Facing financial problems, Mahnomen hospital cuts in-patient care

CATHY WURZER: It might sound strange, but very soon the Mahnomen Minnesota Hospital won't have hospital stays for its patients anymore. The tiny facility is converting to a rural emergency hospital, leaving many residents in the area far from inpatient care.

It's the first hospital to do so in Minnesota after the option was created at the start of 2023, but it probably won't be the last. These sorts of hospitals have emergency department services and observation care. However, that care can't exceed an annual average of 24 hours. So why make this move?

The latest data from the state department of health shows that in 2019, 38% of rural Minnesota health care systems have been in the red for more than four years. Dale Kruger is the hospital administrator of the Mahnomen Health Center. He's on the line.

I appreciate your time, Mr. Kruger. Thank you so much.

DALE KRUGER: Thank you for having me, Cathy.

CATHY WURZER: Can you tell folks, what's your financial situation like right now at the Mahnomen Health Center?

DALE KRUGER: Well, we struggle as a small, rural hospital. And so we have been looking at this designation since about the end of 2022 to the beginning of 2023, to do our due diligence to look at options so that we can create an innovative win-win approach so we can continue providing health care services for our community.

CATHY WURZER: Tell us, how many people do you normally have in a year? I was looking through some of your data. You had just 52 admissions in 2022. Is that pretty typical?

DALE KRUGER: Well, the inpatient admissions has gone down over the years for the simple fact that there's new rules, new regulations. Insurance companies are wanting more prior authorizations, and where they might determine this person shouldn't be an inpatient, maybe they should just be an outpatient. And so with all the new regulations, it is harder to be an inpatient in a small, rural hospital.

CATHY WURZER: What was the tipping point for you, when you and your staff realized, we have to do something here. We need to convert to this rural emergency hospital situation.

DALE KRUGER: Well, we've been working on it for quite a while. We watch our numbers-- our inpatient numbers decline. And so we started working with our auditors and the rural emergency hospital technical assistance center in Pennsylvania.

And we've been working with them for several months, looking at the pros and the cons of the transition. And in both instances, with both of the independent projections, it was determined that RH designation would be a win-win for our community, for our hospital, and for the health of our patients.

It has a net positive impact for our community of about $1.5 million annually.

CATHY WURZER: If you decided to not go this route, do you think that the hospital would have closed in due time?

DALE KRUGER: There's always that possibility. We are fortunate that we are a hospital, and we also have an attached nursing home. So sometimes when one kind of lags a little bit, the other one is doing better. But there's always that possibility.

And the payment structures are really not in our favor. With critical access hospital reimbursement systems, Medicaid is always a struggle for us. And we have very high bad debt percentages.

CATHY WURZER: I wonder here-- go ahead. I'm sorry. I didn't mean interrupt you. Go ahead.

DALE KRUGER: I'm sorry. I just said, so it would be possible, yes.

CATHY WURZER: OK. You mentioned that you had some high unpaid debt level. Is that some of the highest in Minnesota?

DALE KRUGER: Yeah, we're by far the highest bad debt in the state of Minnesota. We average almost 10% in bad debt annually.

CATHY WURZER: So that's not very helpful, obviously. So lay out a scenario. If someone's in Mahnomen, and their appendix bursts or something like that. They come in. They're hurting. What might happen?

DALE KRUGER: What would happen today is the exact same as what will happen under rural emergency hospital designation because we do not offer surgery services at our hospital. So we would bring the people into-- or the patient into our ER, examine them, find out what the problem is, and they would be transitioned to a larger organization, more than likely in Fargo with Sanford Health or Essentia. They would be sent there to have their surgeries performed.

CATHY WURZER: OK. If I came in to your ER as a visitor, and I had-- I don't know, maybe I fell, and I just had a bad fall, would I get service from you? Would I stay in observation at all under this scenario?

DALE KRUGER: Yes. All of our other services stay the same. Our emergency room will stay the same. It's a 24 hour emergency room. We have five bays, including two trauma bays. We will still be a stroke accredited hospital, a level four trauma hospital. We provide radiology, lab, therapy, and all other outpatient services.

So if you fell and something happened, we could easily take care of you and offer other services in addition. Instead of the inpatient, you might be there as an observation bed patient.

CATHY WURZER: I see. So locals are still going to have to go travel for inpatient care, as you say, Fargo, perhaps, maybe Bemidji or some someplace like that.

DALE KRUGER: Correct. But our patient volume has dropped off a lot. We average about one-half patient per day. So the impact to not providing inpatient services is very low.

CATHY WURZER: You mentioned in our conversation that the payment structure is just not in your favor. It's probably not in the favor of a lot of rural hospitals. Making this move, as you have laid out, is a good one at this point.

But I'm wondering, is this kind of just a Band-Aid on a larger problem of payment for rural health care services and access?

DALE KRUGER: I do not believe it's a Band-Aid. I think that this is a new designation that many rural hospitals will benefit from. Back in the-- I've been in health care for many, many years, and back in the '90s, 1999, when many hospitals became critical access hospitals, they said, critical access hospitals are nothing more than a Band-Aid station.

Well, now we're here. We're here 25 years later, and critical access hospitals are still here. But we will be able to provide most of the care that our community needs. And that's what we're focusing on, is what does our community need, and how do we best serve our residents.

CATHY WURZER: By the way, because you have a nursing home attached, and since you won't have inpatient care, as you had in the past, might some of those rooms be used by the nursing home?

DALE KRUGER: Well, we can-- there's also another designation called swing bed, which is a--

CATHY WURZER: Yes.

DALE KRUGER: OK. And the swing bed designation also goes away. But because we have a nursing home attached, we can bring our patients back to the nursing home for post-hospital rehab. So they can come back after a surgery or a hip replacement or something like that.

And they could be Medicare Part A patient in our nursing home and receive the exact same care as swing bed in the hospital. So that really doesn't go away. It's terminology more than anything.

CATHY WURZER: Sure. Well, Mr. Kruger, I appreciate your time. I wish you well. Thank you so much.

DALE KRUGER: Yeah. Thank you, Cathy.

CATHY WURZER: We've been talking to Dale Kruger. He's the hospital administrator of the Mahnomen Health Center. The State Department of Health, by the way, will hold a public hearing April the 30th at 6:00 on this transition to a rural emergency hospital.