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St. Francis Regional Medical Center in Shakopee is spending about $44 million to build a free-standing surgery center while also expanding the hospital’s emergency room and cancer center.

The projects, which were disclosed in a financial statement this month, were approved by the hospital’s board of directors earlier this year and are scheduled for completion by autumn 2021.

Hospital officials say they’ve seen a growing demand for ER and cancer center services due to population growth in the south and southwest suburbs of the Twin Cities. Construction of a surgery center is a response to a push from health insurers for operations to be performed in those facilities, rather than hospital operating rooms, said Michael Morris, director of business development and administration at St. Francis.

“We need to comply with those directives from the insurance companies and make sure we can accommodate patient care needs in our market,” Morris said.

St. Francis Regional Medical Center is jointly owned by Minneapolis-based Allina Health System and Bloomington-based HealthPartners. A division of Duluth-based Essentia Health also has a small ownership interest in the hospital. The hospital operated 85 beds in 2017, placing it among the 30 largest medical centers in the state, according to data from the Minnesota Department of Health.

The new construction projects are expected to begin in 2020.

The hospital’s emergency room will double in size, adding a four-bed mental health unit, four private trauma rooms and a four-station garage for ambulances.

The mental health beds are needed in part because of the regional challenge of finding inpatient space for mental health patients, Morris said. The problem, which occurs at many hospitals, means patients can spend six to 24 hours in the emergency room, he said, whereas current rooms are designed for shorter stays.

The ER now has two rooms for trauma, each of which is divided by a fabric curtain, Morris said, adding that the new rooms will be bigger so they can house modern trauma equipment and improve privacy to better serve patients.

Two ambulances now can drive in and back out of the ER garage. With the expansion, there will be room for four ambulances to drive in and out.

The hospital plans on spending $25 million on the ER project and the expanded cancer center.

“The oncology center will expand from four to 12 exam rooms, and add natural light to the infusion area to improve the patient experience,” the hospital said in a financial statement.

St. Francis expects to spend about $18.9 million on the new ambulatory surgery and endoscopy center. More insurers are imposing rules saying they will pay for outpatient procedures in surgery centers, but not in hospitals, Morris said. The view from health plans, he said, is that surgery centers can cost less and be run more efficiently.

“If we want to continue to serve those patients,” Morris said, “we have to build a surgery center.”

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck