Lake Region Healthcare outlines campus upgrades and financial plan to preserve local services

Kent Mattson, chief executive officer of Lake Region Healthcare, told the Fergus Falls Committee of the Whole on Oct. 29 that the locally governed nonprofit is pursuing a multi-year plan to shore up finances, expand access to providers and modernize aging campus facilities.

Mattson said the system, headquartered in Fergus Falls, now operates as a single company after combining Lake Region Healthcare and Prairie Ridge Healthcare and serves a broad rural footprint. “We’re community owned, we’re community governed and locally led,” Mattson said, adding that the system employs roughly 1,100 people, includes about 130 physicians and expects operating revenues that would put it near $210,000,000 this year if it meets budget targets.

The update emphasized recruiting and retention: Mattson said the system has tripled its medical staff since 2010 and has actively recruited MDs and advanced practice providers to improve patient access. He said Lake Region’s patient‑only revenue has grown to about $200,000,000 and the organization is aiming to reach $250,000,000 in three years to reinvest in staff, technology and facilities.

Mattson described a structural change intended to improve reimbursements: executives merged two corporate entities to make some sites eligible for critical-access reimbursement and to access other federal programs. He said the change may alter co‑pays for a small subset of Medicare patients and that staff mailed notices to roughly 16,000 Medicare patients ahead of open enrollment so they could evaluate supplemental coverage options. “We’d be able to be eligible for critical access reimbursement and 340B,” Mattson said.

Facility priorities on the Fergus Falls campus include replacing outdated utility systems that are beyond their useful life, improving emergency department flow, consolidating radiology and imaging space, expanding surgical capacity, and updating labor and delivery areas. Mattson said the system is planning a central utility plant with new chillers, boilers and backup generators so the hospital building can remain heated, cooled and powered; he said a plan for the central utility plant is expected to be presented to the Lake Region board by the end of December, though the board has not yet approved any facilities project.

Mattson described campuses as a patchwork of buildings from multiple eras and stressed a conservative approach to new construction: “We want to build in for the future,” he said, and noted the organization is interviewing construction managers and has selected an architect for a planning project.

Council members pressed Mattson on local impacts. When asked whether a forthcoming VA community‑based outpatient clinic (CBOC) would reduce Lake Region revenue, Mattson said veterans’ access in the community is limited and that the CBOC is likely a net access benefit even if it affects some service volumes. On parking, Mattson said an architect is doing counts this week and the hospital is studying options that emphasize use of existing lots, on‑campus parking adjustments and potential demolition of some houses used historically for staff housing if additional lot space is needed.

Mattson described the system’s recent quality performance, noting the hospital has earned high CMS ratings in recent years and credits staff for safety and care measures. He framed the strategic plan as a response to a “financial scare” in 2023 and said the plan is intended to create a sustainable economic engine to support local, patient‑centered care.

Next steps: Lake Region will continue planning and community engagement with city planners on zoning and site constraints. Mattson said the board must approve any facilities plan before construction funding or contracts are executed.