St. Luke’s takes full ownership of Lake View

Talk about it

The future of Lake View Memorial Hospital is more secure now that Duluth’s St. Luke’s hospital fully owns the Two Harbors medical center, leaders of both hospitals said last Friday. “We’d be hard-pressed to keep the doors open,” Lake View CEO Brian Carlson said after sending a memo to employees detailing an ownership agreement that began this month.

Carlson said those worried about outside ownership of his hospital should be more wary of what would become of Lake View if it were on its own.

While the official ownership began Jan. 1, Carlson said the memo to the 150 employees in Two Harbors Thursday wasn’t a reaction to any misinformation floating around. He said the plan was to get information out after the holiday season rush.

St. Luke’s now fully owns Lake View after a 12-year governance affiliation. The boards from both hospitals agreed that full ownership would strengthen a shared commitment to “health care staying in the community,” Carlson said.

John Strange, president and CEO of St. Luke’s, said the affiliation that began in 1998 was often “awkward” when it came to access to capital, group discounts, or the purchase of equipment. “They’d say, well, you’re only half-owners,” he said of attempts at investment in Lake View. “We can do (those things) under this arrangement.”

For Two Harbors employees, the ownership change is transparent, Carlson said. The biggest change will be that the hospital’s board membership will be split between St. Luke’s and Lake View members.

Lake View retains its assets, shares or losses in profits, and workers remain Lake View employees, Carlson wrote in his memo.

The merger is a way to keep a small town hospital afloat, Strange said. He and Carlson agreed that the 12-year affiliation has meant a continuation of offering health care where people live along the North Shore. “Any rumors that we’re there to close the hospital is not what it’s about,” Strange said.

Carlson said the technological advances at Lake View, including computer and phone systems, couldn’t have been accomplished without the larger hospital by its side. “We can’t afford those things on our own,” he said.

The two hospitals had a governance affiliation agreement for 12 years, which meant the two properties would act in concert toward certain policy and financial goals. That agreement had a termination date of Dec. 31, 2009, and the boards of both hospitals negotiated to see what should come next. It was agreed that Lake View would come under St. Luke’s ownership.

“Day to day, it doesn’t change much for employees,” said Brad Alm, director of Lake View Clinic, one of two Two Harbors properties aside from the hospital. “We’re just more a part of St. Luke’s. There won’t be any signs changing or anything like that.”

Employee forums are being scheduled for next week to explain the St. Luke’s ownership.

Carlson said the Lake View board presented some long-range goals in December, including what to do with the nursing home space it has after closing the 50-bed Lake View Home last year. There are no immediate plans.

Strange said St. Luke’s would like to strengthen the clinic with technological advances in records and billing. Both CEOs said there are efficiencies they want to improve over time.

Carlson said his board “struggled” with the ownership decision and what “fears might naturally arise.” But looking back on the affiliation with St. Luke’s, he said, it remained confident the initial reason for pairing with Duluth remained. It was the “local focus on health care,” he said.

About the properties

Lake View is a 25-bed hospital with inpatient and outpatient care, outpatient specialty clinic, emergency services, rehabilitation services and acute services. It opened in 1957. It also runs Lake View Cottages, a 20-bed adult foster care and assisted living facility; and Lake View Clinic, which it purchased in 2008. In 2009, Lake View closed its 50-bed nursing home that was part of the hospital building.

St. Luke’s has a 267-bed hospital in Duluth. St. Paul’s Episcopal Church founded it in 1881 in response to a typhoid epidemic that was ravaging the city. St. Luke’s is now a multi-specialty hospital with 34 primary and specialty clinics, and is federally designated as the Regional Trauma Center.

Tags: two harbors, news, lake view hospital, health care