MeritCare Health System

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MeritCare Health System

720 4th Street North
Fargo, North Dakota 58122
U.S.A.
Telephone: (701) 234-6000
Toll Free: (800) 437-4010
Fax: (701) 234-6979
Web site: http://www.meritcare.com

Private Company
Incorporated: 1905
Employees: 6,702
Sales: $669 million (2006)
NAIC: 622110 General Medical and Surgical Hospitals

Based in Fargo, North Dakota, MeritCare Health System is an integrated clinic and hospital system. According to the organization’s web site, it provides services to patients in a 250-mile area stretching from Jamestown, North Dakota, to Bemidji, Minnesota. The organization ranks as its home state’s largest private employer, with a workforce of 6,702 people and 500 volunteers.

MeritCare Hospital, North Dakota’s largest, admits 22,500 patients per year, offers 583 beds, and includes the 63-bed Children’s Hospital. In addition to 17 locations in the Fargo/Moorhead/West Fargo area, Merit-Care operates 9 regional clinics in North Dakota and 17 regional clinics in Minnesota. The organization operates the largest medical group practice in North Dakota, with about 400 physicians providing some 1.5 million patient visits annually.

LAYING FOUNDATIONS: 1905–27

According to MeritCare, its origins are rooted in the efforts of several Fargo, North Dakota, citizens. On March 22, 1905, Drs. Christian Kackelmacher, Olaf Sand, and Nils Tronnes; druggist Lars Christianson; Pastors S. Romsdahl and O. A. Fonkalsrud; and several other members of the community held a meeting to discuss the possible construction of a Lutheran hospital in their hometown.

These pioneers acted with a sense of great urgency. A corporate publication from April 1983, titled 5th at Mills, included Dr. Tronnes’ description of healthcare in the Fargo area at the time: “The hygienic conditions in town were bad; the water mains throughout the city carried dirty river water. Consequently, typhoid fever was epidemic.”

Tronnes explained that no real facilities existed for the poor: “Out in Oak Grove an old abandoned shack was sometimes used for these unfortunates with a couple or three rooms with dirty beds and mattresses; many windows were broken and old rags were stuffed in the holes; especially in wintertime conditions were awful; patients with fevers had to get up and start a fire in an old dilapidated stove to keep from freezing to death.”

The MeritCare Story, a comprehensive historical time line on the organization’s web site, details how progress was made during the organization’s early years, despite numerous challenges. The Lutheran Hospital Association was incorporated in 1905, construction of a hospital started the following year, and St. Luke’s Hospital opened its doors on February 25, 1908. That month, the hospital established St. Luke’s School of Nursing, led by Sister Osa Oppedahl of the Deaconesses from the Norwegian Lutheran Church of Chicago.

The Reverend O. A. Fonkalsrud was put in charge of the hospital’s business affairs in 1909. His first major undertaking was to plan the hospital’s first expansion. With a $10,000 donation from Lars Christianson, an eastern addition was finished in 1918 that doubled the size of St. Luke’s Hospital.

On April 7, 1919, the hospital’s board approved a proposal from Drs. Sand, Tronnes, and Oftedahl to develop a small specialty clinic where doctors worked in a team setting. Similar to Mayo Clinic, the concept was somewhat radical at the time. Although many physicians were not receptive to the idea, Fargo Clinic opened in 1921.

More progress was made during the 1920s. In 1922 the American College of Surgeons granted accreditation to St. Luke’s Hospital. The following year departments were formed within the hospital and Fargo Clinic established a regular staff of 28 physicians. The citizens of Fargo benefited from the establishment of an emergency room in 1925.

CHALLENGING TIMES: 1928–45

According to A History of St. Luke’s Hospitals 1908– 1983, St. Luke’s and Fargo Clinic faced numerous challenges during the Great Depression and the trying years of World War II. Both organizations were forced to implement cost-saving measures, including staff and salary reductions. To stimulate cash flow, the hospital offered a discount of 30 percent to patients who paid their bill within 30 days.

St. Luke’s helped to establish the North Dakota Hospital Association in 1934, and the two organizations urged North Dakota’s governor to request financial aid from President Roosevelt for the state’s sick and needy individuals. Four years later, increasing patient volumes and the need for more space prompted Fargo Clinic to erect a small addition. The 1930s concluded with Dr. O. J. Hagen’s efforts to establish the St. Luke’s Hospital Cancer Institute.

By 1940 both St. Luke’s and Fargo Clinic were in the black, and available cash was used for needed physical improvements, salary increases, and debt repayments. While conditions had improved financially, World War II presented other challenges. As G. Wilson Hunter, M.D. recalled in The Founding of the Fargo Clinic: “The World War II period was a difficult one for the Clinic with a third of the medical personnel going into the service. The volume of work increased in spite of our diminished staff, and at the end of the war we were faced with the need for tremendous expansion in both the Clinic and the hospital.”

GROWTH AND EXPANSION: 1946–79

The organization experienced considerable growth during the second half of the twentieth century. While modernization and expansion is continuous in the healthcare industry, substantial progress was made in the first few decades after the war.

