Fosston City Council in Minnesota, US, has voted to terminate an agreement with healthcare system Essentia Health over concerns about its management of Fosston Hospital.

Originally signed in 2009, the agreement allowed Duluth-based Essentia Health to manage the hospital operations while First Care Medical Services, a city-owned 501(c)(3) organisation, retained property ownership and the hospital's license.

In a press release, Fosston officials said: “Under the terms of the 2009 agreement, the city and its legal counsel believe that termination is a logical and valid legal action at this time.

“After a 15-year relationship, and given the continued decline in local healthcare services, Fosston’s city council has determined that the time to terminate this agreement has arrived.“

The council's decision on 26 November followed an arbitration ruling in September, which upheld Essentia's adherence to the affiliation agreement.

In July, an arbitration panel consisting of neutral arbitrators concluded that Essentia Health had operated the Fosston hospital, along with other healthcare facilities in the region, within the guidelines of the 2009 agreement.

This ruling supported Essentia's continued management of the hospital, clinic, assisted living and long-term care facilities in Fosston, as well as clinics in Bagley and Oklee.

In June 2022, Essentia Health-Fosston diverted the hospital's obstetrics (OB) services to its Detroit Lakes facility because the hospital did not have enough nursing staff.

In response, the City of Fosston formed an OB task force with 14 community stakeholders last year to aid Essentia in communicating about the pause in services and collaboratively seek a solution for resuming OB services.

After several meetings with local and Essentia leadership, the city concluded that Essentia had no intention of reinstating OB services at the hospital and believed the company had manufactured the issue.