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Published February 25, 2011, 09:01 AM

Sanford Health Business Model Focuses on Sharing

Sanford Health leaders are casting their gaze around the world for where they might plant their flag next. They've built or looked at building in Oklahoma, Oregon, California, Central America and Europe, and they're still looking.

By: Jon Walker, Argus Leader

FARGO, N.D. (AP) — Sanford Health leaders are casting their gaze around the world for where they might plant their flag next.

They've built or looked at building in Oklahoma, Oregon, California, Central America and Europe, and they're still looking.

But their biggest investment by far is one about to happen here, a new hospital in southwest Fargo. They hope to break ground in 2013 and open in 2016. By the time they pay all the bills for the new building and related work, the tab will be more than $300 million.

"That would be the biggest project we've ever had," said Ron Strand, inspections administrator for the city of Fargo.

That's six times more than the cost of the Fargodome, a $50 million arena that opened in 1992. It's three times the cost of Engelstad Arena up the Red River in Grand Forks, and almost four times more than any building of any type in Sioux Falls, S.D.

The numbers are historic, but they represent something else. Sanford has the chance to build a model hospital in a new era of health care and in so doing wash away lingering doubts about its commitment to Fargo and the region it serves.

The doubts took shape in 2009. Sanford, with its home in Sioux Falls, merged that November with MeritCare in Fargo, thus joining a South Dakota health giant with a similar giant in North Dakota.

Leaders called it a marriage of equals. But a suspicion in North Dakota was that Sioux Falls would treat Fargo as junior partner and either swallow or ignore the needs of the north. MeritCare's leverage in the new arrangement seemed suspect after costly flooding in Fargo in spring 2009. Even the symbolism of the union produced doubt. The new name, Sanford-MeritCare, was long and ungainly. Officials said it would stand, but they soon shortened it to what CEO Kelby Krabbenhoft called a nice seven-letter word, "Sanford."

The fears soon faded. Krabbenhoft, who lives in Sioux Falls, has a personal history in the Fargo area, including a college degree from Concordia in neighboring Moorhead, Minn. He came to Fargo to answer questions in public forums soon after the merger became a solid proposal.

The new network chose Bismarck, not Pierre, to file its papers, so Sanford Health officially is a North Dakota corporation. Krabbenhoft and other leaders began to explain how Sioux Falls and Fargo would be co-equals as dual headquarters for the network. They began running shuttle buses 245 miles up and down Interstate 29 so physicians, managers and technicians could go back and forth every day.

The arrangement is an odd duck for a business model, industry leaders say, but they say it with curiosity and admiration.

"I'm impressed that they're sharing staff," said Dan Talley, economics professor at Dakota State University in Madison, S.D. "They may still be in the process of working out staffing changes and how departments are merged and functions are centralized. Sometimes it's good to get a feel for how people do the job in both places."

The process will go beyond getting a feel. Sanford officials say the commuter bus is not a temporary symbol. Top executives are based in both cities in something resembling a 50-50 split. They talk up the merits of a system with two centers of gravity instead of one. They say the proof will be in the medical care.

Peggy Brossart, a resident of West Fargo, did not care much last week about the subject of mergers. Her 5-year-old daughter, Haley, was flat on her back with pneumonia in the children's unit of Sanford's downtown Fargo hospital, as registered nurse Jan Kupitz tended to her needs.

"It doesn't make any difference," Brossart said of the name on the wall. "I'm pleased with the service. It seems the same place as when MeritCare was here."

For others the merger is a difference-maker. Dr. Thav Thambi-Pillai, 40, was born in Sri Lanka and trained in Ireland, Philadelphia and Cincinnati before joining Sanford in Sioux Falls in November. Last week, he rode the bus to Fargo to join Dr. Bhargav Mistry in what would have been a kidney transplant before a last-minute postponement of the surgery.

Thambi-Pillai said the highway runs both ways. He expects to work with Mistry and Dr. Adela Casas-Melley, another surgeon in Sioux Falls, to strengthen the transplant program in the region. "I looked at Sanford and saw growth and opportunity here," he said.

Dr. Ben Noonan, a 1988 graduate of Moorhead High School, will be coming home in 2012 to join Sanford in Fargo. He's now a fifth-year resident as an orthopedic surgeon at Yale and will spend the next school year at the University of Michigan. His wife, Melanie, also will join Sanford in Fargo next year as a nurse practitioner in the newborn intensive care unit.

"I honestly didn't know a lot about Sanford," Noonan, 40, said last week from Connecticut.

A friend mentioned the new network to him. He began to read about it and, after interviews, found it to be the right fit for his interest in sports medicine.

"I never thought I'd be able to come home," he said.

Dr. Bruce Pitts, president of Sanford Health Clinic in Fargo, said the benefit of sharing between two cities will become more evident. Fargo is equipped for both kidney and pancreas transplants, which should benefit Sioux Falls, he said. Sioux Falls has a level of pediatric surgery and maternal fetal medicine that will help Fargo.

"We'll see more doctors on the move," Pitts said.

The new hospital will rise on 100 acres west of I-29 and adjacent to I-94. It's a cornfield now but in a growth region of the metro area.

The opening of the hospital will bring about a new purpose for the main downtown hospital.

"We'll renovate the downtown campus, but the new purpose is still unclear," said Dennis Millirons, president of Sanford Medical Center in Fargo.

At the new hospital, all rooms will be private, with generous window treatment, flat screens and communications gadgets. It will have public and private corridors and green design as cash flow allows.

Details on the future of both sites will come this August, Millirons said.

Justin Pearson, vice president of business retention and expansion for the Greater Fargo-Moorhead Economic Development Corp., said the community has warmed up to Sanford. Sanford and the YMCA here are splitting the $12 million cost of a new wellness center. Sanford is expanding orthopedic medicine and has backed local projects. Any fear of a Sioux Falls takeover seems to be gone.

"Logistically, it would have made sense if higher jobs would shift, but that hasn't happened," Pearson said.

"I don't know that those fears existed, but that kind of investment should allay any fears," said Strand, the city official.