Rural hospital on the verge of shutting down could be saved by lawmaker’s bill

ELGIN, N.D. (North Dakota Monitor) — The fate of a rural hospital, over 100 jobs and health care in southwest North Dakota communities might hinge on a bill lawmakers will consider this week.

The Jacobson Memorial Hospital Care Center in Elgin, North Dakota, could be forced to close its doors and the area’s only ambulance service if it doesn’t obtain immediate financial assistance, Chief Operating Officer Kristin Heid said.

“We are in serious financial trouble,” said Heid, who has been serving as the hospital’s administrator since November. “We’re kind of payroll to payroll right now, just hoping that enough revenue comes in to make the next payroll.”

Sen. Donald Schaible, R-Mott, has drafted a bill that would give the health care facility an out. He’s proposing legislation creating an emergency low-interest loan program for nonprofit hospitals and asking legislative leaders to allow the bill to be heard during this week’s special session.

Sen. Donald Schaible, R-Mott. (Photo provided by the North Dakota Legislative Assembly)

“This is a special caveat for somebody in dire trouble,” Schaible said. Without help, “They would fold. It’d be a very massive effect on the community. They’re the largest employer by far.”

The $10 million loan program would be administered by the state-owned Bank of North Dakota under an existing program that awards low-interest loans to support medical facility construction projects. The potential loan amount for any hospital would be capped at $5 million and would require the hospital to demonstrate a business plan to return to solvency.

“It can’t be a gift,” Schaible said. “They have to have a decent business plan. They have to go through criteria that makes them prove that they’re sustainable and have a future going forward.”

The closure of the critical access hospital would force local residents to travel more than an hour to the nearest facilities in Dickinson, Hettinger or Bismarck. The closure would include health care clinics in Elgin, Richardton and Glen Ullin. The hospital also hosts 21 patients in long-term swing beds, akin to a long-term care facility, who would have to be transferred to nursing homes elsewhere if operations cease, according to the chief operating officer.

The community would also lose the ambulance the hospital leases, staffs and operates, Heid said.

“We are in a health care desert,” Heid said. “The nearest ambulance would be 30 miles away.”

Assistance is not guaranteed. Legislative Management must agree to allow the bill to be introduced during the special session. Then the Legislature must hold a hearing and vote on the bill. If approved, eligible hospitals like Elgin’s would then have to apply for a loan through the Bank of North Dakota and provide documentation of the need and ability to repay the loan.

The hospital’s financial crisis has been growing for years. Internal Revenue Service filings show the nonprofit reported deficits of $822,000 in 2022 and $1.5 million in 2023. Audit findings from 2023 identified “material weaknesses” in the hospital’s internal checks and balances necessary to detect and correct any errors in financial records. The weaknesses were attributed in part to the small size of the staff.

Heid said the hospital is $3.8 million in debt, but the board was not alerted to the dire financial situation until August or September of last year. The CEO’s employment was terminated in November and the position will not be filled, said Heid, who now serves as the hospital’s lead administrator.

The board has since initiated several internal reforms to get the hospital’s finances back on track.

The hospital is still operating on a thin margin despite those reforms, and used a line of credit from a local bank to make payroll around the holidays, Heid said. A low-interest loan from the state is key to keeping the hospital open, she said.

“I’m not sure if we can continue forward without that money,” Heid said. “Our facility is just very important to the community and our service area. We hope that we can continue to be there to serve our community in the future.”

The hospital plans to host a community meeting in February to share information about the financial situation, a new strategic plan and how the Rural Health Transformation Program funding from the federal government could help the area.

Tim Blasl, president of the North Dakota Hospital Association, supports the bill and said he believes it will serve as a good solution to help Jacobson Memorial Hospital Care Center return to safe operating margins.

“It’s structured very well,” Blasl said. “They have to pay these dollars back. So it’s not like a handout or a grant.”

He said some rural hospitals in North Dakota are financially struggling, but they are not in the same degree of trouble Jacobson Memorial Hospital Care Center is.

Schaible said if the program is successful in helping Elgin or other community hospitals, it could serve as a pilot program that could be expanded in the future.

North Dakota Monitor reporter Jacob Orledge can be reached at jorledge@northdakotamonitor.com.