HealthPartners plans new Lakeview Hospital in Stillwater

HealthPartners says it plans to replace Lakeview Hospital in Stillwater with a new facility built for growth as more patients reach retirement age.

The hospital campus will be built on Hwy. 36 at Manning Avenue on land that HealthPartners acquired in 2017, the system announced this week. The current medical center is about 3 miles to the east.

Bloomington-based HealthPartners hasn't yet put a price tag on the project, but it says similar facilities are being built for about $400 million. Completion is expected in late 2027 or early 2028.

"The percent of people over age 65 is projected to increase 20% over the next five years," Brandi Lunneborg, president of Lakeview Hospital, said in a statement. "The need for coordinated services for chronic illnesses such as cardiology, cancer and orthopedic care will also increase."

The plan is an example of how health systems in Minnesota are beginning to invest more in bricks and mortar even as the high costs of labor and supplies have strained their budgets. Just this week, the Minnesota Hospital Association issued a report citing "grave financial challenges" for health systems across the state.

HealthPartners, one of the state's largest nonprofit groups, operates a health insurance company and a prominent network of hospitals and clinics.

It posted an operating loss of about $22 million through the first half of 2023, according to a financial statement. The loss doesn't factor, however, about $151 million in investment income during the time.

In September, HealthPartners broke ground on a $50.5 million specialty care clinic in nearby Woodbury.

"While we're experiencing some of the same financial challenges seen across the industry, it's important that we continue to invest in the programs, care and innovations that our patients and members will need for the future," the health system told the Star Tribune.

This week, Allina Health reported third-quarter financial results showing a $95.4 million loss on operations — up from the Minneapolis-based health system's loss of $35.3 million in the same quarter last year.

Even so, Allina continues to move forward with plans for a $1.2 billion patient tower at its flagship Abbott Northwestern Hospital. Through the first three quarters of this year, the health system saw investment income of $112.7 million.

"Part of returning Allina Health to financial sustainability requires innovation and planning for the future of how we deliver care," the health system said in a statement to the Star Tribune.

In Stillwater, HealthPartners plans to build on a 67-acre parcel and has hired architects, engineers and a real estate advisory firm for the project.

In the next planning phase, the hospital says, it will seek community input on the campus design. Updates, including a construction timeline, are expected in the coming months.

"As we look ahead, our new health campus will allow us to keep pace with the needs of a growing, changing community," Andrea Walsh, president and CEO of HealthPartners, said in a statement. "With the community's input, we plan to create a state-of-the art campus that is ready for the future."

Health systems must modernize facilities to accommodate developments in patient care while meeting new regulatory requirements, the Minnesota Hospital Association said Friday.

The trade group also said hospitals face "a broad spectrum of competitors, ranging from private-equity-funded centers to global for-profit corporations like Amazon."