Bucking the trend, rural northwest Iowa makes aggressive medical moves

Regional partnerships fuel growth as many other rural hospitals struggle

Avera Merrill Pioneer Hospital in Rock Rapids is part of the Avera Merrill Pioneer Health Campus that opened on May 1. T
Avera Merrill Pioneer Hospital in Rock Rapids is part of the Avera Merrill Pioneer Health Campus that opened on May 1. The new health care campus cost about $28.9 million to construct. (Mark Mahoney/N’West Iowa Review)

ROCK RAPIDS — While hospitals across rural America struggle to stay in the black, one far Northwest Iowa community has seen millions invested into new health care facilities.

May 1 marked the opening of both the new Avera Merrill Pioneer Health Campus and new Sanford Health Rock Rapids Clinic in Rock Rapids, a town of about 2,550 that serves as the Lyon County seat.

Avera Health’s health care campus, which includes a hospital and clinic, cost about $28.9 million. Sanford Health’s medical clinic was about $5.15 million.

The hospital is among eight in the Northwest Iowa counties of Lyon, O’Brien, Osceola and Sioux.

“They’re not like the rest of the nation,” Curt Hohman, Avera’s vice president of managed hospital services, said about the counties and their health care access. “They’re doing better than the rest of the nation by far. They’re doing better than other Iowa facilities even.”

Hohman, a 22-year Avera employee, gave three possible reasons why a rural region of Iowa has access to eight hospitals in a four-county area:

• Doctors have lived and worked in the region for most of their careers.

“The stability of physicians that have been in Northwest Iowa has just been great,” Hohman said. “You just don’t see that in a lot of places. A lot of times, doctors are there for a few years and then they leave.”

• Communities strongly support their local hospitals.


In addition to the new facilities in Rock Rapids, Hawarden Regional Healthcare and Hegg Health Center in Rock Valley have undergone major renovations during the past five years. Sioux Center Health celebrated its fifth anniversary this year of the relocation and construction of a new hospital building in 2014. Orange City Area Health System opened a new campus in 2006, which replaced a 1960s-era hospital.

“If you’re living in those towns or if you’re living in that county, you’re going to your local hospital,” Hohman said.

• The health of a hospital is a reflection of the health of its community.

Hohman pointed to the region’s low unemployment, healthy population and diverse economy. Iowa Workforce Development reports that Lyon County had the state’s lowest unemployment rate in August at 1.2 percent. Sioux County’s unemployment rate that month was 1.6, followed by Osceola County at 1.7 and O’Brien County at 1.9 percent.

That four-county area is known for its rich agricultural land and manufacturing companies.

“Those kinds of things, when those are happening, the hospitals are doing much better,” Hohman said.


Avera’s medical campus is designed around outpatient services.

“The trend in health care historically has been a lot of inpatient, but we’ve started to see a pretty significant transition, especially in rural areas, from inpatient to outpatient,” Avera Hospital Administrator Craig Hohn said.

About 100 people work at the Rock Rapids hospital and clinic. “We have our inpatient unit. It has 11 beds in it, so we’re built to meet the needs of the community today. But you see a lot of our imaging, our lab, our clinic, pharmacy services,” Hohn said. “Things like that are built at a pretty robust level to help support those outpatient services.”

Fifty-one people work at the Sanford clinic.

“When we were designing this building, we really tried to look at: Where’s health care going to go?” Tammy Loosbrock, the clinic’s senior director, said. “We wanted our providers to be able to have the tools to do their job.”

Hohn, a first-time hospital administrator, said technology has changed for hospitals built in the 1950s and 1960s. “Now with a new building, it’s really designed with a lot of that newer technology in mind,” Hohn said.



Both new medical facilities in Rock Rapids boast names of well-known regional health systems — Avera and Sanford —— that are based in Sioux Falls, S.D.

Loosbrock said there are advantages to being a part of a medical clinic owned by a large health system such as Sanford.

