Representatives of St. Luke's and Essentia Health laid out their plans Monday to invest more than $1 billion, combined, in their respective downtown Duluth medical campuses.
Essentia wants to spend about $675 million on new facilities and another $125 million to renovate existing ones, said Mark Hayward, senior vice president of operations for Duluth's largest health care provider.
Meanwhile, St. Luke's aims to invest $249 million in its downtown facilities, said John Strange, the organization's president and CEO, in a presentation to the Duluth City Council.
But first, the city will seek $184 million in state support to advance the projects by providing needed public infrastructure, said Keith Hamre, as he finished out his stint as Duluth's interim chief administrative officer Monday night.
Hamre contends those public dollars would be well spent, as they are expected to generate an additional $2 billion in new tax revenues over the next 15 to 20 years.
To put the medical district investments in perspective, Hamre said: "We, in an average year, get $200 to $300 million in new construction citywide. And these two projects will be $1 billion over two years."
Hayward said Essentia's project stands to yield 815,000 square feet of newly constructed space, as well as 115,000 square feet of renovated space.
Yet Essentia expects its footprint to shrink.
"We're really focused on building up, not out," Hayward said.
Strange laid out St. Luke's three-phase project, beginning in 2019 with a $36 million investment to repurpose space inside a five-story structure known as Building A, retrofitting it to include a new emergency room and ancillary services. That project would displace 182 parking spaces but would also allow for two new emergency helipads to be installed.
In subsequent phases, St. Luke's would expand Building A and put up a new six-level 216-bed inpatient hospital tower.
Strange said designs for the new facility were drawn with an eye toward increasing pedestrian access to the city's waterfront rose garden and making St. Luke's feel like "more of a healing place."
He talked about collaborating with the city to put up a parking structure with retail space fronting Superior Street and possibly housing above.
"We think that would increase the housing stock, which is a major issue for our city and for us as an employer. But it would also increase the tax base," Strange said.
Strange also talked about including hotel rooms in the mix, saying: "Hotel rooms are important to us as an organization as we serve a region, and people come to us in the middle of the night with loved ones who are injured or ill, and they don't want to leave the campus."
Hayward, too, sees Essentia's pending project as being about more than new buildings.
"It's really an investment in our people, in our mission, in the patients and the communities we serve to provide state-of-the-art care, whether it's with new operating rooms to meet the new demands in operating rooms or procedural rooms or new patient rooms," said Hayward, noting that Essentia would shift to provide more private care rooms, phasing out shared inpatient quarters.
Mayor Emily Larson praised St. Luke's and Essentia for their proposals, saying: "These are really catalytic transformational opportunities."
She said the projects have her full support and that her administration will make obtaining state support for the improvements a high legislative priority.