The Minnesota Department of Health has rejected a proposal from a Texas-based, for-profit chain of rehabilitation hospitals interested in opening a 60-bed facility in Roseville.

Backed by private equity investors, Nobis Rehabilitation Partners has opened 20 facilities in 12 states since 2021 alone, an “aggressive growth” strategy that gave MDH pause, according to a written announcement from the department.

Rather than expand the marketplace, a freestanding, $43 million rehab center could “have a negative financial and workforce impact on existing facilities” while reducing services for those in need, according to MDH, which cited “a lack of explicit commitments in the project proposal for providing care to low-income and nonpaying patients.”

Restrictions on new hospitals

Unless a proposal meets defined statutory exceptions, state law prohibits the construction of new hospitals or the expansion of bed capacity at existing hospitals without specific authorization from the Legislature. Nobis submitted a letter of intent to MDH last year and its application was deemed ready for review in September.

“As Minnesota is facing high and rising health care costs, it is important we ensure that any proposal truly is in the best interest of all Minnesotans. By law, there is a high bar to clear,” said Minnesota Commissioner of Health Dr. Brooke Cunningham, in the department’s written announcement on Thursday. “Our analysis indicates that this project does not meet that burden and, therefore, MDH is unable to recommend that it is in the public interest.”

Officials with Allina Health, North Memorial Health in Robbinsdale, Hennepin Healthcare and the Minnesota Nurses Association wrote letters of concern to MDH, as did a series of physicians objecting to a for-profit hospital chain potentially poaching patients and workers and making it harder for existing rehab centers to offer care.

“By introducing an out-of-state, for-profit provider to the state’s market, the state could potentially see disruptions throughout the rehabilitative care continuum,” wrote Brian LeLoup, vice president of Allina Health’s Courage Kenny Rehabilitation Institute.

“The focus of our challenges is less about the number of inpatient rehabilitation beds and more about staff capacity to take care of the patients in those beds,” wrote Keith Wilton, executive director of Rehabilitation Services for Hennepin Healthcare.

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