Sue Sitter/PCT Heart of America Medical Center CEO Erik Christenson outlines a proposal for a new hospital at a town hall meeting held Oct. 20 at Rugby’s Cobblestone Inn.

Representatives from Heart of America Medical Center and architectural firm JLG invited community members to give feedback on two proposed options for a new hospital at a public meeting Oct. 20 at Rugby’s Cobblestone Inn.

Hospital CEO Erik Christenson presented the two proposals to an audience of about 50 members of the community, hospital employees and local government representatives. Christenson’s presentation was also livestreamed on the hospital’s social media page.

“The basic premise (for the project) is we have to,” Christenson told attendees. “We’re going to run into problems if we don’t, so now’s the time to ensure that many of our healthcare services remain local.”

“Our health system at this point is in dire need of updating,” Christenson added.

Christenson showed a slide presentation with photos detailing the facility’s deteriorating condition. “Last week, it rained,” Christenson said. “We found 17 holes with water coming into the facility. It’s structurally to a point where the maintenance is not keeping up. The dollars to continue the maintenance are expensive.”

Christenson showed a ceiling tile in the Heart of America Johnson Clinic bulging from water inside it. He joked that clinic provider Dustin Hager took a carpet knife “to lance the abscess,” sparking laughter from the crowd.

More laughter came when Christenson illustrated the lack of improvements to the facility in three decades by pointing out he and his wife, who just became grandparents, went to prom and homecoming in high school the last time the hospital was remodeled. “1991 is not new,” he said, referring to the hospital’s most recent addition.

Christenson added, “technically, every 10 to 20 years, you should be doing a major remodel and you should be removing old buildings as you’re building new buildings. We just kind of encapsulated ourselves. It was not planned out for updates.” He noted updates would enable the hospital to depreciate assets on their books, however, with the lack of new work on the buildings, “we’re all depreciated out. We’re missing out on a lot of money we could have if we had a new facility.”

“Every year, we’re fighting a headwind of $2.2 million,” Christenson said of the missed revenue opportunities. “There’s a strong possibility of continual operation losses and eventual bankruptcy if we continue to stay in that old building.”

Christenson showed a graph representing income for the facility, which saw only three years operating in the black in a decade. Christenson said assets “were creeping up,” however, the facility needed to relocate for the organization to stay healthy financially.

Christenson also explained the hospital’s benefit to the Rugby community. “We pay in wages every year about $17,800,000,” Christenson said. “Not all people live in Rugby; we do employ people from surrounding areas: Dunseith, Towner, Leeds and Maddock and they come into our facility to work. But, with $17.8 million in wages, we have an annual economic impact directly of $2.77 million and indirectly, through creation of other jobs and services of $40,800,000 every year. Other than the agricultural industry, that is probably the largest economic impact.”

“You can see the hospital is a huge part of the GDP (gross domestic product) here in Pierce County,” he added, noting the hospital’s 220 employees and approximately 80 part time and temporary employees make HAMC the largest employer in the community.

Christenson presented two design options for a new facility, to be located on U.S. Highway 2 with access added via a frontage road.

Christenson described the services currently available at the facility, which includes senior care.

“We have assisted living, that’s the Haaland Manor. Assisted living is a facility that does not supply 24 hour nursing services. Basic care provides nursing services but of a CNA (certified nursing assistant) only. They’ll have nursing services but not 24-hour nursing services. They’ll have 24-hour CNA services,” he added.

“Skilled nursing provides 24 hour of nursing services,” Christenson said. “It’s the highest level of nursing services supplied in Rugby, so we have three different levels of senior care: assisted living, basic care and long-term care, or a skilled nursing facility.”

HAMC’s Haaland Estates and Haaland Manor provide assisted living and basic care services to area seniors. Patients requiring long term care stay in rooms on two of the medical center’s upper floors. Christenson said there are 32 long-term patients currently at the facility.

Christenson presented two options the hospital was considering.