“All of the purchasing power that you get as part of a large system — it helps keep your expenses down,” she said. Plus, “when you start looking at recruiting providers, sometimes providers are attracted to a larger organization that they can be a part of.”

In early 2016, Avera agreed to lease operations of the community medical center in Rock Rapids and clinics in Rock Rapids and George from the nonprofit Merrill Pioneer Community Hospital group beginning in May and lasting for a quarter century.

“That means we take the risk for that organization,” Hohman said.

“If we do well, then we reinvest that money into the facility, into the business, into the community,” he said. “If we don’t do well, then we obviously need to fill those financial holes and we take the risk for that.”

After having leased to Sanford since 1999, the local hospital group now partnered with Avera to build the state-of-the-art critical access hospital and medical clinic for family medicine services. Avera never had a facility in Rock Rapids before.

To help pay for the project, the hospital group applied for and received a roughly $17.75 million loan from the U.S. Department of Agriculture Rural Development. The long-term, low-interest loan’s terms are for 25 years at 3.25 percent interest.

The USDA loan, construction loan money from area Lyon County banks and the James W. and Ella B. Forster Charitable Trust are among many funding sources for the project.


“There was a really strong capital campaign that helped support the hospital,” Hohn said. “That really helped demonstrate that community support that is really needed in a community for a hospital to be successful.”


Avera’s footprint covers parts of Iowa, Minnesota, Nebraska, North Dakota and South Dakota.

The health system’s presence in the far northwest corner of Iowa began during the mid-1990s, a time of major changes in the industry. Rural hospitals were looking to partner with larger ones.

Avera began several partnerships, and the new partners formed management agreements. For a monthly fee, they gained access to Avera services.

With Avera building a new health care campus in Rock Rapids, competitor Sanford decided to construct its own new medical clinic in town.

Sanford had had a presence in Rock Rapids since 1992, when the regional health system was known as the Sioux Valley Hospitals & Health System. That year, Sioux Valley started a management agreement with the community hospital in Rock Rapids. That switched to a lease agreement in 1999.

Loosbrock became the chief executive of Sanford Rock Rapids Medical Center and Sanford Rock Rapids Clinic in November 2010.

“We’ve really worked hard on getting providers that are rooted in the community,” she said. “They raise their families and they live here. We just felt it was important for us to have that presence, too, because we’ve been here for so long.”

Sanford, one of the nation’s largest health systems, covers 26 states and nine countries.


Hohman said one reason rural hospitals started partnering with regional health systems was the emergence and the need for electronic medical records. Other reasons exist, though.

“They also wanted to reach a new level of quality,” Hohman said.

Hohman said physician recruitment to rural hospitals become increasingly difficult during the 1990s. Meanwhile, many primary care physicians in far northwest Iowa started looking for area hospitals or regional health systems to purchase their practices.


Hohman said Avera’s partnerships with rural hospitals have worked well. “The relationships have been obviously long-lasting,” he said. “They’ve been great partnerships. We trust each other.”

Rock Rapids development director Micah Freese said having multiple health care facilities is a big benefit.

“It gives residents options,” he said. “Also, by having both providers in our community — Sanford and Avera — they draw from other communities.”

The impact extends to businesses where people eat or shop before and after appointments.

“Also, with having those two providers in town and spending nearly $35 million between them, we’ve got a lot more jobs,” he said. “Small towns our size are lucky to even have any type of health care provider. We’re blessed to have options here.”

“Seeking a Cure: The quest to save rural hospitals” is a collaborative project including the Institute for Nonprofit News and INN members IowaWatch, KCUR, Bridge Magazine, Wisconsin Watch, Side Effects Public Media and The Conversation; as well as Iowa Public Radio, Minnesota Public Radio, Wisconsin Public Radio, The Gazette (Cedar Rapids, IA), Iowa Falls Times Citizen and N’west Iowa REVIEW. The project was made possible by support from INN, with additional support from the Solutions Journalism Network, a nonprofit organization dedicated to rigorous and compelling reporting about responses to social problems. For more stories visit

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.