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N’West Iowa hospitals invest in region

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N’West Iowa hospitals invest in region
N’West Iowa hospitals invest in region

Avera Merrill Pioneer Hospital in Rock Rapids is part of the Avera Merrill Pioneer Health Campus that opened on May 1. Avera’s new health-care campus cost about $28.9 million to construct.

REGIONAL—While hospitals across rural America struggle to stay in the black, one N’West Iowa community has seen millions of dollars invested into new health-care facilities.

May 1 marked the opening of the Avera Merrill Pioneer Health Campus and Sanford Health Rock Rapids Clinic in Rock Rapids, a town of about 2,550 people that serves as the Lyon County seat.

Avera Health’s health-care campus — which includes a hospital and clinic — cost about $28.9 million, while Sanford Health’s medical clinic had a price tag of about $5.15 million.

The hospital is among eight located in the N’West Iowa counties of Lyon, O’Brien, Osceola and Sioux.

“They’re not like the rest of the nation,” Curt Hohman, Avera’s vice president of managed hospital services, said about the counties and their health-care access. “They’re doing better than the rest of the nation by far. They’re doing better than other Iowa facilities even.”

Hohman, a 22-year Avera employee, listed three possible reasons for why a rural region of Iowa has access to eight hospitals in a four-county area:

  • Longtime doctors, many of whom are from the far northwest corner of the state, have lived and worked in the region for most or all of their careers.

“The stability of physicians that have been in northwest Iowa has just been great,” Hohman said. “You just don’t see that in a lot of places. A lot of times, doctors are there for a few years and then they leave.”

  • Communities strongly support their local hospitals.

In addition to the new health-care facilities in Rock Rapids, Hawarden Regional Healthcare and Hegg Health Center in Rock Valley have undergone major renovations during the past five years.

Sioux Center Health celebrated its fifth anniversary this year of the relocation and construction of a new hospital building in 2014.

Orange City Area Health System opened a new medical campus in 2006, which replaced a 1960s-era hospital.

“If you’re living in those towns or if you’re living in that county, you’re going to your local hospital,” Hohman said.

  • The health of a hospital is a reflection of the health of its local community.

Hohman pointed to the region’s low unemployment, healthy population and diverse economy.

Iowa Workforce Develop­ment reports that Lyon County had the state’s lowest un­­employment rate in August at 1.2 percent.

Sioux County’s unemployment rate that month was 1.6 percent, followed by Osceola County at 1.7 percent and O’Brien County at 1.9 percent.

The four-county area of N’West Iowa is known for its rich agricultural land and many manufacturing companies.

“Those kinds of things, when those are happening, the hospitals are doing much better,” Hohman said. “A good, local economy certainly helps the local hospital.”

‘Significant transition’

N’West Iowa hospitals invest in region

Registered nurse Leah Freese uses the automated medication-dispensing system at Avera Merrill Pioneer Hospital in Rock Rapids. The facility opened on May 1.

Avera’s health-care campus, which has an approximately 52,000-square-foot footprint in the southwest part of Rock Rapids on the west side of Highway 75, is designed around outpatient services.

“The trend in health care historically has been a lot of inpatient, but we’ve started to see a pretty significant transition, especially in rural areas, from inpatient to outpatient,” said Avera Merrill Pioneer Hospital administrator Craig Hohn.

“That trend probably started slowly about 15 to 20 years ago and continues to this day,” he said.

About 100 people work at the Rock Rapids hospital and clinic.

“We have our inpatient unit,” Hohn said. “It has 11 beds in it, so we’re built to meet the needs of the community today. But you see a lot of our imaging, our lab, our clinic, pharmacy services. Things like that are built at a pretty robust level to help support those outpatient services.”

Between the start of May and end of August, 15 percent to 20 percent of its volume of patients has been to Avera’s health-care campus for inpatient stays while 80 percent to 85 percent has been for outpatient stays.

“With advances in technology — especially minimally invasive procedures that used to be more complicated — people who used to have to stay overnight — or more — are increasingly being able to go home the same day as their procedure,” Hohn said.

“In smaller rural hospitals, the majority of the inpatient stays are people suffering from conditions such as pneumonia, diabetes complications and other illnesses,” he said.

Fifty-one people work at the approximately 9,600-square-foot Sanford outpatient clinic located on the western edge of Rock Rapids on the north side of Highway 9.

“When we were designing this building, we really tried to look at: Where’s health care going to go?” said Tammy Loosbrock, the medical clinic’s senior director. “We wanted our providers to be able to have the tools to do their job.”

‘Trend will continue’

She noted there are many factors that have led the transition from inpatient to outpatient care, a trend she has seen happen since she started in health care in 1996.

“First, technology and procedures have improved greatly resulting in less recovery time,” Loosbrock said. “Second, so much can be done outpatient thus decreasing costs and allowing patients to stay in their own homes.

“We anticipate this trend will continue as Medicare just recently approved for total knee surgery to be on the outpatient procedure list as well,” she said. “Payers really like to see as much done outpatient versus a more expensive inpatient stay.”

Hohn, a first-time hospital administrator, said technology has changed for hospitals built in the 1950s and 1960s.

“With a new building, it’s really designed with a lot of that newer technology in mind,” he said. “It fits it better. It all incorporates better into the building.”

