Altru Health System’s plans for a new Grand Forks hospital are being scaled back from a seven-story to a five-story building, as a spokesperson says the hospital is pivoting to address trends in outpatient care.

“We have updated our plans to include five floors and 120 private rooms for medical/surgical patients,” Annie Bonzer, a marketing and communications manager, said in an email. “Additional observation space will be located adjacent to the Emergency Room.”

Altru’s project broke ground earlier this year and had an expected cost of $305 million with a completion date of 2022. That cost has been revised downward to $250 million, Bonzer said on Friday, and the estimated square footage has dropped from 528,000 to 420,000. The timeline, though, has not changed.

Bonzer added that changes have been “ongoing” through the project, with “the most recent updates” coming during the autumn.

“The shift from inpatient to outpatient care is happening across our industry for several reasons, including reimbursement changes, technological advances and innovation around how care is provided,” Bonzer said. “Fewer patients require an inpatient stay; care that formerly required a hospitalization now can be done safely on an outpatient basis. Our updated plan addresses this growing need.”

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The change comes not long after news of the hospital’s revenue bond was downgraded by Moody’s, a New York-based financial firm, raising questions about the hospital’s financial future. However, multiple Grand Forks observers on Friday downplayed concerns.

“I think that they’re right. We do see medical care going more to outpatient (settings),” said Grand Forks Mayor Mike Brown, an Altru OB-GYN. “They’re the regional healthcare provider, and I think they’re adjusting to the market. I think it’s wise they’re doing it. Rather than building something that’s going to be an albatross, they’re building something that’s efficient and going to serve the region better.”

David Flynn, an economist with UND, offered a similar analysis, emphasizing that the project change appears to be an adaptation to market forces – not a sign of internal trouble.

“What I see is a local firm responding to national trends and national adjustments in what is a very competitive marketplace,” Flynn said. “And so, while it is a matter to note and to pay attention to, it doesn’t rise to the level of quote-concern-unquote at this time.”

Bonzer said the hospital construction is still proceeding on schedule.

“We are installing the structural steel and have completed demolition of the tunnel connecting the current hospital with Altru Cancer Center,” she wrote. “Additional pilings will be placed where the tunnel demolition occurred; that work will begin next week.”

The new hospital, she added, will “support expansion,” giving Altru the ability to accommodate “future growth or industry shifts” after the project is completed.

“We are confident that our plans align with our vision of providing world-class care to our region, while being strategic about how we grow and deliver care now and in the future.”

Altru was prompted to build new after structural failure of its main clinic in 2017.