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RC Hospital posts strong revenues

Tribune file photo The $25 million, 65,000-square-foot RC Hospital and Clinics facility on the east edge of Olivia was dedicated in September 2015. The Renville County-owned system posted $9 million in net revenues last year with a 9.5 percent total margin, according to the annual report.

OLIVIA — Renville County decided to build a new health care facility and remain an independent and locally owned system as the nation struggled through an economic recession and major health care systems consolidated.

"We built our facility when everybody said you were crazy to do it,'' Nathan Blad, CEO of RC Hospital and Clinics, told the Renville County Board of Commissioners on Tuesday in an annual report on the status of the county-owned system.

The timing proved to be better than expected. The county was able to access low-cost financing through U.S. Department of Agriculture Rural Development, financing that is now much harder to come by. And, it came at a time when construction bids were very competitive, allowing the county to build the facility for much less than would be the case today, according to Blad.

The $25 million facility which opened just over 2½ years ago in Olivia has continued to perform well economically, posting $3 million in net income last year with a 9.5 percent total margin on $29 million in net revenues..

"It puts us among the best performing hospitals for our size,'' Blad told the commissioners.

The economic performance for 2018 appears to remain on track with last year, he added.

It's performing well in terms of patient satisfaction and quality of care as well, receiving a five-star rating in a recent independent analysis, he told the commissioners.

The question now being raised, Blad said, is whether the county built large enough.

"Had we to do the project over, we would have made it bigger,'' said Blad during the presentation.

The hospital and clinic more recently obtained grant funds through USDA Rural Development to install telehealth equipment. It's connected the facility with the Avera eCare Hospitalist service through Avera Health, allowing 24-hour physician access via telecommunication. The hospital believes the connection will help end 40 or more "avoidable transfers'' each year. These are cases in which patients will be able to remain in Olivia and receive care that they would otherwise have been transferred to other locations to receive.

Blad also outlined a number of areas where the facility is working with other health care entities to offer more speciality services by using telecommunication. A new connection with St. Cloud will allow the hospital to offer chemotherapy services soon.

The CEO said the hospital and clinic system is also looking at refining its current walk-in clinic model toward an urgent care model that will make possible 24/7 service.

RC Hospital and Clinics is also aiming to expand its role in wellness and prevention efforts in the county. Blad said the hospital hosted a meeting Monday with representatives from throughout the county to look at how to address the needs. A recent study found a 37 percent obesity rate in the county, as compared to a 27 percent rate statewide.

On the economic side, the "big elephant in the room'' remains the issue of whether small, rural hospitals should maintain independence or pursue mergers or partnerships with larger networks. The biggest driver of consolidation right now is the need for capital, Blad said, and the RC Hospital and Clinics system does not have an immediate need for capital.

The other driver toward consolidations and partnerships is the decline in reimbursements from payers. There is more leverage to obtain favorable reimbursement rates when part of a larger system.

A workforce shortage is another significant issue facing all health care systems, he said. "For all of us, it's tough to find talented people.''

Blad said the hospital is currently conducting a strategic analysis and working with a consultant and its software to identify how it can best defend and maintain its current market position. At this point, he expects that the hospital will continue to build joint ventures with other entities, similar to its partnerships in telemedicine.

Tom Cherveny

Tom Cherveny is a regional and outdoor reporter with the West Central Tribune in Willmar, MN.

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