FOSSTON — An arbitration panel has ruled in favor of Essentia Health in a contract dispute arising from the discontinuation of labor and delivery services at the hospital in Fosston.
In a split decision, arbitrators ruled 2-1 that Essentia Health will continue management of the hospital, clinic, assisted-living and long-term care facilities in Fosston, as well as clinics in Bagley and Oklee.
Fosston city officials said they may still consider further actions, including appealing the ruling or pursuing a case on breach of contract.
Mayor Jim Offerdahl affirmed the city’s dedication to restoring local governance of the hospital, which also includes the council-appointed First Care Task Force.
"We will have further information after discussions next week with our consultants and legal team on what our next steps will be," he said in a released statement. "But I will say that the task force is committed to restoring local decision-making at the Fosston Hospital."
In a statement, Essentia Health said the ruling affirmed the provider's position that it has operated the Fosston hospital within the requirements of the agreement signed in 2009.
“Now that the arbitration process is over, Essentia is focused on the opportunity to engage our patients, colleagues and the community in building a shared vision for the future of health care in Fosston,” stated Dr. Stefanie Gefroh, interim president of Essentia Health’s West Market, in a news release.
“We look forward to working with city leaders in support of that objective and for the patients we’re honored to serve.”
The conflict arose in 2022 when Essentia Fosston first announced a pause on labor and delivery, later making that decision permanent. More than 40 people packed Fosston City Hall during the state-moderated public hearing on the closure of the unit in February — nearly two years after the last baby was delivered in Fosston.
Fosston-area moms who are expecting have traveled ever since to surrounding hospitals including Essentia St. Mary’s in Detroit Lakes, more than an hour’s drive away.
First Care Medical Services is a local nonprofit organization the City Council selected to own its hospital, with Essentia Health operating it since its 2009 affiliation agreement.
The arbitration took place nearly two months ago, around the same time the city of Fosston approved the Essentia Health-Fosston Hospital Administrator Callen Weispfennig to continue in the role in the event of an operator change.
Offerdahl said the split decision gives the city reason to continue pushing forward.
"We are disappointed that the panel ruled by a vote of 2 to 1 in Essentia's favor in our dispute over labor and delivery being discontinued at our hospital in Fosston," Offerdahl said. "The fact that it was not unanimous indicates that the city's position has been validated."
Essentia Health stated the dispute has brought new awareness to the many challenges faced by rural health care providers.
"As leaders in rural health care, Essentia is committed to ensuring patients have high-quality, compassionate care as close to home as possible," the provider stated.
In discontinuing labor and delivery and moving to a “shared care model,” Essentia leaders said in February that they’re prioritizing the safety of mothers and babies while acknowledging workforce challenges and a declining population in the rural northwestern Minnesota city.
