Virginia hospital to join forces with Essentia

The future of Virginia Regional Medical Center, which opened its doors on the Iron Range in 1936, has been the topic of much discussion in recent months. The hospital, which is owned by the city of Virginia and employs more than 400 people, has fallen on hard times.

It's burdened with more than $7 million in debt.

Like many rural hospitals in the state, which operate on narrow margins, VRMC has found it increasingly difficult to remain independent as the health care landscape changes. MPR News' Michael Caputo held an online forum in January on this very topic. (Look for more coverage of rural health care in coming weeks from our Ground Level project.)

Now, according to Virginia Mayor Steve Peterson, the city has entered into a letter of intent with Duluth-based Essentia Health. Negotiations are ongoing and it's unclear whether the agreement will result in a merger or an outright sale of the facility.

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"A stand-alone hospital just doesn't work anymore," says Peterson. "You just don't have the networking capabilities. You don't have the affiliations. You don't have the benefits when buying medical supplies and pharmaceuticals. Unless you can collaboratively work with other hospitals--and we are trying to do that with other independent hospitals--you just can't be competitive."

"We've lost 35 percent of our market share in the last two years," he says. "We need to get that back, or a portion of that back. I think we can do that with the right partner."

The letter of intent is a start. But, according to Peterson, it's a "long road ahead."

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