By 1946 plans were made for a new four-story addition to St. Luke’s Hospital, where high patient volumes caused dangerous overcrowding. Built with funds from a three-year fund-raising campaign, the addition opened in 1952.

While contending with the problem of overcrowding, St. Luke’s helped the Fargo community weather polio outbreaks in 1948, 1951, and 1953, by establishing a polio ward on the facility’s first floor. In A History of St. Luke’s Hospitals, former nurse Minnie Johnson recalled the seemingly endless process of putting hot, moist towels on patients’ joints to provide relief. “I would go from room to room applying these blankets to the patients,” she stated. “By the time I got to the end of the hall, it was time to go back and start over.”

The organization ended the decade by dissolving the Lutheran Hospital Association in June 1949 and replacing it with the St. Luke’s Hospital Association.

Progress during the early 1950s came in the form of expanded services and new diagnostic equipment at Fargo Clinic, where a staff of 30 doctors provided treatment to more than 135,000 patients annually. In addition, the St. Luke’s Hospital-Fargo Clinic Cancer Clinic was established in May 1953.

COMPANY PERSPECTIVES

MeritCare’s mission is to improve the health and quality of life of the people we serve.

During the first half of the decade, both the clinic and St. Luke’s Hospital began to see some of their founding fathers fade from the scene. This began in 1951 with the death of Reverend A. O. Fonkalsrud, who had managed the hospital’s business affairs. He was succeeded by a new hospital administrator named Byron Jackson. Two years later, Drs. Nils Tronnes and Olaf Sand retired after serving the community for 47 years.

By the late 1950s, growth had prompted more physical expansion. A new, 150-room facility was unveiled for the School of Nursing in October 1958. The following year, plans were made for another addition to the hospital.

In May 1962 the hospital addition planned in 1959 was finally completed. What came to be known as the facility’s main wing allowed 40 beds to be added on each floor. Another important development took place the following year when a new hospital was constructed for The Neuropsychiatric Institute (TNI), which had become an affiliate of St. Luke’s in 1961. TNI, which became St. Luke’s Hospitals—the Neuropsychiatric Institute Hospital, had its new facility dedicated in October 1964. At this point, St. Luke’s Hospital was renamed St. Luke’s General Hospital.

Several breakthroughs were made on the service front during the mid-1960s. In 1964 oncology patients began receiving radiation therapy when the hospital added a cobalt unit. Two years later, the hospital implemented “intensive care” services to provide the special care needed for those in critical condition.

Because the original intensive care unit (ICU) had no windows, it was called the “Mole Hole,” according to A History of St. Luke’s Hospitals. Nurses went to great length to alleviate the anxiety this caused some patients. In the book, former ICU Head Nurse Mathra Vorvick explained: “We used day/night lighting, calendars, clocks, paintings, photographs, flexible visiting hours, whatever helped the patient.”

Growth prompted more expansion during the late 1960s. In 1967 plans were made to add four floors to St. Luke’s General’s main wing, which had been completed only five years before. Finally, the decade ended with Fargo Clinic purchasing the original St. Luke’s Hospital building in April 1969.

The dawning of the 1970s was accompanied by leadership changes at St. Luke’s General. Byron Jackson was named president in 1970, and A. John Finnie was appointed vice president. Several years later, in 1976, Byron resigned after a 26-year career with the organization and Finnie succeeded him as president.

The 1970s brought infrastructure changes as well. A bed shortage prompted plans for an east wing, which was completed in 1975. That year an expansion of the hospital’s ICU was made, which involved splitting it into Intermediate Care and Acute Care sections. Finally, in September 1977 the hospital added a three-level, 750-car parking ramp.

By the mid-1970s Fargo Clinic had evolved into a national destination, drawing about 60 percent of its patients from outside its local service area. With a staff of 90 and 190,000 patient visits, the clinic ranked as the largest multispecialty group between Minneapolis and the West Coast. By 1977 the former St. Luke’s Hospital facility acquired by the clinic in 1969 was demolished to allow construction of a new building that enabled the clinic to double in size.

REGIONALISM AND UNIFICATION: 1980–99

Two main themes were evident during the 1980s: regional growth and greater synergies between Fargo Clinic and St. Luke’s. One driver of regional growth was the addition of services that were unavailable elsewhere, such as the addition of pediatric intensive care at St. Luke’s in 1981, the only such unit between Minneapolis, Minnesota, and the West Coast. The state’s largest neonatal ICU also was added that year.

Regional growth also took place via the addition of new facilities, such as the Mayville Clinic in Mayville, North Dakota, in 1983. That year, Fargo Clinic Southwest became the organization’s first satellite location. By 1986 more regional sites had been planted throughout North Dakota and in Halstad, Minnesota.

