Springfield and Mayo Clinic Health System Reach Separation Agreement

The City of Springfield announced Friday, March 13, that it and Mayo Clinic Health System have agreed to the termination of the Lease and Affiliation Agreements.

Springfield is the owner of the land and improvements comprising the Springfield Community Hospital and Springfield Medical Clinic. Mayo Clinic Health System entered into a Lease Agreement with Springfield on Jan. 1, 1998 and had since operated as the fiscal agent for the Medical Facility.

In December of 2019, Mayo Clinic Health System notified The City of their intent to default on the Lease.

Joe Stremcha, City Manager, stated, “We appreciate Mayo’s leadership team for working as a willing partner throughout this process. It was the city’s responsibility to ensure Springfield was reimbursed for Mayo’s default and that assets necessary to maintain the Medical Facility were returned. Mayo has been an integral part of our community for 22 years. We are sad to see this chapter come to a close, but we are equipped to maintain a strong health care presence for our community going forward.”

Under the agreement, Mayo Clinic Health System will terminate their Lease and Affiliation Agreement with Springfield on March 13. Mayo Clinic Health System will remove Personal Health Information (PHI) from IT Systems, any equipment leased by third parties, and equipment not necessary to maintain the Medical Facility.

Mayo Clinic Health System will return the following assets to Springfield:

➢ All fixtures, furniture, and equipment necessary to conduct operations of the Medical Facility [e.g. items will stay within the clinic, hospital, and emergency departments including, but not limited to lab, radiology (mammography, x-ray units and CT Scanner), phone systems, roughly 130 Desktop computer stations, printers, as well as building automation and security systems]. Springfield is entitled to hold, use, collect, and dispose of those assets and all income and profits therefrom, to secure the payment of liquidated damages to Springfield.

➢ The return of $865,000 to Springfield. This amount is based on 1998 working capital obtained by Mayo Clinic Health Systems from the city as well as the costs associated with restoration of the Medical Facility’s plant and equipment to the condition necessary to conduct programs for which the Medical Facility was designed (clinic, hospital, and emergency department). The city will use these funds strictly as working capital for the ongoing operation of the Medical Facility.

➢ The return of $412,000 in donor restricted Springfield Area Health Care Foundation funds to the city. These funds were locally generated to support community health programming, the purchase of equipment for community health care needs, local walking trails, emergency first responder services and the Springfield Medical Facility.

Stremcha said, “We truly appreciate the community’s support and patience shown these past few months. We will continue working hard to ensure our rural health care needs are addressed and that we find a strong partner to join Allina Health in our state-of-the-art facility.”

The City Council has approved a Lease Agreement with Allina Health to continue clinic operations and more information will be forthcoming next week.