Both new multimillion-dollar medical facilities in Rock Rapids boast names of well-known regional health systems — Avera and Sanford — that are based in the southeast South Dakota city of Sioux Falls.

Loosbrock said there are advantages to being a part of a medical clinic owned by a large health system such as Sanford.

“All of the purchasing power that you get as part of a large system — it helps keep your expenses down,” she said. “When you start looking at recruiting providers, sometimes providers are attracted to a larger organization that they can be a part of.”

‘We take the risk’

In early 2016, Avera agreed to lease operations of the community medical center in Rock Rapids and clinics in Rock Rapids and George from the nonprofit Merrill Pioneer Community Hospital group beginning in May 2019 and lasting for a quarter century.

“That means we take the risk for that organization,” Avera’s Hohman said. “If we do well, then we reinvest that money into the facility, into the business, into the community. If we don’t do well, then we obviously need to fill those financial holes and we take the risk for that.”

After having leased to San­ford since 1999, the local hospital group partnered with Avera to build the state-of-the-art critical access hospital as well as a medical clinic for family medicine services.

Avera, which had never had a facility in Rock Rapids before, was invited to begin working in January 2015 with the hospital group to plan for the new health-care campus. Construction started in August 2017 and finished in February this year.

To help pay for the project, the hospital group applied for and received a roughly $17.75 million loan from the U.S. Department of Agriculture Rural Development. The long-term, low-interest loan’s terms are for 25 years at 3.25 percent interest.

The USDA loan, construction loan money from area Lyon County banks and the James W. and Ella B. Forster Charitable Trust are among many funding sources for the building project.

The trust donated $2 million and the Lyon County Riverboat Foundation provided $1 million toward the project. The hospital group provided about $5 million in reserve funds and its capital campaign raised about $3.6 million toward the project.

“There was a really strong capital campaign that helped support the hospital,” Hohn said. “That really helped demonstrate that community support that is really needed in a community for a hospital to be successful.”

‘Have to be different’

Avera’s geographical footprint of about 72,000 square miles covers parts of Iowa, Minnesota, Nebraska, North Dakota and South Dakota.

The regional health system’s presence in N’West Iowa be­­gan during the mid-1990s, a time of major changes in the health-care industry. Rural hospitals were looking to partner with larger ones.


“That future started to get really cloudy,” Hohman said. “What we were doing in the past in rural communities, rural hospitals, was probably going to have to be different than what we would do in the future.”

Avera began partnerships with the following hospitals in N’West Iowa during the 1990s:

  • December 1996: Hegg Memorial Health Center — now Hegg Health Center — in the Sioux County city of Rock Valley.
  • July 1998: Sioux Center Community Hospital & Health Center — now Sioux Center Health — in Sioux County.
  • October 1998: Osceola Community Hospital — which is being rebranded as Osceola Regional Health Center — in the Osceola County seat city of Sibley.

They formed management agreements. For a monthly fee, they gained access to Avera services.

Avera makes recommendations to the hospital boards of directors in Rock Valley, Sibley and Sioux Center, but the local boards make decisions for their facilities.

‘In the community’

With Avera building a new health-care campus in Rock Rapids, competitor Sanford decided to construct its own new medical clinic in town because it no longer would have a hospital in the community.

N’West Iowa hospitals invest in region

Medical lab technician Kim Geer­des looks at a blood smear under a microscope at the Sanford Health Rock Rapids Clinic.

Sanford has had a presence in Rock Rapids since 1992, when the regional health system was known as the Sioux Valley Hospitals & Health System.

That year, Sioux Valley started a management agreement with the community hospital in Rock Rapids.

That switched to a lease agreement in 1999.

Loosbrock became the CEO of Sanford Rock Rapids Medical Center and Sanford Rock Rapids Clinic in November 2010.

“We’ve really worked hard on getting providers that are rooted in the community,” she said. “They raise their families and they live here. We just felt it was important for us to have that presence, too, because we’ve been here for so long.”

Sanford, one of the largest health systems in the United States, covers 26 states and nine countries.

‘New level of quality’

Hohman said one reason rural hospitals started partnering with regional health systems during the 1990s was the emergence and the need for electronic medical records. Other reasons exist, though.

“They also wanted to reach a new level of quality,” Hohman said about the rural hospitals. “Things were going well. They just wanted to get a higher level of performance.”

Physician recruitment to rural hospitals was becoming increasingly difficult during the 1990s. Meanwhile, many primary care physicians in N’West Iowa started looking for area hospitals or regional health systems to purchase their practices.

Hohman said Avera’s partnerships with rural hospitals have worked well.

“The relationships have been obviously long-lasting,” he said. “They’ve been great partnerships. We trust each other.”

Rock Rapids development director Micah Freese said having multiple health-care facilities is a big benefit for each community.

“It gives residents options,” he said. “Also, by having both providers in our community — Sanford and Avera — they draw from other communities.”

The impact extends into businesses where people eat or shop before and after medical appointments.

“Also, with having those two providers in town and spending nearly $35 million between them, we’ve got a lot more jobs,” Freese said. “Small towns our size are lucky to even have any type of health-care provider. We’re blessed to have options here.”