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HEALTH CARE

Local levy helps Cook Hospital succeed

Facility employs more than 100 area residents, with total economic impact of close to $20 million annually

Marshall Helmberger
Posted 8/22/19

COOK— Across the country, nearly a quarter of rural, small town hospitals are at high risk of closing in the near future due to financial concerns, according to a study published earlier this year …

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HEALTH CARE

Local levy helps Cook Hospital succeed

Facility employs more than 100 area residents, with total economic impact of close to $20 million annually

Posted

COOK— Across the country, nearly a quarter of rural, small town hospitals are at high risk of closing in the near future due to financial concerns, according to a study published earlier this year by Navigant, a national health care consulting firm. Here in Minnesota, the study found that 19 hospitals, including 12 that are considered essential, were at high risk of closure.

For hospitals, particularly independent hospitals like Cook’s, located in towns of under 1,000, the risks are that much higher, as limited patient loads and difficulty recruiting staff pose the biggest financial hurdles for small facilities.

When a rural hospital locks its doors for the last time, the ripple effects can reach far beyond the impact to area patients. For many small communities, like Cook, the local hospital is often the community’s largest employer, providing middle-class wages and benefits that flow throughout the local economy.

An economic study, produced for the Cook Hospital in late 2015, shows just what a significant economic factor healthcare has become for this small community— with a total annual economic impact of $18.5 million. With 104 employees, the hospital injects about $6.7 million in direct payroll into the community each year. As employees spend those wages in the area economy, they support 76 additional jobs in the community, creating another $2.7 million in additional payroll income. Additional non-payroll spending by the hospital, totaling $5.7 million, generates additional spending of approximately $3.5 in other sectors of the economy. And those numbers do not include the employment, payroll, and additional economic impact from the Scenic Rivers Health Services Clinic located adjacent to the hospital. Combined, the two facilities have made Cook a remarkably vibrant health care center for the area’s often-isolated rural population

With expenditures of about $13 million a year, the Cook Hospital likely would not survive were it not for factors such as its Critical Access designation, which provides the hospital enhanced payments from Medicare. Yet, perhaps the biggest factor that allows the Cook Hospital to remain financially viable is the hospital district levy, which has generated $1.39 million annually in recent years to support capital improvements and operating costs for both the hospital and the local ambulance services in Cook and Orr.

For the Cook Hospital, the levy is the difference between keeping the doors open and the lights on or closing the doors for good. “It’s critical,” said Cook Hospital Administrator Teresa Debevec. “Our CFO would certainly tell you it’s critical.”

The hospital district’s board of directors is set to decide this week whether to increase the levy for the first time in five years, to $1.49 million. That’s a seven-percent increase, not even enough to keep pace with the rate of inflation in the healthcare sector.

Even so, hospital board chair Liz Dahl said it’s not a decision the board takes lightly. “This is done with a heavy heart, but we don’t want to see our hospital close,” she said. “We have to stay up-to-date with the modern medical equipment and in a small hospital it takes time to recoup those investments because we don’t have the patient volume.”

The hospital levy, which directs more than half of its proceeds to capital improvements, has allowed the hospital to upgrade its facilities in order to stay competitive in the health care sector.

“It’s really been a big success story,” said Debevec. “The upkeep of our facility is so important.”

The bulk of the proposed levy increase for this year, however, is earmarked for operating expenses. A noticeable decline in the use of the hospital’s imaging equipment this year has contributed to a drop in revenues that’s beyond the hospital’s ability to comfortably cover through budget cuts, said Dahl. “We’ve been able to keep our belts tightened the last five years,” said Dahl, but she noted a number of developments that are affecting revenues, such as more aggressive efforts by Blue Cross to try to limit the use of some testing procedures to control outlays by the state’s largest private insurer. She said the hospital is also going to need to upgrade its medical records system, which could cost close to $1 million.

At the same time, the hospital is paying more for staffing these days, in large part due to the ongoing workforce shortage. At any one time, the hospital is likely to have between six and ten workers on the floor who are employed by private employment agencies, because the hospital can’t find qualified staff to hire. Dahl said those agency staff cost the hospital considerably more than hiring their own people, but without qualified applicants, the hospital has little choice.

The higher levy, if approved, will have a modest bite for taxpayers, notes Dahl. “I’ve been telling people it’s about ten bucks for every $100,000 in value on a homestead.”

