Defying the trend, Blue Earth hospital expands maternity services and attracts new patients

United Hospital District apparently hasn’t gotten the memo — its small hospital in Blue Earth, Minn., is growing and delivering more babies, even as other rural Minnesota hospitals shrink and shut down delivery units.

The independent health care provider even muscled in on Mayo Clinic’s territory in south-central Minnesota and took some of its patients after the world-renowned medical system announced it would close its birthing unit in nearby Fairmont next year.

Whether United Hospital District (UHD) is a blueprint for the rest of the state is unclear, but it is at least a source of hope for Minnesota’s struggling rural hospitals. Statewide, 28 hospitals lost money on institutional operations in 2022, and nine announced they would close childbirth wards or other units this year in response to declining demand or staffing shortages.

“Our focus has been on trying to grow to offset the increased costs,” said Richard Ash, UHD’s chief executive. “And I think we’ve done very well.”

UHD’s hospital admitted 631 patients with acute health problems in 2022, an increase from 543 in 2018, according to the most recent state data. Births also increased from 78 to 102 in that five-year period, when three-fourths of the state’s hospitals reported declines.

Like any small hospital, UHD is one doctor retirement or departure away from staffing pressures. Mayo Fairmont is a larger hospital 23 miles west of Blue Earth, but it couldn’t continue scheduling births after losing obstetricians and being unable to find replacements. It also is halting inpatient pediatrics and surgeries while focusing on its expanded cancer center and outpatient services geared toward an aging population.

UHD leaders believe they have avoided cuts through a somewhat old-school staffing approach, relying on family medicine doctors to staff the hospital when they aren’t seeing patients in their clinics. Other hospitals use full-time staff doctors or specialists in internal medicine, which increases costs and underutilizes the training of family doctors, said Dr. Aaron Johnson, chief of UHD’s hospital medical staff.

“We want our physicians to be working at the highest level of their license as opposed to, ‘OK, family practice, you do sniffles and sneezes, but you don’t touch this and you don’t do OB, because that’s what OB/GYNs do,’” he said.

Four of UHD’s family doctors deliver babies, and cover for their health system’s obstetrician, Dr. Jodi Schulz, when she isn’t on call. Schulz said many hospitals close their delivery units because they can’t guarantee access to C-section deliveries, but UHD maintains 24-hour coverage, provided by Schulz, a surgeon and one family medicine doctor who is trained in these surgical births. The hospital will add another family medicine doctor trained in C-sections next year after she finishes her medical residency.

UHD is overseen by a district board of 13 people elected from Blue Earth and the surrounding township. While it routinely posts positive operating margins, the health system has challenges, including a lack of mental health providers and an abundance of obesity and smoking in its patient population, according to its own needs assessment.

Mayo’s struggles in nearby communities have worked to UHD’s benefit, though. Some residents in Albert Lea started seeking care at UHD’s clinic in Wells, Minn., because they were upset with the consolidation of Mayo’s hospital in Albert Lea in 2017 with another hospital in Austin, Ash said.

UHD first opened a clinic in Fairmont in 2016, but recently moved to a larger space to meet demand, which has increased with Mayo’s cuts. UHD hosted a luncheon last week in Fairmont to invite more patients, including pregnant women, to switch providers.

Fairmont resident Nikki Johnson said it was a no-brainer to switch before she gave birth to her second child this summer. Mayo was diverting childbirths more than 50 miles to its hospital in Mankato while it was still trying to hire obstetricians and hoping to reopen its labor and delivery unit in Fairmont.

“We didn’t want to have to drive 50 minutes, you know, in labor,” she said. Johnson once raced with her husband to Blue Earth in an episode of preterm labor, but ended up scheduling a surgical delivery later to reduce complication risks.

The family then made the move permanent, switching routine primary care from Mayo to UHD and its Fairmont clinic.

Schulz was a physician leader for Mayo who supported closing the delivery unit in Albert Lea and consolidating it in Austin. But she said she left Mayo in March over concerns about its continued cuts and joined UHD because she was excited about its approach and investment in obstetrics.

Ash said these moves might seem cutthroat, but UHD has a responsibility that only increases when Mayo stops scheduling births in Fairmont early next year: “That pretty much puts UHD Blue Earth as the place for deliveries between Austin and Worthington, which is about a 120-mile stretch. So we’ve really got to figure out, what do we need to do to be here?”

With 25 inpatient beds, UHD is small enough to qualify for a boost in federal payment rates as a critical access hospital. However, its size puts it into a vulnerable category. A University of Minnesota survey of hospital administrators found it is difficult to run a safe and financially viable delivery unit with fewer than 200 births a year. One solution has been to send its nurses to Allina Health’s Abbott Northwestern Hospital in Minneapolis to observe and participate in births if they haven’t had enough practice locally.

Ash said UHD has needed cost-saving partnerships to overcome the growing share of patients covered by government-funded health programs such as Medical Assistance that pay less for care than private health plans. Sanford Health provides some medical recordkeeping, radiology and pathology services to UHD, which also relies on Allina Health for some cardiology services and the Orthopedic & Fracture Clinic in Mankato for orthopedic care.

UHD is among 19 independent hospitals that earlier this year founded the Headwaters Network, which will allow them to pool their patient outcome data so they can qualify for value-based insurance contracts.