Let’s keep growing. Together.

The board of Alomere Health has voted unanimously to recommend to the Douglas County Board of Commissioners that Alomere should become a 501(c)(3) nonprofit organization.

Making Alomere Health an independent organization will allow our health system to continue to grow as a regional care provider serving patients in Douglas County and the broader west-central Minnesota region for the long term.

By serving a wider population of patients, we can build more programs and services here, reducing the need to travel outside our community for care. To accomplish this, Alomere Health may choose to make investments outside of the county to bring more services closer to patients outside of Douglas County.

While Alomere Health has never relied on a tax levy to fund its operations, under the current county-owned structure, Douglas County ultimately serves as the financial backstop for the health system. By transitioning to a 501(c)(3) nonprofit, that responsibility will no longer fall on the County. This means that if Alomere Health expands or invests outside of Douglas County in the future, taxpayers will not bear any financial risk.

Patients will not see any changes right away. Alomere Health will continue to deliver what patients have come to expect from us: high-quality care with a local touch.

Over time, however, patients will see that Alomere is able to provide more services in more places. Our goal is to bring more care closer to home for the thousands of Alomere patients who live outside Douglas County.

Dynamics in healthcare are changing, and it’s critically important for Alomere Health to ensure we’ve positioned our health system for the future.

Government-owned hospitals face many legal restraints—on how their boards are selected, how and when their boards can meet, where the hospital can invest and operate, and what employee benefits can be offered. These restraints impair Alomere Health’s ability to navigate the rapidly changing, incredibly challenging world of healthcare.

As an organization, Alomere Health is financially and operationally sound, and to stay strong, we know we always have to be ahead of the curve. By converting to a private, nonprofit health system, we gain the flexibility to ensure we can meet the challenges of healthcare for the long term.

There are several reasons. First, as we mentioned above, we want to be able to expand our services outside Douglas County and currently, as a county-owned hospital, we are limited in our ability to do so. There also is the fast pace of change in healthcare—if we want to continue to serve the healthcare needs of communities across west-central Minnesota, we can’t afford to stand still.

Another thing driving the timing of this decision is a Minnesota state law that was approved this year, which affects the costs Alomere Health would incur if we were to wait. The new law gives government-owned hospitals and nursing facilities until July 1, 2027, to convert into private, nonprofit organizations without a significant penalty for leaving the state pension plan that covers our employees—the Minnesota Public Employees Retirement Association (commonly referred to as PERA).

If we were to make this transition after July 1, 2027, Alomere Health would be required to make a payment, currently estimated at about $3.5 million, to exit the PERA system.

If this new relationship with Douglas County is approved, Alomere Health will gain a lot of operational and governing flexibility.

For example, we will be able to expand our board as needed, to bring in new members with specific areas of expertise. Also, we will be able to add board members who live outside of Douglas County. This flexibility is important when our health system has discussions with other hospitals about potentially joining Alomere Health to expand access and care. In negotiating to join another health system, the board of a local hospital often wants to negotiate the right to name one or more members to the board of the health system their hospital is joining.

If we become a private, nonprofit organization, Alomere Health will also be able to establish and develop our own philanthropic foundation, which can help support our health programs. We will also be eligible to apply for many grants that exclude government-owned entities.

Again, if we convert to nonprofit status, Alomere Health no longer will be subject to public sector restrictions, such as public bidding processes, open meeting and open records laws, public sector benefits plans, and restrictive investment regulations. Other private competitors and vendors in the healthcare market are not subject to these restrictions, and this disparity sometimes puts us at a disadvantage with competitors and negotiating partners alike.

Alomere Health and Douglas County will continue to have a strong relationship, with the same goal of providing high-quality healthcare. Douglas County will continue to own the health system’s land and buildings. Alomere Health will lease the land and buildings from the county.

Under the nonprofit’s governing documents, Alomere Health cannot enter into a sale, merger, or other transaction that gives up control of the health system without the consent of the Douglas County Board of Commissioners.

Two individuals appointed by the Douglas County commissioners will serve on the board of the Alomere Health nonprofit organization. The initial appointees are both current county commissioners.

The lease will have an initial term of 30 years, and will govern all of the land and buildings used by the health system, now or in the future. During the initial term of the lease, Alomere Health will repay all of Douglas County’s outstanding bond debt related to the health system, and will assume all of the county’s past, present, and future liabilities related to the health system.

When all of the county’s debt is fully repaid by the nonprofit Alomere Health, the nonprofit can buy out the lease. Otherwise, the lease continues for the remainder of the term, and the county and nonprofit can choose to let the lease expire or renew it for an additional 30 years.

Yes. In Minnesota, as in other states, the number of government-owned hospitals has decreased significantly over the past several decades, for many of the same reasons we are converting. Many government-owned hospitals have converted to nonprofit status in order to be nimble enough to keep up with the rapid pace of change in healthcare.

A recent example occurred in 2021, when Welia Health in Mora became a private nonprofit.

County-owned hospitals in particular have become a rarity, with fewer than 10 remaining in Minnesota among the more than 100 nonprofit hospitals that operate in the state. Many of those nonprofit hospitals began as city or county hospitals or hospital taxing districts but have since converted.

The “501(c)(3)” refers to the section of the federal tax code that allows organizations that are formed to serve charitable interests to be exempt from paying many taxes, such as business income, property, and sales taxes. These organizations do pay some taxes, such as the employer share of employment taxes.

To maintain the exemption, a 501(c)(3) nonprofit organization must provide community benefits commensurate with the value of the tax exemptions it receives. A 501(c)(3) nonprofit organization must be organized and operated for the benefit of the community it serves. These organizations do not have any private owners or shareholders.

Alomere Health is, and with this change, will remain, a locally owned and operated, patient-centered health system.

Yes. Nearly 3,000 of the roughly 5,100 community hospitals in the United States are organized as nonprofits, according to the most recent annual survey by the American Hospital Association.

Nonprofit health systems are not owned by any individuals or shareholders. They are, essentially, owned by the communities they serve. The board members of a nonprofit health system are stewards of these community assets, entrusted with guiding the direction of the organization to provide for the healthcare needs of the community.

At the Douglas County Board of Commissioners meeting on September 2, the commissioners will hear a detailed explanation of the lease terms and the nonprofit’s governance documents from the commissioners’ outside legal counsel.

On September 26, the county commissioners will conduct a public hearing on the proposed lease agreement.

After the public hearing, the county commissioners will vote on whether to approve the conversion of Alomere Health to a private, nonprofit organization and the lease agreement.

If the Douglas County Board of Commissioners approves the conversion, the transaction will take effect on Jan. 1, 2026.

Not at all. The conversion will put Alomere Health on a stronger footing to remain an independent health system focused on the needs of communities across west-central Minnesota, with decisions about its future made by people in our communities.

Also, as noted above, under the lease agreement, the new nonprofit cannot enter into a sale, merger, or other transaction that gives up control of the health system without the consent of the Douglas County Board of Commissioners.

All Alomere Health employees in good standing on Dec. 31, 2025, who want to remain will be welcomed as employees of the nonprofit Alomere Health as of Jan. 1, 2026. Their pay and years of service will carry over to the nonprofit Alomere Health.

They also will have an attractive set of benefits, including a more flexible retirement plan, vacation and sick days, dental and vision insurance plans, long-term disability insurance, and other benefits.

No. Alomere Health will continue to offer a generous charity care policy for patients who cannot afford to pay for their care. Like any 501(c)(3) health system, the nonprofit Alomere Health will be required to report its charity care to the IRS as part of maintaining its tax exemption.

Yes. This conversion will not change any of our insurance contracts.