Rural hospital officials warn of mounting crisis

REGIONAL—Greg Ruberg, the president of Aspirus Lake View Hospital in Two Harbors, had a simple answer for what would happen if one of northern Minnesota’s critical access hospitals closed.
“People are going to die,” Ruberg said.
Ruberg spoke at a roundtable discussion with hospital leaders and state politicians on Oct. 3. During the roundtable, hospital leaders spoke candidly about mounting financial pressures that threaten their ability to maintain emergency departments, outpatient treatments and other essential services.
Present at the roundtable were Ruberg, North Shore Health CEO Kimber Wraalstad, Ely-Bloomenson Community Hospital CEO Patti Banks, Cook Hospital and Care Center CEO Teresa Debevec, Senior Policy Director of the Minnesota Hospital Association Michelle Benson as well as state politicians Grant Hauschild (DFL-3), Roger Skraba (R-3A) and Natalie Zeleznikar (R-3B).
Hospital leaders explained several compounding financial problems, including inadequate reimbursement for Medicare and Medicaid patients, rising operating costs and staff shortages, and uncertainty surrounding federal and state funding programs.
“It’s a house of cards, and, you know, I think all of us here, we are trying really hard to take care of our little corner of the world,” Wraalstad said, adding, “But every card that they start pulling out, you start seeing stuff collapse.”
A central concern during the roundtable was the federal 340B Drug Pricing Program, which allows eligible hospitals to purchase certain medications at a discount from drug companies. Hospitals taking advantage of the program use the savings to offset other financial losses. Minnesota passed a law strengthening the program’s requirements, but the state law is scheduled to sunset July 1, 2027. Its future is a major concern for rural hospitals that rely on the savings to cover operating costs.
“You’re getting a discount through big pharma on a med to support patient care, and really it helps to offset the losses on all the governmental programs. So Medicare, Medicaid, you’re losing so much money. There are very few ways to make that up to stay open,” Ruberg said.
Hospital leaders explained that losing those savings could force facilities to reduce or halt services such as chemotherapy and other outpatient infusions. If those services were halted, patients, particularly older patients, would have to travel long distances for treatment, potentially an hour or more each way. They warned that losing local services could also push patients to seek care elsewhere, further weakening the finances of rural hospitals.
Staffing shortages, compounded by Minnesota’s new family leave policy, have created additional operational challenges for hospitals. Roundtable participants described efforts to cover staffing gaps through casual staffing pools and contract workers, but said replacing employees with specialized training is difficult.
“We are finding we’re having to not schedule certain types of procedures on Mondays and Fridays because that’s when people are taking all the leave,” Banks said.
According to multiple participants, the pathways to careers in rural health have weakened in recent decades. The group discussed the importance of introducing students to health care careers in high school, expanding opportunities to become certified nursing assistants and supporting scholarships or loan forgiveness that encourage workers to remain in rural communities.
“It’s a challenge getting people to come in. You know, you educate a boatload of people, and you get one bad call, and they say, ‘Well, this isn’t for me,’” Wraalstad said.
Hospitals have also struggled to maintain adequate ambulance services. In particular, hospitals have struggled to transfer critically ill patients to larger hospitals when the required ambulance is already in service or cannot be taken out of service to complete a long drive.
Hospitals across the Northland are designated as critical access hospitals, which aim to provide emergency stabilization and local care but are not equipped to perform every test or procedure a patient may need. Patients experiencing certain emergencies may need to be transported to hospitals in Duluth or the Twin Cities. Hospital leaders said that arranging those transfers has become increasingly difficult when ambulance services have limited staffing and resources.
Hospital leaders described wait times of two to eight hours for an ambulance transfer. During that time, hospital staff must continue stabilizing the patient while waiting for transport, putting further strain on emergency departments.
A need for sustainable funding and reimbursement for patient transfers, including behavioral health transportation, so hospitals and ambulance providers do not have to absorb the cost of moving patients, was also identified as an issue.
Participants also raised concerns about federal scrutiny of Medicaid funding arrangements and uncertainty surrounding Minnesota’s proposed directed payment program. They said delays in federal approval or changes to the arrangements could affect how much funding hospitals ultimately receive, complicating financial planning.
“The federal government, CMS, Treasury are looking so hard at every Medicaid transaction, and DOJ comes in after those two look at it. Every single Medicaid transaction is being looked at,” Benson said.
Throughout the discussion, participants outlined how financial stability, staffing and transportation are interconnected. Losing one part of the system can place additional pressure on the others.
Local hospitals provide emergency treatment close to home, stabilize critically ill patients and connect rural communities to larger health systems. The administrators warned that once a hospital closes or a specialized service disappears, restoring that access can be difficult or impossible.
“We’re in the middle of the crisis right now,” Banks said.