A Record of putting Profits Before Patients

St. Luke's Record of Putting Profits Before Patients

Prioritizing Profits Over Patients
  • Hospital executives spend millions to compete with SMDC Health System, now Essentia Health. In September 1996, executives invest $3.5M into a project that does not increase patient beds, but instead consolidates two facilities that existed across the street.[1] Both hospital systems buy up nearby clinics and practices to increase their market share and fend off competition.[2]
Pushing Care Out of the Hospital
June 1999
  • Luke’s builds a $9M ambulatory surgery center across the street from the main facility in Duluth. Hospital executives intend to structure the center as a for-profit joint venture with local physicians. While St. Luke’s already has a large outpatient surgery business, such ventures are increasingly attractive because they reduce the hospital’s overhead costs.[3]
  • The new surgery center displaces tenants including John Ramquist, who had already been forced to move once when St. Luke's turned his building into a parking lot.[4]

Challenging Worker Protections
June 2000
  • Healthcare workers at St. Luke’s win a union election, almost seven months after casting their ballots, following executives’ unsuccessful attempts to challenge the legality of their efforts.[5]
St. Luke's Choices Questioned
January 2002
  • William Rhoton, the director of St. Luke's $6M foundation, resigns three days after his employer reviewed his criminal record, revealing that Rhoton had pled guilty to six felonies for theft and burglary.[6]
Cutting Healthcare Services and Staffing
February - July 2004
  • Months after St. Luke's builds a $15M medical office building, hospital executives announce layoffs and a hiring freeze due to low reimbursements from Medicare and Medicaid.[7]
Prioritizing Profits Over Patients
January 2005
  • Data released by the Minnesota Department of Health reveals that St. Luke’s had the highest number of deaths caused by medical mistakes and accidents of any healthcare facility in the state.[8]
Prioritizing Profits Over Patients
June 2006
  • Luke’s CEO John Strange complains about unrecovered costs from patients, stating, “[those patients] come back to our ER again and again and again.” The hospital executive went on to complain about their inability to classify “bad debts” as community benefit spending.[9]
St. Luke's Strategy Questioned
October 2008
  • Citing weakened operational liquidity and increased dependence on its line of credit, S & P analysts downgrade St. Luke’s bonds to 'BB-.'[10]
Prioritizing Profits Over the Local Community
March 2011
  • An article in the Duluth News Tribune details the loss of affordable housing caused in part by St. Luke’s development. After calls from advocates to replace some of the units demolished in the name of expansion, CEO John Strange responded by saying that “[St. Luke’s is] not in that business.”[11]
Prioritizing Profits Over Patients
May - July 2011
  • A Duluth News Tribune investigation reveals that St. Luke’s neurosurgeon Stefan Konasiewicz was allowed to continue to practice despite nine malpractice suits and a sanction from the Minnesota Board of Medical Practice. Even more, the hospital praised him for his “outstanding care and skill” and made him the second highest compensated physician at the hospital. At least one former coworker alleged that St. Luke’s stood by “because he was bringing in so much revenue” for the hospital system. Hospital executives sue the Duluth News Tribune for defamation and investigate doctors who spoke with the newspaper.[12]
Challenging Worker Protections
July 2017 - April 2018
  • Luke’s officials publicly oppose a paid sick time law for the City of Duluth. In a position paper, Human Resources Director Marla Halvorson writes, “Is it going to cost people health care? Is it going to cost them retirement? Is that really what they want? There's only so much money. This ordinance doesn't give an employer any more money to spend on employee benefit packages.”[13]
Prioritizing Profits Over the Community
November 2018
  • Hospital executives return to the Duluth Economic Development Authority to raise millions through tax-exempt bond financing. In order to support the expansion of both St. Luke’s and Essentia health systems, Keith Hamre, Duluth's Director of Planning and Economic Development, acknowledges that the city will need to seek $184M in state funding to assist with the cost of new infrastructure.[14] As a nonprofit hospital, St. Luke’s does not pay property taxes to support these costs borne by Minnesota residents.
St. Luke's Leadership in Flux
February 2019 - December 2020
  • CEO John Strange abruptly retires ahead of schedule. His replacement, Kevin Nokels, only lasts 15 months in the position. The Board of Directors names Chief Medical Officer Dr. Nick Van Deelen and Chief Financial Officer Eric Lohn as Co-Presidents/CEOs.[15]
  • In an interview during his brief stint, CEO Kevin Nokels forecasted a near future in which care is “provided on an outpatient basis, meaning you will come and go, and health care will be provided remotely via telemedicine.” Meanwhile, the hospital is spending $249M in campus upgrades.[16].
Prioritizing Profits Over Patients
March 2019
  • Following a report that 20 St. Luke’s patients suffered “reportable” pressure ulcers during the course of a year, nurses speak out about staffing shortages. Nurses tell the Duluth News Tribune that such conditions have led them to work longer hours, pull additional shifts, and receive help from fewer nursing assistants. Meanwhile, hospital officials blame the equipment as a contributing factor.[17]
  • A report released by the Minnesota Nurses Association reveals that St. Luke’s executives set charges for patient services at over 3.5 times the actual cost of providing care in 2016. Using data from Medicare Cost Reports, researchers found St. Luke’s average charge-to-cost ratio of 369 percent was well above the statewide average of 212 percent. St. Luke’s Hospital in Duluth is identified as one of the most expensive hospitals in the state based on the charge-to-cost ratio.[18]
Failing to Provide Needed Healthcare Services and Worker Protections
August - September 2019
  • During a contentious round of negotiations, nurses call on hospital executives to increase staffing levels and retention rates. Susie Moss, an ICU nurse, says that she typically takes care of two patients at a time, a national standard, but has had to take care of three patients at one time, which can put patient safety at risk.[19]
  • Luke’s and Essentia executives are criticized by the National Alliance on Mental Illness-Minnesota for “completely ignor[ing] the compelling needs of people with mental illnesses in the region.” Executive Director Sue Abderholden alleges that although mental health is consistently identified as a top priority in community health assessments, health systems have failed to add inpatient psychiatric beds or create a psychiatric emergency room.[20]
St. Luke's Choices Questioned
October 2019
  • Luke’s and Essentia executives plan to spend a combined $1B to transform Duluth’s Medical District, an area with some of the worst health outcomes in the city. One resident, Joel Heller, expressed distrust in the local health systems: “We don’t trust you because you’ve never done nothing for us. You’re going to build a multi-million dollar thing, and we support that part of it. But ... once it gets built, we’re still going to be left to the side.”[21]
Prioritizing Profits Over Patients
November 2019
  • In response to price transparency laws which require hospitals to publicly list the prices they've negotiated with insurance companies, Vice President and CFO Eric Lohn tells the Duluth News Tribune that he expects costs to increase due to the cost of compliance with the transparency measure, as well as raising rates to match competitors.[22]
Prioritizing Profits Over Patients
December 2019
  • The Minnesota Department of Health concludes that St. Luke’s engaged in maltreatment by neglect when a patient developed a pressure wound after two occasions when a bedpan was not removed from under her. Despite the report citing inadequate staffing, hospital officials maintain that incident was the result of a lack of communication.[23]
Cutting Healthcare Services and Worker Protections
June 2020
  • Luke’s executives reduce staffing by 10 percent and temporarily halt operations at temporary urgent care centers.[24] Co-CEO Dr. Nick Van Deelen later discusses cuts to staffing and wages and boasts that the hospital finished 2020 with a positive bottom line.[25]
Prioritizing Profits Over Patients
September 2020
  • Hospital executives spend $15M to merge Lake View’s hospital and medical clinic into one building.[26]
Prioritizing Profits Over Patients
November 2020
  • A report by National Nurses United reveals that St. Luke’s executives continued to charge significantly more than the actual cost of providing care. Researchers found that the Duluth-based facility had an average charge-to-cost ratio of 297 percent in fiscal year 2018, which was well above the statewide average of 220 percent.[27]
Prioritizing Profits Over Patients
February 2022
  • Data released by the Kaiser Family Foundation reveals that St. Luke’s has been singled out for poor performance on hospital-acquired conditions — conditions a patient develops while in a hospital being treated for something else — as well as for excess readmissions.[28]


