By Anna Jauhola
Without a quorum of stockholders, the Kittson Memorial Hospital Association held its annual meeting as an informational, yet positive one, on Tuesday, Jan. 28 at the hospital facility in Hallock.
For the first time in two years, the board of directors and stockholders saw complete and accurate financials. Neil Frizzell, chief financial officer contracted through Eide Bailly, attended in person and presented a balance sheet and income statement. Though some of the numbers appear stark, the good news is 2022 and 2023 financials are audited, 2024 is 90% reconciled with the audit scheduled for April, and cash on hand still sits in a good position of 126 days.
“Looking at the balance sheet, yes, there has been some drop in cash,” Frizzell said. “We’ve seen improvements. In May 2024, that’s when we started getting around the $5.8 million range, but over the last six months, I know as of January, we are at $6.5 million. So the cash is coming back very well. A lot of it is watching what they’re spending and staying on top of items.”
Addressing the income statement, Frizzell emphasized that no rural hospital is making money on its operations. The unaudited loss for 2024 sits at $1,417,009. Net revenues for that year were down nearly $1.69 million, and operating expenses stayed approximately the same around $17.5 million. Frizzell said although the gross patient revenues were just over $20 million, there was “a sharp drop on the inpatient revenues.”
“The facility is going through an operational analysis to say, ‘We need to cut expenses, we need to maintain services, we need to look at what we’re doing,’” he said. “But this is also the first time in two years that we had financial data to even look at.”
While closely working with Kittson Healthcare CEO Andrea Swenson since December 2023, Frizzell said the biggest area to examine is salaries. In 2022 alone, Kittson Healthcare paid out $8.1 million in salaries, plus $1.7 million in benefits – so $9.8 million overall. He said they have cut salaries and benefits by $1.5 million, part of which was shifted over to travel staff – travel staff’s benefits are paid by the companies that hire them. He said Kittson Healthcare spent $978,000 on travel staff salaries alone. However, that was a net savings of nearly $500,000.
He added later the facility has cut down on medical supplies by $780,000, and plans to look even closer at reimbursements, ensure billing is being done properly and whether they’re getting proper payments.
“Our focus over the next six months is to find additional savings for the facility,” he said.
According to the income statement, Frizzell pointed out it takes approximately $50,000 a day just to operate Kittson Healthcare. This is not uncommon for rural healthcare facilities, especially when considering the cost of lights, utilities, staffing, supplies and so on.
“Our goal is now to provide regular financial statements, look at how we can improve the operation. That’s something Andrea and the board are very committed to,” Frizzell said. “Are these rough numbers? Yes. I don’t like seeing them. But I know we can improve on them.”
Stockholder Paul Craigmile asked why revenues over expenses dropped about $2 million from 2023. Frizzell said there was less payment from what’s billed out due to different types of insurance. But also there was a drop of $750,000 in inpatient revenue – fewer patients equals fewer dollars to operate a 24/7 facility.
Another stockholder asked about the difference in professional fees that went from $281,123 in 2023 to $831,573 in 2024. Frizzell said those costs account for professionals who covered the emergency room, Eide Bailly’s accounting fees and extra cost from Clifton Larson Allen, the auditors, which included an accountant from Robert Half.
“To get where we are at now, it took three of us from Eide Bailly to get the accounting records straightened out,” Frizzell said. “They were unfortunately in a very bad state, to the point they couldn’t be audited.”
He added, with that work completed, Eide Bailly plans to reduce its fees by 50% for 2025. And Robert Half is no longer in the picture. The extra fees in 2024 were necessary to finally know where Kittson Healthcare stands financially, the board agreed.
State of the Operation
Chief Executive Officer Andrea Swenson outlined key points of Kittson Healthcare’s ongoing strategic plan and the operation’s structure. She said they’ve achieved 75% of what they set out to do in the original strategic plan implemented about a year ago, such as educating the community on services, recruitment and retention, and updating equipment and infrastructure. Pieces of the plan remain in motion, such as recruitment and retention, considering that will be an ongoing struggle. Swenson said to address it, they are working with a regional college to bring educational opportunities for staff, working with local schools to show students jobs available here at home, and also working with a marketing firm on a campaign about rural healthcare.
“Geographically, it’s difficult getting people here who actually work in healthcare. The kids coming out of school don’t seem like they’re gravitating toward healthcare and nursing like they used to,” Swenson said. “We’re trying to connect with colleges and educate employees on going further in the world of healthcare.”
She added they still rely heavily on travel staff, but want to decrease that reliance as much as possible, “because it is costing us and we know that. But for the time being, it allows us to provide services, so we do need to capitalize on it.”
Swenson emphasized Kittson Healthcare has completed capital improvements, specifically radiological equipment upgrades, therapy department equipment and services, and an updated kitchen floor. The therapy equipment is all owned by Kittson Healthcare, provided by fundraising efforts through the Kittson Memorial Foundation, and the services are contracted through Big Stone Therapies.
She added the facility received a $198,000 grant to help purchase a new ambulance for Kittson County Ambulance Service. The remaining cost was covered by donations from a letter campaign through Kittson Memorial Foundation. The brand new 2025 rig is due to arrive this month.
Through the strategic plan, Kittson Healthcare has also updated its employee handbook, implemented quarterly CEO meetings with staff and implemented updated Kittson Memorial Hospital Association bylaws. The bylaws are available to view at the facility, just contact Swenson. Any stockholder can get their own copy. Also, anyone can become a stockholder by purchasing a $50 stock at the front desk at Kittson Healthcare.
In other discussion:
• Kittson Healthcare Board of Directors took turns thanking facility employees for leadership, continuity of care and dedication to caring for the communities throughout Kittson County. They also thanked Frizzell and Swenson, and all employees involved, for working so hard to get financials finally completed and available, putting the facility back on the right track. Board Director Dr. Roland Larter specifically noted he’s seen five area rural hospitals close during his time in Kittson County – Greenbush, Karlstad, Red Lake Falls, Drayton and Warroad. “We’re still here,” he said. “So something went right. The bright side is we’ve survived all this and had our share of tumults at Kittson Memorial.” He noted it was in the best interest of the facility to enlist Eide Bailly to straighten out the financials.
• Board President Janelle Craigmile announced her retirement from the board after 22 years of service. She hopes to see some fresh blood move the organization into the future.
• Craigmile noted the board is looking for at least one board member to add. Due to the lack of a quorum, they could not vote on two board members who were up for re-election. Swenson will mail out ballots to stockholders to vote for these board members. This ballot will include write-in spots for additional board members. The ballot will also include 2024 annual meeting minutes for stockholders to approve by a vote.
• The board recognized several people for their years of service – 10 years: Laura Hanson, Amanda Pinnock, Kassi Winge; 15 years: Michelle Kuznia, Natalie Lind, Kelsey Stenmark; 20 years: Torey Peterson; 25 years: Maylea Boursaw, Lee Pemberton; 35 years: Dale Hanson; and 40 years: Karen Warner.
• In the packets provided, the stockholders read annual reports from the Kittson Memorial Foundation, Kittson Memorial Auxiliary and Kittson County Ambulance Service. Pam Taie, auxiliary president, specifically noted she finally had solid numbers for their fundraising efforts with Kathy Phelps as the treasurer. As of Jan. 1, 2025, the Auxiliary has $18,441.68. The ambulance service currently has 20 EMTs, and had 194 runs during its fiscal year October to September.