CentraCare spending $228M on expansion projects in St. Cloud, Sartell

CentraCare is spending $228.8 million to expand outpatient facilities in St. Cloud and Sartell.

The construction projects, which were announced Wednesday, are the latest examples of how health systems are starting to make capital investments again as their financial results improve following the COVID-19 public health emergency.

The bulk of the new expense will fund construction at CentraCare Plaza in St. Cloud, including more and/or new space for orthopedics, neurosciences, rehabilitation and plastic surgery. The health system says it also will expand its Sauk Crossing facility in Sartell, where construction is scheduled to begin in September.

“The priorities of these projects include increasing access and quality of care for our community members, supporting team-based care and primary care transformation [and] enhancing safety,” said Dr. Ken Holmen, the CentraCare chief executive, in a news release.

CentraCare, which is based in St. Cloud, is one of five large Minnesota health systems reporting improved financial performance this summer as the industry sees moderation in labor costs and more demand for patient services.

Another nonprofit reporting improvement is Allina Health, which announced in early 2022 plans for spending about $1.2 billion on a new patient care building at Abbott Northwestern Hospital in Minneapolis.

Since November, Bloomington-based HealthPartners has announced plans for spending about $400 million on a replacement hospital in Stillwater, plus another $80 million on a new Como Clinic in St. Paul.

In July, Children’s Minnesota announced plans for spending $8.2 million to expand several suburban clinics across the Twin Cities.

In St. Cloud, some work on CentraCare Plaza started in June. Other phases will launch in the spring. The current Plaza building covers 465,560 square feet and will grow by nearly 50% to 680,669 square feet.

The expansion in Sartell will create a new home for CentraCare-Sartell Clinic, which currently is located in the former St. Cloud Medical Group building.

Separately, the health system is partnering with the University of Minnesota Medical School for the new CentraCare Regional Campus St. Cloud, an initiative that also is launching construction work within the city.

For the fiscal year ending June 30, CentraCare posted about $25 million in operating profit on revenue of nearly $2 billion, for a margin of just over 1%. The health system also saw during the 12-month period about $125.4 million in investment income.

CentraCare employs about 11,600 people.

The COVID-19 pandemic forced a short-term shutdown in many services for health care providers, followed by weak demand from patients as many stayed away from health care facilities.

Then health systems were hit by higher costs from general inflation, trouble discharging patients to step-down facilities and what some analysts described as a “labordemic,” with hospitals dependent on high-cost temporary workers.