KEY DATES

1905:: The Lutheran Hospital Association is incorporated.
1908:: St. Luke’s Hospital opens on February 25.
1921:: Fargo Clinic is established.
1949:: The Lutheran Hospital Association is replaced with the St. Luke’s Hospital Association.
1985:: The hospital, its subsidiaries, and the clinic all add MeritCare to their names.
1993:: St. Luke’s Hospitals MeritCare and Fargo Clinic MeritCare merge to form MeritCare Health System.
2002:: The organization begins a $55 million, fiveyear renovation of its entire downtown Fargo campus; Heartland Health System is acquired.
2005:: 100th anniversary of The Lutheran Hospital Association’s formation.

Stronger synergies between the hospital and clinic began during the 1980s, beginning with joint health and outpatient surgery services in 1985. A more unified brand was established when the hospital, its subsidiaries, and the clinic all added MeritCare to their names.

Other key developments during the 1980s included Lloyd Smith’s appointment as president and CEO of St. Luke’s Hospitals and St. Luke’s Association in July 1985, following A. J. Finnie’s retirement, and the opening of Children’s Hospital in 1986. The following year a fund-raising arm named the St. Luke’s Foundation was established, and the School of Nursing graduated its 77th and final class.

Stronger synergies between the hospital and clinic continued in the 1990s. The Roger Maris Cancer Center, as well as a joint venture named Southpointe Place, both formed in 1990. Southpointe Place initially housed a clinic, optical shop, dental practice, and pharmacy.

In 1993 the strong connections between St. Luke’s Hospitals MeritCare and Fargo Clinic MeritCare culminated in the two entities merging to form a single enterprise named MeritCare Health System, with Roger L. Gilbertson, M.D., as president and CEO.

According to Science News, in late 1994 MeritCare Medical Center Cardiac Sonographer Pam Ruff began noticing heart valve problems in young women taking the diet drug combination fen-phen. This discovery led to further investigation by MeritCare Medical Center Cardiologist Jack Crary, M.D., who coauthored a widely publicized study about the connection that was published in the New England Journal of Medicine and saved countless lives. That same year, MeritCare worked with the Neuropsychiatric Research Institute and the University of North Dakota School of Medicine and Health Sciences to establish the Eating Disorders Institute in Fargo.

In 1998 an expansion of Southpointe was completed, increasing the facility’s size from 32,000 to 118,000 square feet. A wide range of new services were added, including ear, nose and throat; hand therapy; mammography; occupational therapy; orthopedics; physical therapy; plastic and reconstructive surgery; podiatry; radiology; and sports medicine.

A SECOND CENTURY: 2000 AND BEYOND

The first decade of the new millennium was marked by major developments at MeritCare. These included efforts to ensure a solid physical infrastructure for the organization’s second century of operations, as well as changes in the delivery of healthcare that were a reflection of advancements occurring industry-wide.

The organization began the decade by announcing the renovation of its entire downtown Fargo campus. Work on the $55 million, five-year initiative commenced in 2002. That same year MeritCare acquired Heartland Health System. The purchase included Heartland Hospital, which was renamed MeritCare South University, several clinics, and approximately 550 new employees.

Medical advancements during the early 2000s included the introduction of an automated unit-dose medication system in 2001. Implemented to reduce medication errors and improve patient safety, the system dispensed 24-hour supplies of medications in small, barcoded plastic bags that contained individual doses. In the September 2003 issue of Packaging Digest, Merit-Care Clinical Information Analyst/Programmer J. Orv Brown, R. Ph., explained the organization had “virtually eliminated errors in the dispensing of medication” as a result of the bar-coding technology.

A medical breakthrough took place at MeritCare in 2003, when the da Vinci Surgical System was used to perform robotically assisted open-heart surgery. The advanced procedure allowed surgeons to operate while the patient’s heart was beating, unlike traditional openheart surgery. Another advance took place the following year when MeritCare implemented the picture archival communications system (PACS), which essentially marked the transition from traditional film-based medical images, such as X-rays, to digital ones. PACS enables multiple clinicians to view and share medical images faster.

A special milestone was reached in 2005, with the 100th anniversary of The Lutheran Hospital Association’s formation. In August of that year, MeritCare completed its most substantial construction project on record when its Heart Center and new main entrance opened.

Heading into the second half of the first decade of the 2000s, some analysts were concerned about Merit-Care’s financial foothold. The November 8, 2006, issue of the Bond Buyer indicated that MeritCare lost $8.2 million in 2005, $15.7 million in 2006, and that more losses were expected in 2007. In the publication, Lisa Goldstein from Moody’s Investors Service cited lower levels of pharmaceutical reimbursement, Medicare reimbursements that failed to keep pace with physician fees, and the use of cash to fund capital projects as contributing factors.

While its losses were unfortunate, MeritCare was not unlike other U.S. healthcare systems, which were constantly challenged to fund capital projects and introduce the latest medical technology in what had become a more difficult financial climate. As MeritCare looked ahead to the 100th anniversary of St. Luke’s Hospital in February 1908, it did so from a position of market leadership, and was well prepared to provide quality healthcare during a second century.

Paul R. Greenland

PRINCIPAL SUBSIDIARIES

Child Development Center; F-M Ambulance; Healthcare Environmental Services Inc.; MeritCare Foundation; MeritCare HealthCare Accessories; Agassiz Assurance.