Allina Health System, whose managed-care operation is struggling, is selling a money-losing hospital in Long Prairie, Minn.
Minneapolis-based Allina last week agreed to sell 141-bed Long Prairie Memorial Hospital and Home to St. Cloud, Minn.-based CentraCare, the parent company of 616-bed St. Cloud Hospital (See related story, p. 90).
Allina is selling Long Prairie Memorial for $3.2 million. The sale is expected to be completed Jan. 1.
Primarily a long-term-care facility, Long Prairie Memorial includes 123 nursing-home beds and 18 acute-care beds, according to American Hospital Association figures. The hospital also offers home care and hospice services.
Long Prairie Memorial lost $504,000 in 1997 on net patient revenues of $8.3 million, according to Allina.
This is just the latest change in course for Allina, a hospital system and large managed-care operation often hailed as one of the nation's most innovative integrated delivery systems.
Last month Allina's health plan announced it would dump its Medicare HMO program in some parts of the state (Oct. 5, p. 6). Allina's Medica Health Plans said low reimbursement rates have made it impossible to sign up enough providers to meet HCFA's access requirements.
Last year Medica lost $23.9 million on its insurance operations, but investment income pushed it $8.5 million into the black.
Overall, Allina earned $23.4 million on total revenues of $2.5 billion last year.
Before the sale of Long Prairie Memorial was announced, a three-physician group practice at the hospital already had agreed to join CentraCare, said Jim Davis, vice president of network development at CentraCare.
The employment agreement is effective Dec. 1.
The doctors, Davis said, had been referring patients to St. Cloud Hospital.
A regional healthcare system, CentraCare includes St. Cloud Hospital, 87-bed Melrose (Minn.) Area Hospital and a multispecialty clinic with about 100 physicians.
"Our relationship for our folks in Long Prairie is with St. Cloud, and that [is] where CentraCare is based," said Clayton Peterson, Long Prairie Memorial's president.
Allina has owned Long Prairie Memorial for about five years, said Allina spokeswoman Sarah Stoesz. Predecessor companies to Allina had managed the hospital since 1978.
Selling Long Prairie Memorial leaves Allina with 18 hospitals that it owns or operates.
Stoesz said Allina opted to sell Long Prairie because the community needs services for the elderly beyond traditional healthcare services.
According to CentraCare, Allina began shopping for a buyer in May, when it sent out requests for proposals.
Once the sale is completed, Long Prairie Memorial's president and the hospital's 243 employees will become CentraCare employees.
Davis said it's not clear yet what antitrust approval the deal will require.