative of those [government] funds and that did improve our bottom line," said Ric Magnuson, the chief financial officer at Allina. The year-end results show "the continuation of the strategic direction of the company that we're seeing come through nicely."

He added: "The margins are there to be able to reinvest back in the organization and the community. ... We have historically been aiming toward the 3 percent."

New COVID-19 case counts have fallen quickly in recent weeks across Minnesota, but a surge in January showed how the virus continues to significantly affect hospital operations. During a 10-day period in mid-January, Allina had to manage staffing shortages as COVID-19 sidelined an average of more than 1,300 workers each day.

The health system has more than 28,000 employees overall. State records show that Abbott Northwestern in 2019 was operating more than 600 beds, the third-highest total for any single hospital in Minnesota