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St. Luke’s partners with rural hospitals

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Nine independent area hospitals, including St. Luke’s in Duluth, announced Monday they will band together to form Wilderness Health. But the collaboration will not come at the sacrifice of independence, officials said.

Cassandra Beardsley, executive director of the new alliance, noted that each hospital, regardless of size, will retain just one vote on Wilderness Health’s board of directors.  

Besides St. Luke’s, members include Bigfork Valley Hospital, Community Memorial Hospital in Cloquet, Cook County Hospital in Grand Marais, Cook Hospital in Cook, Fairview Range in Hibbing, Lake View in Two Harbors, Mercy Hospital in Moose Lake and Rainy Lake Medical Center in International Falls.

The last two partners from Moose Lake and International Falls come to Wilderness Health after relations with another large partner in Duluth — Essentia Health — soured.

Mike Delfs, CEO of Mercy Hospital and the vice-chairman of Wilderness Health, said his board and the community sent a message loud and clear a few years ago that they did not want to compromise their independence.

“So for us, the challenge is: How do you meet all of the tenets of health care reform as a small facility, and you really have to have partners to do that,” he said. “This is a vehicle that allows us to remain independent, and we’re with a bunch of independent, like-minded hospitals. We’re really trying to partner together to do the things we need to do to care for patients better, while at the same time maintaining our independence.”

The threatened reduction of the nation’s critical access program could deprive rural hospitals of the slightly higher Medicare reimbursement rates they receive, compared with urban facilities, and Delfs said it could threaten the very survival of many small medical providers already operating on razor-thin margins.  

“A good year in a critical access hospital is being in the positive 1 or 2 percent,” he said. Delfs noted that unaudited results showed Moose Lake’s Mercy Hospital losing nearly $1 million during its most recent fiscal year.

“The uncertainty about the continued critical access program in the form that it’s in today is part of what is driving us to be innovative. We want to be ready if something changes in that program,” he said.

John Strange, St. Luke’s CEO and board chairman of the new collaborative, considers the preservation of small hospitals in the region crucial.

“Some of these hospitals have been sending us patients for 130-plus years. We’ve worked closely with them for a long time,” said Strange, noting that the collaborative essentially formalizes long-standing relationships.

“Supporting these community hospitals is incredibly important,” Strange said. “They are the lifeblood of their communities. In most cases, they’re the largest employer. Plus, if you think about the distances we travel and the ability for those hospitals to get patients and make sure that they’re stabilized, so if they have to move on that they can. They’re just integral to the care of patients.”

Delfs said the collaborative will set to work on a system that readily allows its members to share electronic medical records in a safe, secure and efficient manner. Left to its own devices, Mercy Hospital would be hard-pressed to move to an electronic records system at a likely cost of $4 million to $7 million, according to Delfs, who said that’s tough to manage for a facility with gross annual billingsof just about $35 million.

“That is one of the big drivers for us to say: If we have to move into an era where we can move data around more easily, where we can combine resources to think about how we care for patients efficiently, doing it together is really the only way a small hospital can do that,” Delfs said, pointing to the advantage of being part of a larger entity with greater economies of scale.

Beardsley said the organization is designed to improve outcomes for both patients and hospitals.

“In the world we live in, health care is becoming more and more expensive and less and less sustainable. So we wanted to identify how we could work together to improve that for our patients,” she said

“Our tagline is: Partners advancing rural health. And that is really the goal,” Beardsley said. “When you look at Northeastern Minnesota and the geography, you can see the geography we represent here is from the Canadian border all the way down I-35 and across over to Bigfork Valley. It’s a large geographical area with hundreds of miles of distance in between, and we all play a role in caring for patients in this region.”

Beardsley said Wilderness remains in talks with other health care providers in the region, and she hopes the collaborative will grow to include more rural hospitals, as well as clinics and long-term care facilities in time.

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