Like many rural hospitals across the country, Madelia (Minn.) Health’s pockets are running dry, leaving the 25-bed critical access facility with negative days cash on hand for more than two years, and a growing uncertainty of its future.
“We’ve been on a line of credit since I arrived here a little over three years ago, meaning all days cash on hand, unfortunately, are negative,” David Walz, CEO of Madelia Health, told Becker’s. “They have been, for over two years, negative days cash on hand. Anywhere from some days five to 12 negative days up in cash on hand.”
The hospital, which has around 200 full- and part-time employees, is experiencing financial pressures that many other rural hospitals are facing: revenue cycle challenges, slow Medicare reimbursements, unfavorable payer contracts, and the closure of UCare in Minnesota, which left outstanding payments to Madelia that have not been received.
Madelia Health has conserved cash where it can, including extending accounts payable vendor terms. The hospital has also closed several service lines in recent years, including home care around two years ago and its retail pharmacy a year ago. It also is closing an underperforming clinic Aug. 1.
“We conserve cash to ensure we have enough for payroll,” Mr. Walz said. “The day we can’t, then it’s over. … [The employees] are doing their part. They’re seeing patients, they’re taking care of what they’re supposed to do, so I’ve got to ensure that I’m doing my part to make sure they get a paycheck, because they have mortgages and some of them have families to feed.”
Should something happen to Madelia Health, care access would be another large issue, with the closest hospitals 15 to 35 miles away in a region where some residents lack personal transportation and rideshare services do not run.
The week of May 4, a patient heading to another hospital for delivery stopped at Madelia, which does not provide that service. When labor could not wait, staff delivered the baby. Without the hospital, he said, that outcome could have been very different.
“If we weren’t there, that baby would have been delivered probably in a car,” he said.
Madelia is pursuing multiple options for relief. It has applied for a federal rural health stabilization program, is working with the Madelia Health Foundation to raise funds from the community, and is exploring a potential city bond. A recently passed Minnesota state legislative measure allocating $115 million to rural healthcare could also be helpful, though Mr. Walz said details remain unclear.
Madelia is not alone in its struggle, with Minnesota’s healthcare funding challenges drawing attention at the highest levels of state government. On May 13, it was revealed that Minneapolis-based Hennepin Healthcare will receive $205 million this year under a Minnesota state budget agreement, with up to $500 million available through 2031 to keep it financially viable. The struggling system shared in early April that it was working to cut $200 million in costs by the end of 2026, but that internal savings alone would not be enough to sustain it, with closure on the horizon should the state Legislature fail to act.
“We’re not looking for a handout, we’re looking for a hand up,” Mr. Walz said. “We’re a pillar of the community, much like a school. … I think healthcare and a hospital is vital to the community. That’s why I wake up every day to work hard to ensure that there’s healthcare in a hospital in the community.”
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