Altru Health System’s decision to resume work on its new building comes as the nonprofit hospital reaps the benefits of city-issued bonds, financial adjustments and donations.
Hospital staff announced Tuesday that they plan to carry on with construction on the partly completed building this fall, with a completion date sometime in 2024. In the meantime, they’ll figure out some new but mostly unspecified design elements, including a “negative pressure unit” that would be designed to limit the spread of viruses, among other administrative tasks.
“This is a really, really good piece of news for our community and our region,” Dave Molmen, Altru’s CEO, told the Herald after the announcement Tuesday. “We were determined to see that this happened.”
Altru paused construction on its new hospital in April at the outset of the COVID-19 pandemic. Rosier financial outlooks this year and last gave the hospital the financial room to resume the project.
“We were not going to start the project until we had the operational and financial support that put us in the right place to do it,” Molmen said. “We had a positive year in 2020 thanks to a lot of amazing work by Altru staff who worked very hard and dedicated themselves and sacrificed a lot.”
Grand Forks city leaders agreed in October to borrow up to $50 million on the hospital’s behalf, which allows Altru to more cheaply refinance a loan it took out in November 2019. The city is a conduit for that money but the financial obligation is entirely Altru’s. Molmen said the hospital is expected to hit that $50 million cap and is working to issue more bonds via the city. City Administrator Todd Feland indicated that the hospital has not asked the city for another bond issuance, but they also have specifically met about one.
The hospital also cut costs at multiple points in 2020, including large-scale layoffs in June and pausing construction on the new hospital in April. The nonprofit has since rehired some of the 167 people it laid off last spring, but Molmen and spokesperson Kenneth Harvey didn’t specify how many.
“Altru has rehired former employees when possible,” Harvey said.
At one point earlier in the pandemic, the hospital had about 120 days’ worth of cash on hand, but Molmen said that figure was about 187 days’ worth on Tuesday.
“We’ve worked to make sure that we’re efficient in everything, that we’ve reduced areas of possible duplication or waste,” Molmen said. “We’ve tried to smooth out our procedures, eliminate downtime, all kinds of things like that.”
And “philanthropic support” is also set to help pay for the new building, according to Altru staff. Molmen said lots of people in the Grand Forks area want to see the new hospital built, but said Altru doesn’t have a goal in mind for would-be donations.
The most recent estimate for the new hospital’s construction is about $250 million. Molmen said the hospital didn’t lose any money by putting that project on a back burner. Thus far, Altru has spent between $60 million and $70 million on the project, Molmen estimated, cautioning that it was an approximate figure. Harvey and other hospital staff did not provide a more precise figure than that.
And that $250 million could ultimately mean about $320 million worth of “economic impact” in the Grand Cities, according to David Flynn, a UND economics professor who directs research at the school’s Institute of Policy and Business Analytics. Flynn’s estimate assumes that about 60% of the firms the hospital will use to build its new site are local.
The bulk of that figure encapsulates the money Altru plans to pay builders and designers to put the building together, and the remainder represents how those businesses spend that money once it's in their own checkbooks.
There may also be a more roundabout economic boost from the Altru project. Cities with amenities like a large hospital could more easily attract people and businesses, but that’s complicated by a chicken-and-the-egg relationship between those two phenomena: does a city with many conveniences attract businesses and people, or do a lot of businesses and people attract a lot of conveniences?
“From a development standpoint, as you try to evaluate and assess communities and try to attract in other kinds of business, it can, depending on the type of business, matter what kind of medical facility you have available in the town, in the region,” Flynn told the Herald.
A company that recruits on the strength of its workers’ health insurance plan could, perhaps, have an easier time if its workers could use those benefits locally.
“What’s the use of being offered health benefits if you have to drive 95 miles in order to see the particular specialist you want or get the particular scan you need?” Flynn said.