Minnesota City Council votes to terminate hospital contract with Essentia Health

On November 26, Fosston, Minnesota city council members voted unanimously to end an agreement that allowed Duluth, Minnesota-based Essentia Health to control Fosston Hospital, something the health care system does not believe the city has the right to do.

A 2009 agreement between First Care Medical Services, the city’s 501(c)(3) organization that operated Fosston Hospital, and Essentia Health allowed the system to control the hospital, with First Care Medical Services retaining ownership of the property and holding the hospital’s permit.

Fosston officials said in a Nov. 26 news release shared Becker that the decision “reflects the city’s commitment to address concerns about the current state of health care services in Fosston.”

“Under the terms of the 2009 agreement, the city and its legal counsel believe that termination is permissible

At this moment, it is a logical and justified legal action,” we read in the statement. “After fifteen years of cooperation and given the continuing decline in the quality of local health care services, Fosston City Council has determined that the time has come to terminate this contract.”

City council votes follow an arbitration panel ruled in favor of Essentia in September in a dispute with the city. The city sought to terminate the contract and regain control of the hospital after Essentia Health-Fosston halted labor and delivery services in June 2022. Fosston Mayor Jim Offerdahl he said Becker in January that the city had reason to believe it was never a shutdown: “It really was a shutdown, but that’s what they called it and everyone kept saying it was like that for almost a year.”

An Essentia spokesperson said in a statement shared with the company Becker that the system was unaware of the scheduled special city council meeting and is currently reviewing its options. A spokesman said the system did not believe the city had the right to establish an association agreement, citing the panel’s decision.

“This is another distraction from the important work of improving health care in Fosston,” the spokesman said. “As throughout this process, our goal will remain to provide the best possible care to patients throughout the region.”