Mercy wins key approval to leave State Street campus for $75 million hospital

Portland’s Northern Light Mercy Hospital has reached another milestone in its ongoing plan to relocate from State Street to a newer medical campus along the Fore River Parkway.

Mercy announced Friday that the Maine Department of Health and Human Services has approved its certificate of need application for the planned move, which would consolidate most of the nonprofit health care provider’s operations at the Fore River property. The hospital is also negotiating with a buyer for its State Street campus.

Obtaining the certificate of need was a critical step for Mercy executives, who hope to begin construction on the new, $75 million hospital in early 2020. The state approval allows them to proceed as planned, said hospital President Charlie Therrien.

“It went through relatively easy with no problems,” he said in an interview Friday.

Another requirement was met in late September, when Mercy completed its most recent fiscal year with a net income of $1.6 million after several years of net losses. Therrien said the hospital needed to get its finances in order before it could proceed with relocation, which has been accomplished.

The two-year hospital construction project would be funded by proceeds from a $20 million fundraising campaign (minus $2 million in expenses), $22 million from the sale of Mercy’s State Street property plus some additional cash, and about $35 million in debt. Mercy said it has factored the rising cost of construction in Portland into its budget and planning.

The fundraising campaign already has collected about $12 million from donors, Therrien said.

In December, Mercy announced that it had narrowed down the pool of bidders on its highly coveted 3½-acre State Street property in Portland’s West End to six individuals and groups with the likely goal of redeveloping at least some of the property for residential use.

The bidders included groups of prominent local developers that have been involved in restorations of historical buildings, market-rate and affordable housing projects, office and retail projects and other work. Still, the developers declined to provide details about their plans for the Mercy site.

The sale would include Mercy’s hospital building at 144 State St., which is listed on the National Register of Historic Places and considered a local landmark, and an adjacent parking lot. On Friday, Therrien said the hospital has selected a final bidder and is currently in negotiations.

He would not say who the bidder is, what their redevelopment plans are, or what the likely sale price would be. Therrien said he expects to release those details within the next two months.

Previously, Mercy officials have said they believe the property could be worth up to $20 million.

Mercy hopes to maintain a walk-in health clinic on the State Street property after the hospital relocates to Fore River in the spring of 2022, Therrien said.

When completed, Mercy’s Fore River campus would feature an addition to the hospital for inpatient and emergency services, convenient parking for patients and staff, a new surgical center for outpatient services and more of its services and practices in one location, the hospital said.

Therrien said the new facility would reflect advancements in health care such as improvements in surgical techniques and technologies that allow more patients to undergo same-say procedures without the need to stay in the hospital overnight.

“We appreciate the state’s thorough review, and we’re looking forward to getting shovels in the ground next spring,” he said. “When complete, this project will improve patient access to a full range of services on one convenient campus.”