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MN Health Department approves new mental health hospital at Bethesda

Saint Paul Pioneer Press - 9/12/2022

While acknowledging “significant concerns” with the lack of emergency services for patients in crisis, the Minnesota Department of Health has found that moving forward with a new mental health hospital at the old Bethesda Hospital location in St. Paul is in the public interest due to the shortage of inpatient mental health beds.

Approval from state health officials was one of the final hurdles facing Minneapolis-based Fairview Health Services and Tennessee-based Acadia Healthcare, which have formed a partnership to finance and operate a new facility licensed for 144 inpatient beds. A state review noted the new beds would partially — but not fully — offset mental health beds recently lost at St. Joseph’s Hospital in downtown St. Paul.

The state review found that most of the increased patient load from the closure of St. Joe’s emergency department, among other mental health beds lost at St. Joe’s, had already been absorbed by surrounding hospitals, “though it is placing a strain on emergency rooms and inpatient mental health units,” according to a statement from the state’s leading public health institution.

“The public review of this proposal shows how much need there is for additional mental health beds in Minnesota,” said Minnesota Commissioner of Health Jan Malcolm, in the statement. “As we seek to address the acute shortage we are facing, we hope this review highlights the need for policy makers, health care organizations, mental health care providers, employers and insurers, and patients to work on solutions to fully meet the state’s mental health needs.”

MDH, however, found that the new stand-alone mental health hospital “will not replace the comprehensive services previously offered at St. Joseph’s Hospital,” which Fairview closed in July, according to the statement. “There will be significant inpatient care gaps remaining after the establishment of the facility that other providers will need to fill.”

Among the state’s concerns, the new facility will lack both an emergency room for receiving patients in mental health crisis and “a full complement of medical care,” so it will “only serve a subset of mental health patients.” And the new site will operate under a “leaner staffing model than is the norm nationally and in Minnesota.”

Fairview officials have insisted for months that rather than cherry-picking the wealthiest patients, no patient will be denied care at the new hospital based on insurance or their ability to pay.


State health officials said public comments received during a state-led public meeting held June 9 and during other public presentations showed that most respondents recognized the need for more mental health beds, and many “commenters acknowledged Fairview Health Services as a trusted community partner and expressed the belief that the new facility would help underserved populations.”

Among the public comments received was a letter from Lorna Schmidt, public policy director at Catholic Charities of St. Paul and Minneapolis, which offers emergency shelter and housing supports to many homeless and uninsured or underinsured residents.

“These individuals require — and are worthy of — comprehensive and dignified mental health supports such as those that could be offered at the proposed hospital by Fairview and Acadia Healthcare,” Schmidt wrote.

Among those opposed to the proposal, according to MDH, the most common concern was that the facility would not serve all patients in need “based on limited medical capabilities and limited access with no emergency department.” Others questioned the quality of Acadia Healthcare nationally, and the extent to which the new hospital would accept transfers outside of Fairview.

“It is critical to maintain care delivery regardless of a patient’s ability to pay, including in this new facility,” said Andrew Cochrane, Chief Hospital Officer of North Memorial Health in Robbinsdale, in a June 23 letter to MDH. “Without an emergency department, this facility is not subject to the same regulations as an acute care hospital.”

The Minnesota Psychiatric Society wrote that because the new hospital will lack an emergency room, it will get to pick and choose which transfer patients it accepts from other hospitals. And as an “institute for mental disease” rather than a full-service hospital, it will be restricted in how much it can bill federal insurance, a strong incentive to further screen patients.

“We have seen in our community how that lack of ability to provide emergency assessment allows the hospital to cherry pick which patients they will accept, since they do not have the immediate responsibility for the patient,” reads the letter from the psychiatric society. “That leads to denying acceptance to some patients who have insurance that does not pay well and denying to accept some patients with more challenging and often more expensive care needs.”

In short, they wrote, “other hospitals … must pick up a disproportionate amount of the more expensive and less well reimbursed care.”

MDH said the Minnesota Legislature expects “close, ongoing scrutiny” of how the new facility will impact care delivery and “the economics of inpatient mental health services in the community.”

Based on the same state legislation this year that allows the hospital to move forward under a conditional exception to the state’s hospital construction moratorium, MDH will monitor both the patient mix and payer mix, as well as patient transfers and patient flow throughout the state.

In addition to granting the conditional exception this year, the Legislature altered the moratorium by creating a process for establishing additional inpatient mental health beds without a public interest review.

The process includes additional oversight, as well as a report on the impact of any expanded inpatient mental health capacity in 2027.

The initial proposal from Fairview and Acadia, among other materials associated with the state’s public interest review, are online at

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