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Statewide Blog

Big changes ahead for Virginia hospital

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The Virginia Regional Medical Center, in the Iron Range city of Virginia, has been struggling for a couple of years. The city-owned hospital is on track to lose $2.4 million this year, according to the Mesabi Daily News. It lost another $1 million between 2008 and 2009.

I reported on the hospital's struggles and those of rural health care in general in a June story.

A big part of the problem in rural areas is the low reimbursement rates from federal programs like Medicare and Medicaid. Meanwhile, elective health procedures have dropped off during the recession.

Management has been in turmoil at the Virginia hospital. Former Administrator Keith Harvey left in March. His temporary replacement, Kyle Hopstad, who used to work with a hospital management firm, filled in after that for $25,000 a month. But the hospital board, and perhaps more importantly, the Virginia City Council apparently thought that was too rich for their budget, and they bid Hopstad farewell at the end of August.

The Virginia Regional Medical Center has been trying get by as an independent facility at a time that hospitals across the landscape are being gobbled up by large regional health systems. As an independent, VRMC found it very difficult to recruit and retain key personnel. They managed to provide specialty services through agreements with Duluth providers.

But an era is coming to an end. The hospital board and city council met jointly early this month and decided to entertain an affiliation with one of the regional health systems, like Duluth-based Essentia Health, Duluth's St. Luke's Hospital, or Minneapolis-based Fairview Health Services. The hospital board is expecting proposals from three to five health systems.

Meanwhile, the board is considering finding a temporary CEO who can help with the transition to a partnership for management services.That's the lead topic on the agenda when the board meets in Virginia on Monday.