Blue Cross Blue Shield of Minnesota will relinquish its 50% interest in Innovis Health, Fargo, N.D., leaving physician-owned Dakota Clinic as the 74-bed hospital's sole owner. Innovis will refinance a loan to pay back the Minnesota Blues for hospital startup costs, but specific terms of the deal weren't disclosed. The deal has been approved by the state attorney general and is expected to be completed in the summer. The Minnesota Blues and Dakota Clinic opened the $90 million not-for-profit hospital in 2000, when the insurer was looking for a way to control high inpatient costs in the area and after the clinic lost a deal to provide ancillary services to former 110-bed Heartland Health System. Heartland suffered from the competition and subsequently closed.
"At that time, Blue Cross saw an opportunity to create healthy competition in the area," said the insurer's spokeswoman, Jan Hennings. "Innovis has grown and stabilized to the point where we felt Blue Cross funds were no longer needed. This change will help Innovis and Dakota Clinic move forward." The Blues had planned to return to its core insurance business for some time, she said. Earlier this year, a deal to sell Innovis to Catholic Health Initiatives fell through when the parties were unable to agree on terms. Innovis earned $5.8 million on revenue of $136.9 million in 2003, according to the American Hospital Directory. -- by Laura B. Benko