U Regents approve St. Cloud medical school campus agreement, launch $50M campaign

University of Minnesota regents on Friday approved an agreement with St. Cloud-based CentraCare to create the state's first new medical school campus in 50 years.

The regents unanimously approved the academic affiliation agreement with the health care system, but one more step is needed to finalize the arrangement: A clause allowing the U to back out if the university isn't satisfied with details of the project's financial plan will be considered by the regents later this year. The clause is not anticipated to hold up the arrangement.

William Sibert, associate dean and chief financial officer for the U's medical school, told regents in a committee meeting Thursday he's confident in the sustainability of the agreement because of "how strong the financial status of CentraCare is."

Sibert said CentraCare has about $1.6 billion in net assets and enough cash on hand to cover about 240 days of expenses, indicating the system has a "really nice opportunity to be able to weather any storms that might precipitate."

The agreement lays out plans for the program, which is slated to start in August 2025 and grow to 96 students by 2028. It will likely be housed in a repurposed CentraCare facility on St. Cloud's west side.

The agreement runs for 15 years, with options to renew in five-year increments after that. Both sides would be required to give three years' notice if they don't want to renew.

With the approval, the U and CentraCare will work on a joint campaign to raise $50 million through donations, about $10 million of which would be earmarked for scholarships or student support.

Ken Holmen, president and chief executive of CentraCare, said that as of Wednesday, the 3½-week-old campaign had raised $10 million and "was going north."

Holmen said retired doctors in greater Minnesota already are calling him and asking to be mentors.

"It doesn't surprise me how excited they are in rural Minnesota," said regent Mary Turner, president of the Minnesota Nurses Association. "They have had to live through decades of decline of health care access."

Turner said she's been hearing that physicians have been traveling to Minnesota from other states to try to recruit new doctors.

"So anything we can do to help get more physicians, thank you so much," she said.

The campus will have a focus on rural health, similar to the U's Duluth campus focus on rural and Native American health, and is meant to help address the growing shortage of medical professionals, which is expected to grow to 80,000 physicians nationally by 2030.

Because of the shortage, rural patients face longer waits, travel farther for care and experience poorer health outcomes than their urban counterparts.

"We all know the reasons why it is so fundamental for the state of Minnesota to have more of the rural physicians that are trained in the area of greater Minnesota," said Jakub Tolar, dean of the U's medical school and who has worked closely with Holmen to plan the campus.

The U expects the program initially will have about five faculty members and about 10 at full implementation. CentraCare has agreed to cover the project's estimated annual deficit of $1.5 million.

The campus is slated to have 24 students per year, as well as expanded residency programs in fields with physician shortages in rural areas — such as mental health, pediatrics and general surgery. A research institute focused on rural health also will be included.

In the 2023 legislative session, the U and CentraCare requested $72 million to help secure scholarships, residency programming and a rural health research program. This year's infrastructure package allocated $5 million to help design the medical campus, and the higher education bill included $10 million to kick-start the campus' accreditation process.

CentraCare plans to to ask the Legislature for about $13 million next session. The bonding dollars, if allocated, would go toward an estimated $18 million project to repurpose a 60,000-square-foot administrative building to house the medical school, simulation center, team-based learning space and other medical educational opportunities.