When Donza Worden, M.D., took on the job of physician executive at Mackinac Straits Health System two years ago, its tiny hospital in St. Ignace, Mich., was, he admits, "a [bleep]."

This is a family publication. Worden quickly corrects his jocular but unprintable characterization.

"It was old, substandard, not up-to-date," he interprets for the record. "It was a Hill-Burton hospital built in the 1950s and added onto piecemeal since then. There was an ER, a long-term care facility, a small dialysis unit, a minimal capacity for overnight admissions in shared rooms… We were not sure how long we could maintain it. The decision was either to close it or to build a new hospital."

The problem was that to finance such a costly project, the health system would have to scrape together cash up front as security for a construction loan. And the coffers were all but empty.

That's when the Sault Tribe of Chippewa Indians came to the community's rescue.

A Self-Governing Nation

St. Ignace is a city of about 3,000 on Michigan's Upper Peninsula, at the northerly end of the five-mile suspension bridge spanning the strait between Lake Huron and Lake Michigan.

Wooded, sparsely populated and flecked with picturesque islands that draw vacationers in summer but often are isolated by rough water, fog and ice in winter, the area is the ancestral home of the Anishinaabeg people. In 1972, their descendants in the region won federal recognition as a self-governing nation—the Sault Tribe of Chippewa Indians—and were awarded lands in trust and fishing rights in the Great Lakes.

The tribe today claims some 29,000 members. About a third live in the two counties served by the Mackinac Straits Health System. Native Americans make up close to a quarter of the local population. In addition to the critical access hospital in St. Ignace, the health system runs a small emergency hospital at the southern end of the bridge and outpatient clinics in five surrounding locations.

Since 1985, the Sault have reduced endemic poverty by operating gambling casinos—notably, until recently, a flossy resort they erected in Detroit's Greektown section. Indeed, thanks to five Sault-owned Kewadin casinos and a number of other businesses, the tribe now numbers among Northern Michigan's largest employers.

Although it is one of 34 tribes in three states whose health care is, by treaty, the responsibility of the Bemidji Area of the Indian Health Service, the Sault see only about 40 percent of their medical care needs met by the underfunded federal agency, according to Joe McCoy, tribal chairman. To make up the difference, the Sault employ their own physicians, nurses and dentists, and have maintained an overcrowded health clinic in St. Ignace that sees more than 8,500 patients annually.

The Sault Tribe has established close ties with the Mackinac Straits Health System as well. Tribal leaders have held seats on its board and have been instrumental in raising funds for improvements to the hospital like enhanced radiology and laboratory services. So when decisions were being made about the future of the community facility, it was not altogether a stretch for tribal leaders and health system CEO Rod Nelson to descry a unique partnership opportunity.

Nelson had ideas about lenders, including one somewhat offbeat resource for a hospital—the U.S. Department of Agriculture—but, as noted, the health system lacked earnest money to back the multimillions in borrowed dollars that would be necessary to build a new facility. The Sault possessed land potentially suitable as a construction site, they had a bank balance and were outgrowing their cramped tribal health center.

A deal obviously lurked in those circumstances. All that was required was a bit of imagination, a dash of good will and a handshake (and then, of course, lawyers).

Exciting Features

The April 8, 2010, issue of The St. Ignace News was bundled with a 40-page supplement describing the glories of the about-to-open Mackinac Straits Hospital and Health Center. Flanked by congratulatory ads from area businesses, the columns detailed the facility's exciting features.

The architects had designed around an earth-water-sky motif, and inside 8,200 square feet of brick, stacked fieldstone, natural wood and muted tile were: an emergency room with an indoor ambulance bay (important in cold or rainy weather); a state-of-the-art laboratory; two X-ray rooms with digital mammography and a 24-slice CAT scanner; expanded dialysis capacity to accommodate 12 patients per day (double the old throughput); triple the old oncology space; a telemetry-equipped cardiology unit; a pool for aquatherapy; a 54-seat cafeteria (in the old hospital, hungry staff had to get by on soup and salad); and 15 private acute care rooms, each with bath and shower.

Generous windows soothe every inpatient with a view either of the lake to the east or the woods to the south of the 16-acre site. Floor-to-ceiling glass floods public spaces with daylight and looks out on grounds landscaped with native plants and grasses—offering views of seasonal changes and low maintenance cost.

For the Sault Tribe, there's an extraordinary amenity: The second floor of the two-story hospital structure houses a dedicated tribal health and human services clinic. Behind its entry doors are: eight examining and ambulatory procedure rooms for the medical staff, including two Sault-employed physicians and a physician assistant; six chairs in which tribal members can be seen by one full-time and one part-time dentist; a tribal optometry clinic; a pharmacy; community health, behavioral health and social services offices; and, facing east in accordance with custom, a traditional medicine area. There, three tribal healers and two practitioner assistants minister to the 2,400 patients who seek their alternative interventions annually. The space also is specially vented for ritual smoke.

The Sault lease the tribal health and social services clinic premises, conveniently located under the hospital roof when patients need more complex medical care, from the Mackinac Straits Health System at an affordable rate of $1 per year. The sweetheart lease runs for 40 years. It compensates the tribe for two crucial initial investments that made the whole project possible. First, was the outright gift to the health system of the hospital site, valued at $1.2 million. Second, was an advance of $1 million to set up an escrow account to guarantee construction loans (it was repurposed later toward building costs).

Worthy of Emulation

By the time all equipment was up and running, loan fees were folded in and existing hospital debt had been refinanced, the Mackinac Straits Hospital project penciled out at $37.5 million,  according to CEO Nelson. Bricks and mortar accounted for about $24 million.

Sault building contractors profited from the jobs created by the project, too. A construction company owned by the tribe partnered with lead developer Skanska, a Swedish company that had worked with the tribe on its casino in Detroit.

Encouraged by the area's congressional delegation, the USDA Rural Development Community Program provided a starter loan—$10.4 million at 4.25 percent annual interest. And it backed a conventional bank loan of $26.8 million. Local fundraisers were asked to raise $3 million in private donations as a signal of community commitment.

Improvements to essential health care facilities in rural areas and towns of up to 20,000 residents are among approved uses for USDA Guaranteed Community Facility Loans. Nonprofit corporations and tribal governments are among qualified recipients. Funds can be used for land acquisition, payment of necessary professional fees and purchase of equipment required for operation.

"To my knowledge," says Worden, "we're the first group to ever have done anything like this in relation to tribal health care facilities. It was possible because of the strength of our relationship and our trust … and the economics.

"Here was a great opportunity to combine our needs and do something together," he says. "And we're working on sharing other services. I think this is an approach that will be emulated by others."

David Ollier Weber is the principal of The Kila Springs Group in Placerville, Calif., and a regular contributor to H&HN Daily.

The opinions expressed by authors do not necessarily reflect the policy of Health Forum Inc. or the American Hospital Association.