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Clearwater Health signs deal with Sanford

The Clearwater County Commission in Bagley, Minn., announced Tuesday a new agreement with Sanford Health to run its beleaguered county-owned hospital and clinics, ending a two-year failed deal with a Grand Forks physician-owned group.

It's clear the idea still is to sell Clearwater Health Services, one of Minnesota's last county-owned hospitals and clinics, into private hands, despite the problems with Grand Forks' Aurora group that defaulted on such a deal.

After more than two years of battling with Dr. Tom Peterson of Grand Forks and his Aurora group -- including Monarch Management and Cocoon Holdings and his brother, Dr. Mark Peterson -- which signed a contract for deed deal in 2009, the county called the deal in default earlier this year after the Peterson failed to pay the $3.8 million owed.

Dr. Tom Peterson will continue to provide medical services remotely via telemedicine into May, but Dr. Mark Peterson no longer will make visits to Bagley, according to a CHS nurse.

Sanford Health, based in Sioux Falls, merged in 2009 with the Fargo-based Meritcare system, which previously had managed CHS. Sanford Health says it's the largest health-care provider in rural America and it added the hospital in Bemidji.

Clearwater County commissioners say CHS has lost too much money, costing taxpayers too much, and that selling it to a private company would be good for everyone.

Despite the failure of the deal with Aurora, the county and CHS aren't any worse off for trying to make it work, county commissioners have said.

But many if not most of the 110 employees of CHS's hospital, two clinics and ambulance service have voiced concerns that the Aurora group was a bad choice because of financial problems the Grand Forks group has had.

Employees told county leaders it appeared the Aurora group was using money generated in Bagley to fund Aurora operations in Grand Forks.

On Tuesday, the County Commission said Sanford Health of Northern Minnesota, based in Bemidji, would begin managing CHS on Friday under a six-month contract, with ownership remaining under the county-run board of directors. Bonnie Anderson will be the interim administrator, replacing Ashley King, installed last fall by Aurora's Monarch Management.

Anderson apparently has worked for Meritcare, previously helping run CHS, and now works for Sanford, according to the nurse who provided the Herald with the county board's letter.

In a news release today, Paul Hanson, president of Sanford Health of Northern Minnesota, said it will run CHS out of its operation in Bemidji and that the relationship could deepen.

"Providing access to quality health care for patients, close to home, is an important piece of Sanford's philosophy," Hanson said. "This partnership has the potential to do exactly that."

After the six months, things may change, Hanson said. "Further assessment will determine the future of the relationship between Sanford and CHS."

He said the benefits for CHS in the arrangement include "continued availability of local care, access to additional services and doctors, efficiencies that come with being part of a larger health system such as management/consulting services, and readily available expertise to help address today's increasingly complex health care environment."

According to the nurse, the announcement was welcomed by employees, who had been vocal in asking the county board and the CHS board -- dominated by the five-member county commission -- to let Sanford take over CHS from the Aurora group.

During the controversy that boiled over last year over Aurora's management, Sanford Health sent a letter to the county offering any help it could provide.

More information about the longer-term plans for CHS will be announced to employees later, said Daniel Stenseng, chairman of the county board, in a letter sent to employees Tuesday.

"At a time of great change in health care, we see the next six months as an opportunity to further evaluate the needs of our communities and the future sale of CHS," Stenseng wrote.