MAHNOMEN — Leaders at Mahnomen Health Center announced a planned designation change for the rural hospital and discussed its merits at a virtual public hearing.
Jointly owned by Mahnomen County and the city of Mahnomen, the health center was Minnesota’s first critical access hospital, a federal designation created in 1997 in response to rural hospitals shuttering in the ‘80s and ‘90s. Pending approval from the Centers for Medicare Services, it will be the first hospital in the state with the rural emergency designation, meaning it would no longer offer inpatient beds.
The Tuesday, April 30, public hearing was moderated by the Minnesota Department of Health — a requirement under state statute whenever a hospital intends to close a unit.
Mahnomen leaders said the facility will continue to provide 24-hour emergency services, outpatient care and maintain its 32-bed skilled nursing facility.
Mahnomen Health’s presentation indicated its inpatient beds and “swing beds” are little used since patients are not meeting medical necessity requirements, with many surgeries now performed on an outpatient basis. As a Level IV trauma center, the hospital is designed to provide services before a patient is transferred to a facility capable of a higher level of care.
In 2021, amid the COVID-19 pandemic, the hospital averaged just over one patient a day in its swing beds. Swing beds are those used when patients switch from acute care to skilled care status. The trend continued downward, and even fewer patients filled inpatient beds. Admissions dropped from an average of one patient every two days in 2021 to around 73 patients throughout 2023, according to the provider’s figures.
Chief Financial Officer Lori Guenther said financial changes have resulted in a decline in payment reimbursement for the hospital on
"There have been financial changes ... that have resulted in a decline in payment reimbursement, and it has led to a situation where the critical access hospital designation does not benefit Mahnomen Health Center anymore,” said Lori Guenther, the chief financial officer for Mahnomen Health.
The financial changes, according to state Medicaid Director Julie Marquardt, may include reimbursements based on outdated information.
“Our rates for critical access hospitals are paid at a cost-based rate for both inpatient and outpatient services,” Marquardt said. “That pays around 100% of costs from a base-year cost report that may be two to three years old.”
Mahnomen Health CEO Dale Kruger said reimbursement rates are not keeping up with costs.
“There have been double digit increases in the cost of our supplies, [the cost of] labor force continues to increase, but the reimbursements for that have not increased,” Kruger said in an April 25 phone interview. “We are trying to be proactive, looking ahead to say, ‘OK, what do we have to do to make sure that we keep health care in our community?’”
Medicaid’s requirements for inpatient care have also changed, according to Guenther, making it more difficult to classify a patient as inpatient.
Instead of the reimbursement procedure with critical access, under the rural emergency hospital designation, Mahnomen Health Center would see an annual flat payment from Medicare.
"The net positive for our facility is estimated to be about $1 million per year,” Guenther said.
Marquardt said in the state’s Medicaid program, they are analyzing the financial impact of hospitals pursuing this designation change.
“We will be working with Mahnomen Hospital as we go through this analysis,” Marquardt stated.
Mahnomen Health Center has a workforce of 110 and serves 5,500 people in the Mahnomen and White Earth Nation areas. On average, it sees 3,500 emergency room visits and 35,500 outpatient encounters per year.
While no formal date has been approved for the switch at the federal level, the provider will continue 24-hour emergency services and outpatient care, as well as maintain its 32-bed skilled nursing facility.
CEO Kruger said the switch will be a positive direction for health care in the region.
"There will be no staff changes, and no one will lose a job due to the transition,” Kruger said during the hearing.
“To preserve health care in Mahnomen County and White Earth, this change is necessary. Mahnomen Health will continue to meet the needs of the community while balancing resource limitations and financial considerations. We have regional partners to help meet health care needs, better utilizing local resources and capitalizing on the expertise of larger organizations such as Sanford Health.”