One design would include 10 hospital beds and 30 long-term care beds. According to written information from the hospital, the design would maintain “our care offerings at close to current levels. Our projected need for long-term care beds is 27.” The design also increases the number of employees for the hospital.

Disadvantages include increasing building costs “by about $2 million,” the information explained. “It is very difficult to staff. Currently, we have nine contract staff in long-term care.”

Other disadvantages listed are increased regulations and a need to separate the facility from the hospital association. The design also “draws money from the association,” the information said.

The list of disadvantages went on: “Increased staff costs are making many long-term cares not profitable. The long-term care will diminish the association’s ability to assure the debt load can be supported. The long-term care will make it more difficult to produce revenue to update the Haaland Estates.”

The second option presented was a 25-bed hospital, which would include seven acute care beds and 18 long-term care swing beds. Christenson said the second design had many financial advantages for the hospital.

Christenson pointed out that acute care nurses could easily move to the long-term care unit if needed. He said the design was similar to that of St. Andrew’s Health Center in Bottineau.

The design also made it easier to address regulations such as patient visitations during COVID due to fewer government regulations on smaller facilities.

Financial advantages with the smaller design include “no direct or indirect revenue caps” and “no contractual relationship with the (hospital) association, reducing administrative costs,” the hospital’s information said. “It allows for a cost-based daily rate. It is about 20 percent cheaper for the residents,” the information added.

Other advantages include reductions in maintenance and energy costs and reduced labor needs with the smaller design.

Disadvantages for the smaller design include a care gap created by 18 long-term care beds rather than 30, a limited amount of skilled nursing beds and fewer employees.

“Although, currently, we could keep all of our employees as much of the labor consists of contracted employees,” the hospital’s information said. “However, some would have to adjust their job duties.”

The smaller design would also mean the facility would not be able to increase the number of beds needed in the future. Christenson noted hospitals have had the option of purchasing beds in the past, however.

Christenson said the less expensive design would also free up money to remodel Haaland Estates, built in 1962.

Both designs, however, would require a budget of about $50 million, ten percent of which must be raised through donations. Christenson said the association hoped to raise at least half of the $5 million through a capital campaign.

The presentation featured a question-and-answer session, where Rugby Job Development Authority Director Karl Frigaard asked about locating the facility closer to downtown. Christenson said the hospital determined the current site would be best after considering five other parts of the town.

Frigaard also asked about trends toward an aging population in the area.

Christenson said accounting firm Wipfli, whose study identified a need for a new hospital, said, “They projected a decrease in population to about 2,500 (for Rugby).”

“We’re definitely going to have utilization (of senior care services) in this community in the next 25 years the way Wipfli projected it out.”

Christenson noted current trends in elder care point to more care at home and with families. He also pointed out patient numbers in nursing homes have been declining nationally.

Dr. Hubert Seiler asked if the 30-bed design included acute and swing beds. Christenson said the number of acute care beds has been declining. “Ten is kind of our max now,” he said. Christenson added the new design would feature four emergency room bays.

Architect Mark Honzay of JLG said of the site chosen, “It’s very common for critical access hospital replacements to be on the edge of town. There’s better access for emergency services. They don’t have to weave through traffic. We benefit from being right off of Highway 2. There’s very high visibility. People are often visiting the hospital in a traumatic or stressful state of mind. They don’t have to navigate downtown or the railroad tracks.”

Honzay said the site was at a higher elevation, which helped drainage and other issues. “It is a very walkable distance from everything,” he added, noting the site was within walking distance of downtown.

Christenson encouraged members of the public to complete a survey to express their opinions on the two hospital designs. He also asked for volunteers for the hospital association’s capital campaign to raise money for the project. Paper copies of the survey are available at HAMC’s emergency room waiting area, HAMC Johnson Clinic and Lake Region District Public Health Unit in the Pierce County Courthouse. A QR code link to the survey is also available on HAMC’s Facebook page.