An arbitration panel has sided with Essentia Health in its dispute with community leaders in the northwestern Minnesota town of Fosston over control and governance of the local hospital.
The medical center is owned by a local nonprofit but is operated by Duluth-based Essentia under an affiliation agreement that dates back to 2009.
Fosston leaders have been trying to restore the local nonprofit’s decision-making authority after Essentia announced earlier this year that baby deliveries would no longer be scheduled at the facility. The decision made permanent a 2022 temporary suspension of labor and delivery services, which directed patients more than 60 miles away to the health system’s regional hospital in Detroit Lakes.
With the ruling announced Wednesday, Essentia Health says it will continue to operate the hospital, clinic, assisted-living and long-term care facilities in Fosston, plus clinics in Bagley and Oklee.
“Now that the arbitration process is over, Essentia is focused on the opportunity to engage our patients, colleagues and the community in building a shared vision for the future of health care in Fosston,” said Dr. Stefanie Gefroh, interim president of Essentia Health’s West Market, in a statement.
Arbitrators were asked to rule on whether Essentia eliminated a “core” service by discontinuing deliveries, because if so the city of Fosston would then have the right to terminate the affiliation agreement. But the panel in a 2-1 vote concluded that labor and delivery is just one aspect of obstetrics (OB).
“OB is a ‘core’ service under the agreement, encompassing labor and delivery as part of comprehensive care for pregnant women,” the ruling states. “Simply put, while the delivery of the baby is an essential component, it is not the sole care provided to a pregnant woman.”
Fosston officials, including the town’s mayor, were involved in the arbitration because the city has a legal connection to the nonprofit owner of the medical center, which historically was a municipal hospital.
