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CentraCare adding Redwood Falls hospital

November 26, 2018

CentraCare expects to close in January on a deal that would transfer ownership of Redwood Area Hospital to a subsidiary of the St. Cloud-based health care system, in a transaction that calls for a $60 million capital investment over the next 10 years.

First announced earlier this year, the deal for the hospital in town of Redwood Falls is the latest in a series of transactions that’s grown the size and scope of CentraCare, which includes St. Cloud Hospital.

At the beginning of 2018, CentraCare acquired a large medical group based in Willmar called Affiliated Community Medical Centers (ACMC) while also affiliating with Rice Memorial Hospital, which is located in Willmar. Those operations took on the name Carris Health, which will take ownership of Redwood Area Hospital.

“With Redwood Area Hospital coming on board on Jan. 1, CentraCare, and its wholly-owned subsidiary Carris Health, will operate eight hospitals,” the health system said Monday in a response to Star Tribune questions. “Carris Health makes up about 16 percent of CentraCare’s operating revenue.”

CentraCare and Redwood Area Hospital first announced in April plans to transfer ownership of the hospital, which is a division of the City of Redwood Falls. This month, financial statements from CentraCare confirmed the timeline for the transfer while listing financial details related to other recent mergers.

During the fiscal year ending June 2018, CentraCare acquired ACMC and a related partnership called Willmar Medical Services LLP. The health system during the fiscal year also acquired the assets of Anesthesia Associates in St. Cloud and all personal property of Northern Star Therapy. The total purchase price consideration for the fiscal 2018 transactions was $171.1 million, according to a financial statement this month.

In the response Monday, CentraCare said that its Carris Health unit posted earnings of about $2.7 million for the three months of the current fiscal year, on approximately $67 million in revenue. The earnings represent 13 percent of CentraCare’s revenue in excess of expenses in the current fiscal year, which started July 1.

In the financial statements this month, CentraCare disclosed that it plans to sell a clinic and surgery center in the town of Marshall that are part of Carris Health to South Dakota-based Avera Health. Financial terms were not disclosed and the deal is still subject to approvals by the health systems and regulatory agencies.

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck

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