Wed. Dec 7th, 2022

MONTEVIDEO

— CCM Health is “bucking the trend” but nonetheless facing many of the challenges that rural hospitals are up against.

Brian Lovdahl, CEO of CCM Health, told the

Chippewa County Board

of Commissioners on Tuesday that the health system jointly owned by the city of

Montevideo

and

Chippewa County

is performing in the black at a time when many hospitals are reporting operating losses.

For the first time in recent history, the Minnesota Hospital Association reported that an analysis of acute care hospitals in the state showed that the median operating margin for the first half of the year was a negative 1.5 percent, Lovdahl told the commissioners.

The Minnesota Hospital Association stated in the report that “a workforce crisis is compounding an already dire financial situation.”

The negative showing statewide during the first half of the year compares to a positive 2.2 percent for the same period one year ago.

In contrast, CCM Health is operating in the positive, with an operating margin of about 3.5 percent, the CEO said.

He said the system is facing the same cost challenges troubling hospitals across the state. Costs for supplies and services continue to rise, he said.

Lovdahl said that agreements with insurance companies limit the amount that hospitals can raise their charges. The allowed increases fall short of the rise in costs due to inflation, he explained.

CCM Health has maintained strong workforce numbers, even through the COVID-19 pandemic, he told the commissioners.

At one point it enlisted help from three traveling registered nurses as part of a 15-member RN staff. In contrast, there were other hospitals in the region that saw their RN staffing fall to three or four total, he said.

Delays, inflation and supply chain challenges are negatively impacting the financial projections for the Veterans Administration clinic expansion on the CCM Health campus. The timing of the project was not as expected due to the length of time it took to receive approvals from the VA and supply chain issues.

An anticipated March 2022 completion date has been delayed by a full year to the end of March 2023.

Lovdahl said that he is currently waiting for a new cost estimate for the project. It will likely be above that approved previously by the city and county, he told the commissioners.

Last July, he reported to the commissioners that the total cost could exceed the projected $4.5 million cost by over $1 million.

Lease payments by the VA were projected to retire CCM Health’s investment for the clinic expansion project over a 10-year lease and provide a small margin. Due to the delays and rising costs, Lovdahl said CCM Health will be lucky to break even on the first 10-year lease.

He noted that the system should be able to have a positive return on its investment over the course of a subsequent, 10-year lease.

The Veterans Administration has leased space attached to CCM Health for a clinic for about two decades, but has outgrown that space. It issued a request-to-lease proposal, and CCM Health developed a plan to remodel the existing 10,000-square-foot clinic and expand it by roughly 2,000 square feet under terms of a 10-year lease agreement with a 10-year renewal option.

As part of the long-standing partnership, the VA clinic obtains a variety of services, such as radiological and laboratory tests, from CCM Health.





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