Essentia CEO says shakeup won't slow downtown plans

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The abrupt departure of three top Essentia Health executives this week will not affect the organization's plans to make a major investment in its downtown Duluth health care campus, doctor and CEO David Herman said Thursday.

The immediate departure of Jeff Korsmo, vice president for operations and administration; Bob Brigham, chief operating officer for Northeastern Minnesota and Northwestern Wisconsin; and Tracy Miland, chief strategy officer in Duluth, was announced earlier this week. The three had been involved in Essentia's plans to modernize its downtown Duluth operations, at an anticipated cost of more than $500 million. The project is predicted to be the largest single private investment in Duluth's history.

Herman said there has been "no change in direction whatsoever," and that it was "business as usual from that standpoint."

He said the management changes were not a result of any financial difficulties and that Essentia, the region's largest health-care provider, plans to hire people into the roles of the departed executives. He noted that some of those vacancies likely will be filled by promotions from within the organization.

Herman also said the management shakeup was not a result of any outstanding legal concerns or alleged financial improprieties.

During staff meetings, Essentia employees reported that they were told the decision to sever ties with the executives was because they had not properly represented "Essentia's values."

When asked to elaborate on what particular values they had failed to uphold, Herman responded: "We've said all we are going to say on that."

Herman declined to comment on other questions about the circumstances of the terminations.

The News Tribune reached out to Korsmo this week and he did not respond to the inquiry.

Korsmo had played a particularly prominent role in working with the city to develop plans to expand the downtown medical campus, according to Keith Hamre, Duluth's director of planning and construction services.

Hamre said city staff and Korsmo's team had been making progress and working together smoothly. He said news of Korsmo's abrupt departure Monday came as a surprise, although Hamre expressed optimism that it would not prove to be a setback.

Herman said he didn't expect the departures to disrupt progress.

"I don't know that they were involved in the vision any more than others," he said of the dismissed employees. "It's been very much a team process. It was started before any of them joined the team, so this is not a process that began with their arrival or that ends with their departure."

Herman said ground will be broken for a new facility in the spring of 2019, in hopes of completing the work by 2022.

"What we really hope is this acts as a catalyst for other private development here in Duluth," he said. "We would like this to really invigorate Duluth, but certainly what we are calling the medical district."

The idea is to build as close to Lake Superior as possible, with a smaller footprint, Herman said. By building a taller structure there, Essentia hopes to make the downtown medical campus easier for patients to navigate. The campus's sprawling footprint stretches up the hill from First Street to Sixth Street, gaining more than 100 feet of elevation along the way.

No final decisions have yet been made, but Herman said some downtown buildings probably will be decommissioned as part of the project.

Herman said downtown Duluth presents a challenging landscape and Essentia seriously considered building on a flat piece of land in Hermantown, noting that it would be "frankly easier from a construction standpoint."

"But here in downtown Duluth we have 6,000 employees who come to work here every day and multiples of that for patients and visitors," he said, suggesting that moving "would have been devastating to the city of Duluth."

"Our future is intimately tied to the future of Duluth. The things we can do to support the success of each other is important," he said.

Korsmo had been with Essentia since 2016, and Miland and Brigham since late August.

Korsmo has 33 years of experience in health care, most recently as president and CEO of Kansas-based Via Christi Health. He previously had worked as executive director of the Mayo Clinic Health Policy Center.

Miland came from a vice president role at HealthEast Care System in St. Paul. Brigham has spent the majority of his 40-year career with Mayo Clinic; he started as a nurse and worked in several clinical positions, coming to Duluth from MD Anderson Cancer Center in Houston, where he was senior vice president for hospitals and clinics.


The dismissed executives

Three prominent members of Essentia's regional management were let go Monday.

Jeff Korsmo

  • Former executive vice president of operations and administration
  • Hired Aug. 2016

Tracy Miland

  • Chief strategy officer
  • Hired August 2017

Bob Brigham

  • Former chief operating officer for operations in northeast Minnesota and northwest Wisconsin
  • Hired August 2017