Members of a committee in Pine County say they are "devastated and bewildered" after their latest talks with administrators of Essentia Health over the future of Essentia's Sandstone affiliate.

"We as a committee are reeling from Tuesday's meeting," said Tim Schmutzer, chairman of a transition committee appointed by the North Pine Area Hospital District's board. "It really was a change in direction."

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Schmutzer and Ron Osladil, the board's chairman, said Essentia renewed what they called a "threat" to exercise a buyout clause in the hospital's lease.

A statement the committee released on Friday said they were "rendered nothing less than devastated and bewildered by this renewal of the threat to a hostile 'purchase' of the hospital in Sandstone."

As a result, negotiations had stalled, the committee said.

In a statement, Essentia Health spokeswoman Kim Kaiser said that Dan McGinty, chief administrative officer of Essentia's East Region, met with the committee for two hours on Tuesday and wasn't left with the impression that talks had broken down.

Essentia has operated the hospital, known as Essentia Health-Sandstone, under a lease agreement since 1997. Local board members complained in recent years that the health system hadn't invested adequately in their hospital. The board served notice last fall that it was canceling Essentia's lease, which expires in August. Essentia responded by firing the hospital's top two local administrators and announcing it would exercise an option in the lease to buy the hospital and an attached nursing home.

The standoff eased in May, when McGinty and Dr. Daniel Nikcevich, interim president and chief medical officer for the region, attended a "listening session" in Sandstone. That led to a series of meetings between Essentia representatives and local committee members, and the first two meetings went well, Schmutzer said.

"It seemed very collaborative and pretty open to somewhat experimental ideas," he said.

The atmosphere changed abruptly on Tuesday at the third meeting, he said.

"The main message really was: If you persist, if the district persists in wanting a voice in the overall operational control and future development of its local hospital, then we are going to go back and reassert our right to purchase the hospital," Schmutzer said.

"So I can't imagine there would be any other way to interpret that than the obliteration of any trust that had been built over the last 3½ weeks."

Schmutzer and Osladil said the difficulty revolved around two sticking points.

The district wants an "independent management group" for the hospital. It would be under contract to a joint Essentia-North Pine Hospital Board, but Essentia would have a majority of the members.

"They absolutely said no," Osladil related.

The other issue, the men said, is the provider for electronic medical records. The North Pine group wants to keep their present provider. Essentia wants to switch Sandstone to the provider the rest of the system uses.

Kaiser confirmed that governance and electronic health records were discussed at Tuesday's meetings.

"We have made significant modifications to the lease, and at the end of the meeting, it was (McGinty's) understanding that the task force was going to bring Essentia's proposal forward to the North Pine Area Hospital District Board for a vote next Tuesday," Kaiser said.

Essentia wouldn't offer further comment until after that vote, she said.

Schmutzer said he didn't know what would happen at Tuesday's meeting. "What I could hope (would happen) is that we will come back to the table again with a sense of collaboration," he said.

McGinty and Nikcevich had brought a more positive spirit to the talks, Osladil said, but that has dissipated.

"These two gentlemen had made us feel very good with a willingness-to-work attitude," he said. "All of a sudden we get this strong feeling that they are not our friends anymore, that they are Essentia ... and this is the way it's going to be. And we're just an island here with no say-so."