Financially speaking, the Redwood Area Hospital is in great shape.

Yet, officials from the city-owned hospital also recognize that could change at any time. Challenges exist in healthcare, especially for smaller market hospitals like the one in Redwood Falls, and with reimbursements consistently coming in from providers to the hospital at lower rates, the reality is there is significant risk involved with running such an operation. 

“Health care is changing at a dramatic pace,” said Bryan Lydick, Redwood Area Hospital CEO.

According to Lydick, the hospital recognized this reality and for the past two years had been in discussions with ACMC about the potential of bringing in its clinic in Redwood Falls on site at the hospital as part of its planned site expansion.

When ACMC opted to join in on a venture with Rice Memorial Hospital and CentraCare Health that has resulted in the formation of Carris Health, the hospital leadership opted to take a look at how it might fit in with that concept.

“We have great doctors at the clinic here, and we want to work with them, not compete against them,” said Lydick.

So, the hospital and city leadership began looking at other options, which resulted in interaction with CentraCare Health. That interaction led to the development of a memorandum of understanding (MOU) that was presented to the Redwood Falls city council at its Jan. 2 meeting. The city council approved the MOU that now allows discussions to take place between the City of Redwood Falls, the Redwood Area Hospital and CentraCare Health in order to explore potential affiliation.

“It’s only prudent to look at partnering with organizations that can enhance healthcare delivery for our community now and in the future,” said Lydick.

The MOU is a formal agreement organizations use to outline a proposed affiliation process and typically involves a range of options and issues for all parties involved to explore.

Lydick told the council that entering into this MOU does not mean that one option or another has been determined. Rather it is about exploring all of the options, which he said could include everything from some form of collaboration, a lease agreement or even the outright acquisition of the hospital.

At the end of the dialogue it could also mean the hospital and city decide to do nothing, added Lydick.

According to Lydick, the Redwood Area Hospital received $1.3 million less in reimbursements this past year for the same business it provided the previous year. Continuing down that path is not a healthy financial option, he added.

Amy Busse, Redwood Falls city attorney, said a MOU is different than a contractual agreement in that there are no specific binding elements that have been reached.

One of the only stipulations as part of the MOU is that the city and hospital must agree to speak exclusively with CentraCare Health while that MOU is still in place.

For the City of Redwood Falls there is growing risk involved with operating a hospital, said Melissa Meyer, city finance director, adding the city has experienced a drop in its bond rating due to its operation of a hospital.

Despite the fact that the hospital is financially solid, the bond rating dropped, Meyer said, adding the reality is that investors see a city-owned hospital as a risk.

James Kanne, a Franklin area resident, and Paul Sobocinski, a Wabasso area resident, both spoke out against the requested MOU, adding their concerns about loss of local control.

“You have a real gem in this hospital,” said Kanne, adding it is a regional hospital that has served him and his family well over the years.

Sobocinski shared his concerns about the growing rate of corporate consolidation, adding there is no way to lose control of the hospital if it continues to be owned by the city.

Members of the city council recognized the importance of local control, but they also saw the reality of the impact continued loss of revenue could have on the city and its residents.

“Health care is not the same today as it was 10 years ago,” said John Buckley, city council member, adding 10 years from now it won’t be the same as it is today.

“There are many details to consider,’ said Keith Muetzel, city administrator. “The goal right now is to lay out all viable scenarios, so that we can ensure strong, sustainable healthcare for people in Redwood Falls and the surrounding area.”

As part of the MOU, with the Redwood Area Hospital and CentraCare have expressed that collaboration would likely ensure the delivery of coordinated, high-quality medical care through the implementation of a common electronic health record, as well as care that is delivered locally whenever possible with access to specialists throughout a larger network when necessary.

Corey Theis, Redwood Falls mayor, said the hospital has committed over the years to bringing in more specialists to serve the public, adding he appreciates the fact that means people don’t have to travel out of town for everything.

Theis added he can’t imagine that would change.

No one has a crystal ball, said Jim Sandgren, city council member, but he added the reality is that the local hospital is getting beat up every year by providers who hold the advantage over the small, local hospital.

“By collaborating, Redwood Area Hospital will be better positioned to preserve the long-standing legacy of community-based care,” said Lydick. “Through our initial discussions, I feel confident we have a shared commitment to rural healthcare and a forward-thinking approach to lead on quality, safety and care close to home.”

Lydick said the next step would be to negotiate a letter of intent, which he said will likely take into the middle of March of this year. He added while no specific timelines have been established beyond that point he does not see any official action taking place until the beginning of 2019 at the very soonest.

– Some information for this article was provided via a press release provided by the Redwood Area Hospital.