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Indiana group purchases Aurora Hospital

The mothballed Aurora Hospital building in south Grand Forks appears to be on its way to finally opening to the public.

Physicians Hospital System, an Indiana-based network of physician-owned health care facilities, has completed the purchase of the Aurora Hospital building in the Aurora Medical Park.

Plans call for the new full-service hospital, which will be named Doctors Hospital, to open early next year. The for-profit facility will include an emergency department, an intensive care unit and obstetrics. Additional services, the number of beds and number of workers the facility will employ will be determined within the next two months, company officials said.

Representatives from the for-profit network that includes facilities in Indiana and Michigan met with Aurora officials in Grand Forks last week. Physicians Hospital System personnel also held introductory meetings with a few local organizations during their visit.

"The people of Grand Forks and its surrounding region deserve the best health care services at the highest standard of efficient and effective care," Cameron Gilbert, the CEO of Physicians Hospital System, wrote in a statement obtained by the Herald, confirming the sale. "Physicians Hospital System has been overwhelmed with the kindness and enthusiasm from the community. They are excited to have us in the community, and we are thrilled to bring patient and doctor focused health care to them."

It is also not known when the new facility might receive all required approvals and certifications.

Attempts to reach Aurora officials for comment were unsuccessful.

Barry Wilfahrt, president and CEO of The Chamber of Grand Forks and East Grand Forks, said Physicians Hospital System representatives expressed an interest in learning more about the area when he met with them last week.

"When you go to a new town and you want to get the lay of the land, you go talk to the chamber," he said.

Keith Lund, vice president of the Grand Forks Region Economic Development Corp., also met with the new hospital group. He described the meeting as introductory and said he expected to meet with the organization again in the future.

New competition

The addition of a second hospital in Grand Forks would mark the first time since 1971 when Deaconess and St. Michael's hospitals became one legal entity that the city has had hospital competition. The non-profit, community-owned Altru Health System, which operates the city's lone full-service hospital facility, was formed in 1997 when United Health Services and the Grand Forks Clinic merged.

Altru Health System officials declined to comment for this story.

Grand Forks is the largest city in North Dakota that is served by one full-service hospital. Fargo and Bismarck, the state's largest cities, both have two competing hospital systems. Minot, the state's fourth-largest city, is currently served by one hospital system, but previously had competing hospitals.

Jerry Jurena, the president of the North Dakota Hospital Association, said he doesn't know how much the new hospital would compete with Altru.

Certification process

The Aurora hospital facility has a certification of occupancy from the city and does not need any other city approvals, unless the new owners chose to make changes to the inside or outside of the building that would require additional approvals. The city's planning and zoning and building inspections departments have not received any new plans for the facility recently.

The new hospital would also need to be licensed with the North Dakota Department of Health before it opens.

Bruce Pritschet, director of the state health department's division of health facilities, said no paperwork has been submitted yet on the new facility, but he said his office did receive a phone call about licensing the facility last week.

Pritschet said a new hospital also would need to receive certification to allow it to provide service to patients covered under Medicare and Medicaid.

A provision in the health care reform legislation currently being challenged in court bars physician-owned hospitals, including new facilities, from taking part in Medicare or other federal health programs if the facilities are not certified by Medicare by the end of last year.

Gilbert said the legislation prevented the Aurora Hospital facility from opening. Physicians Hospital System officials do not appear to be concerned about the legislation's impact on the group's plans to open the hospital.

Denise Kolpack, vice president of corporate communications at Blue Cross Blue Shield of North Dakota, said the state's largest health care provider follows a standard procedure for contracting with facilities. She said the facility must first open, receive Medicare certification and be in operation for three months without receiving Blue Cross or Medicare reimbursements before receiving a contract to treat Blue Cross patients.

Aurora Hospital never materialized

Construction on the two-story, roughly 200,000-square-foot hospital building in the Aurora Medical Park began in 2007. Aurora officials had planned to open a 66-bed hospital in late 2009 that would have employed 200 workers.

Construction on the exterior of the facility was completed, but the hospital has yet to open.

Aurora officials have been shopping the hospital facility for some time. Altru Health, which is planning a clinic across South Washington Street from the Aurora complex and is also involved in the Choice Health & Fitness facility under construction nearby, was not interested in the facility.

Physician-owned hospitals

Physicians Hospital System is a physician-owned group of eight medical facilities, including some that provide specialty services, in north central Indiana and southern Michigan that provides services including general, orthopedic and spine surgery, neuromuscular treatment and long-term acute care.

According to the Physicians Hospitals of America advocacy group, 275 physician-owned hospitals operate in 33 states across the country, offering a mix of services ranging from general and long-term acute care, emergency care, multi-specialty, rehabilitation, psychiatric care and services catering specifically to children and women.

North Dakota does not currently have any full-service, physician-owned hospitals.

Supporters of physician-owned facilities argue that patients benefit when physicians are more directly involved in all aspects of health care delivery.

A message to patients posted on Physicians Hospital System's Web site states that "physician-owned healthcare models provide high quality, efficient, patient-focused care, equal access, patient choice, price transparency and overall higher patient satisfaction."

Physician-owned facilities have been criticized by some as focusing on more profitable specialty practice areas, leaving less lucrative services for community hospitals.

But that description may not apply to the new hospital as the group says it plans to open a full-service hospital, including services such as an emergency room, which are typically not as profitable.

Schuster reports on business. Reach him at (701) 780-1107; (800) 477-6572, ext. 107, or email Follow Schuster on Twitter at @RyanSchuster.