Dahl said the impact to taxpayers in the district could be less if Greenwood Township, with its roughly $400 million in property value, were to join. “We’re carrying Greenwood township on our back,” said Dahl. “I know some people probably won’t be pleased to hear me say that.”

Greenwood residents have resisted requests from hospital officials in recent years to join the hospital district, out of concern that the property-rich community would wind up paying the bulk of the district’s levy. But Dahl said some Greenwood residents work at the hospital and many utilize the facility’s services on a regular basis. “We’re a regional hospital. If everyone shared the burden, it would be less for everyone.”

Comments

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Shaking my head

Most Greenwood residents are insured, probably the vast majority. They may have Medicare and private insurance, but we certainly are not a net loss to the hospital. We go to: Cook, Virginia, Ely and Duluth hospitals. I’m guessing a small minority use Cook as their ‘go to’ hospital for care. We will not approve a levy for the Cook hospital. It has been tried many times before. Most of our tax dollars come from seasonal residents, who cannot vote, and do not benefit from most of the services that come from property tax dollars. They are only here for a few weeks or months out of the year. The cash cow you envision ain’t happening. To tax us for your Hospital is taxation without representation. The seasonal folks pay more than their ‘fair share’ already.

Friday, August 23
Steve Jacobson

Like many who live on the lake (seasonal) along with the tourists they like the hospital to be there (at their convenience). Otherwise this is just a nice little playground for them for a couple of days or maybe up to a couple of months. I, for one, am glad that the hospital is there. God forbid that we might have to pay a little more a year to keep the hospital open. A mere $40 -60/ year for most residents on the lake. Cook has good, young, dedicated Doctors who have passed up the opportunities of making way more money but instead have chosen quality of life. Which, is why many have chosen to have a place on Lake Vermilion - they just don't want to pay for it.

Friday, August 23
John bassing

Mr Jacobson,

Your numbers are very inaccurate and to top that off the Cook Hospital District tried to force us in without a vote.

Friday, August 23
Steve Jacobson

Your response says it all!

Saturday, August 24
Lee Peterson

"A mere $40-60/ year for most residents on the lake." That is highly misleading, perhaps a sign of the times we currently live in. First off, joining a school district, hospital district, etc., is an all in, permanent commitment. Just like there is no such thing as being only a little bit pregnant, there is no such thing as being only a little bit into a tax district. Ask folks in Kabetogama Township, who tried for years to get out of the Cook-Orr Hospital Tax District.

Below I have copied the facts from the St. Louis County Auditor of what it would have cost Greenwood taxpayers if we had belonged to the Hospital Tax District in 2015, notwithstanding any increases to the levy since then. Note that it would have meant $100 in increased taxes for each $100,000 in property valuation. Now we're talking money, not the "mere $40-60/ year....

County Auditor - 100 North 5th Avenue West, Room 214 - Duluth, MN 55802-1293

Phone: (218) 726-2380 Phone – Virginia: (218) 749-7104 Fax: (218) 725-5060

Donald Dicklich

St. Louis County Auditor

February 25, 2015

To whom it may concern:

The following is an estimate of the tax effects on homestead properties within the Town of Greenwood if they were to be subject to paying towards the Cook Community Hospital district.

2015 Proposed Hospital Levy = $1,390,000

2015 Town of Greenwood Tax Capacity = 4,609,470

2015 Cook Hospital Tax Capacity (without Greenwood) = 9,408,811

2015 Cook Hospital Tax Capacity (with Greenwood) = 14,018,281

Cook Community Local tax rate (with Town of Greenwood)

1,390,000 / 14,018,281 = 9.9156%

The proposed tax increase on the homesteads with the following taxable market values would be:

$100,000 = $99.16

$200,000 = $198.32

$300,000 = $297.48

This is calculated by taking 1% of a homeowners TAXABLE market value and then multiplying it by the local tax rate of 9.9156%. The 1% is the net tax capacity classification rate as dictated by the Minnesota Department of Revenue and is used when calculating taxes.

If you have any questions, please contact Brandon Larson at 218-725-5125 or at LarsonB@stlouiscountymn.gov.

Sincerely,

DONALD DICKLICH, ST LOUIS COUNTY AUDITOR

By: Brandon Larson, Deputy

Sunday, August 25
John bassing

Thanks Lee. The Greenwood levy is currently 150,000, with the Cook Hospital District we would have an increase of nearly 500,000/yr. we might have to fight this thing again.

Sunday, September 1