Swift County-Benson Health Services, CentraCare one step from full affiliation with final vote pending
The Swift County Board of Commissioners and the Benson City Council have approved full affiliation agreements to join Swift County-Benson Health Services with CentraCare. The Swift County-Benson Hospital District Board is expected to approve the affiliation on Monday.
BENSON — A long-standing partnership between the Swift County-Benson Hospital system and CentraCare is now one step from full affiliation.
The Swift County Board of Commissioners on Tuesday approved agreements to lease the hospital and clinic to CentraCare Health Systems for 30 years. The Benson City Council approved the agreements Monday.
The hospital district board will vote next week on the agreements.
The affiliation will become effective at the start of the new year, provided the hospital board approves it Monday as expected.
Operating under new terms
Under the lease agreement, CentraCare will make lease payments to retire approximately $14.7 million in debt. The hospital district will turn over assets of approximately $12.7 million to CentraCare. CentraCare will be responsible for operations.
Employees of the health system are currently employed by CentraCare as part of a management agreement under which Swift County-Benson Health Services and CentraCare have been operating for nearly three years.
The hospital district will continue to own the hospital and clinic facility and property. CentraCare agrees to maintain the facilities. It will also create a local citizen advisory board for the health system.
The Swift County Board of Commissioners and Benson City Council have also approved separate affiliation agreements with a nonprofit organization created by Premier Healthcare known as Cura of Benson to take over the operations — and the assets and liabilities — of Scandi Village. The 46-unit assisted living facility is attached to the Swift County-Benson Hospital facility.
The affiliation with Cura is also structured as a 30-year lease in which the nonprofit organization will assume responsibility for the debt.
The hospital, clinic and assisted living operation have approximately 150 employees.
The lease agreements allow for renewal after 30 years.
A decision point on whether to continue leasing the hospital and clinic facilities or transferring ownership could occur when the debt is retired in 2034.
Affiliation allays fears of losing care
The county commissioners approved the agreements on Tuesday on a three-to-one vote, with chair Joe Fox and Gary Hendrickx and Eric Rudningen voting in favor and Edward Pederson against. Commissioner Pete Peterson was unable to attend the meeting.
Pederson told the commissioners that he fully supported affiliation with CentraCare. He said he would have favored an agreement in which the hospital district would have been able to set aside a portion of its assets in an escrow account. The assets could be turned over to CentraCare once the bonds are repaid.
Pederson said an escrow account could assist the hospital district in the event that the agreement with CentraCare failed and the hospital and clinic operations are returned to the district.
Rudningen and Hendrickx said their concerns were the opposite. The risks of failure and the possible loss of a local health care system are much greater absent an affiliation with CentraCare. Rudningen termed the agreement with CentraCare the best opportunity for maintaining a local health system.
It was also pointed out that CentraCare is assuming more than $2 million worth of risk in terms of the difference between the value of the assets and remaining debt.
The relationship with CentraCare is longstanding. The Willmar-based Affiliated Community Medical Centers and Swift County-Benson Hospital began cooperating on providing services more than 30 years ago, as pointed out at the meeting on Tuesday. ACMC is now part of CentraCare.
Cindy Firkins Smith, senior vice president of rural health for CentraCare, said rural health care is the focus for the organization.
“We are small-town people. We get it,” she said.
The strong support from the Benson community and Swift County for the health care system played an important role in CentraCare’s decision as well.
“It’s a community we want to be in,” said Bryan Lydick, executive director for rural health for CentraCare.
The city of Benson previously provided a $1 million capital grant for facility improvements at the hospital and clinic. Nearly one-half of the grant has been spent on the improvements, and the city remains committed to providing the remainder for the work to be completed.
Dan Enderson and Melissa McGinty-Thompson, who serve as co-CEOs for Swift County-Benson Health Services, emphasized to the commissioners that the relationship between the organizations has been based on trust, and that they were confident it would continue on that foundation.
The relationship has been beneficial to the local health system both in terms of expanding the services that can be provided locally as well as for economic viability, they explained.
Enderson pointed out that while the health system has managed well financially in the past two years due to funding made available by COVID-19 relief efforts, the system experienced financial difficulties in previous years.
He pointed out that 2013 was the last year the organization posted a positive operating margin pre-COVID.