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Virginia voters approve charter change to save hospital

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Virginia Regional Medical Center
The Virginia Regional Medical Center. Essentia's Health's Virginia Clinic is right across the street.
Derek Montgomery for MPR

Voters in the Iron Range town of Virginia decided overwhelmingly Tuesday to surrender control of their local hospital. 

Eighty six percent of the votes cast supported a change to the city charter that will allow the taxpayer-owned hospital to affiliate with a larger health care system. 

Voters agreed with city officials who said deeper pockets were needed to save the 75-year-old hospital, even if that meant a loss of local control. 

Independent hospitals across rural Minnesota are a dying breed. Just in the past two years nine of them have joined big multi-state systems like Sanford or Essentia Health. Now Virginia's hospital will likely be the 10th. It has nearly $9 million in cumulative losses since 2003, over which time its patient admissions have dropped by more than 40 percent. And it's facing a big drop in Medicare reimbursements. 

Mayor Steve Peterson said he's glad Virginia voters recognized that the hospital can't make it on its own.

"We've been pretty open and candid about what's happening, I think they see that we can't run the hospital as we used to in the past. We can't be a standalone entity anymore," he said.

At a polling place outside a local community center, not a single person among the dozen interviewed voted against changing the city charter. Eleanor Anshus echoed what many city and hospital leaders have argued: that a larger health care system will have better luck recruiting physicians to the Iron Range, and reducing the need for area residents to travel for health care. 

"I think if we got a partner, we'd get more doctors, and people would be not running to Duluth or Minneapolis or wherever to the doctor, I think they could stay right here, if we could get some good doctors," said the retiree, who volunteers at the hospital gift shop. "I just don't want it to leave Virginia, that's all."

Her friend Debbie Perslin agreed that keeping the hospital in Virginia is the priority, regardless of who's running it. 

"I think that we have a nice hospital, a very nice facility, good nursing services and stuff, but the hospital needs some help," she said. "If that means bringing in somebody else to help us run it, that's good."

City and hospital leaders are in partnership talks with Duluth-based Essentia Health, after also attracting interest from St. Luke's, also of Duluth, and Fairview out of the Twin Cities. 

Essentia spokeswoman Kim Kaiser welcomed yesterday's vote.  "We appreciate the opportunity to continue discussing how we can work at the hospital to ensure that VRMC can sustain the delivery of high quality health care close to home," Kaiser said.

But Virginia residents, including Mayor Steve Peterson, have criticized Essentia for falling to deliver on a variety of previous promises, including staffing levels at its clinic next door to the hospital, which the city paid for with nearly $20 million in bonds. 

Despite the range of doubts about Essentia, emergency room nurse Dave Perron said it's not an option for the hospital to remain publicly owned. 

"It was kind of choosing the devil you know versus the devil you don't know, and moving forward having the optimism that if a larger entity moves in and has a financial vested interest in our success, that they'll spend the time and the resources to grow the facility," he said.

Perron is co-chair of the local chapter of the Minnesota Nurses Association union, which has just over 100 members at the Virginia hospital. The union endorsed the charter change, even though it likely means nurses will have to accept less generous employment benefits under a new owner. Perron said Essentia currently doesn't have any financial incentive to send patients from its clinic across the parking lot to the Virginia hospital. 

"But if they have an interest to use us, there's a lot that can be done here that isn't being done, and it's getting a partner that's willing to commit to that and then holding them accountable," Perron said.

The trick is that accountability.  Now that voters have agreed to surrender control of the hospital, the question is whether any potential partner is willing to provide the level of service Virginia residents want and expect. City officials will have a better idea on Dec. 1. That's when a steering committee will recommend to the city council and hospital commission whether to move ahead with negotiations with Essentia, or to start talks with another potential partner. The goal is to have a deal in place by next summer.