[1] Kendra Rosencrans, “St. Luke’s Hospital to Consolidate Duluth, Minn., Facilities,” Duluth News Tribune, September 10, 1996.

[2] Kendra Rosencrans, “St. Luke’s Hospital, Duluth, Minn., Buys Clinic in Ashland,” Duluth News Tribune, October 2, 1997.

[3] “St. Luke’s Hospital in Duluth, Minn., to Begin Expansion,” Duluth News Tribune, June 8, 1999;

Christopher Snowbeck, “Minnesota Nonprofit Hospitals in Tug-of-War with Insurers over Efforts to Rein in Costs,” Star Tribune, January 11, 2020, https://www.startribune.com/nonprofit-hospitals-in-tug-of-war-with-insurers-over-efforts-to-rein-in-costs/566850672/.

[4] Ibid.

[5] Melanie Evans, “Ruling to Yield Answers about Duluth, Minn., Hospital-Unionization Efforts,” Duluth News Tribune, June 22, 2000.

[6] “Director of St. Luke’s Foundation Resigns,” The Associated Press State & Local Wire, January 9, 2002.

[7] Melanie Evans, “Duluth, Minn., Hospital Adds Cancer Center,” Duluth News Tribune, February 13, 2004;

“St. Luke’s to Cut 64 Jobs,” The Associated Press State & Local Wire, July 8, 2004.

[8] John Myers, “Duluth, Minn., Hospital Has Highest Death Rate in State from Mistakes,” Duluth News Tribune, January 20, 2005.

[9] Brandon Stahl, “IRS Checks Hospitals for Abuse of Tax Exemption: Health Care: Duluth’s Miller-Dwan Is One of 550 Hospitals Nationwide Asked to Complete a Survey,” Duluth News Tribune, June 22, 2006.

[10] S&P Global Ratings, “St. Luke’s Hospital Of Duluth, MN’s Anemic Operating Liquidity Cuts Debt Rating to ‘BB-“,” S&P Global Ratings, October 9, 2008, https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/675999.

[11] John Myers, “Duluth Faces Loss of Low-Cost Housing,” Duluth News Tribune, March 6, 2011.

[12] Brandon Stahl and Mark Stodghill, “Multiple Allegations against Former St. Luke’s Doctor,” Duluth News Tribune, May 29, 2011, sec. Lifestyle;

Brandon Stahl, “As St. Luke’s Reaped Millions, Surgeon Racked up Complaints,” Duluth News Tribune, July 31, 2011;

“St. Luke’s Sues Duluth News Tribune over Reporting on Surgeon,” Duluth News Tribune, September 20, 2011, sec. State and Regional News;

Brandon Stahl, “St. Luke’s Investigates Doctors Who Spoke to the News Tribune,” Duluth News Tribune, October 21, 2011, sec. Lifestyle.

[13] Peter Passi, “Employers Air Concerns about Proposed Time off: Discussion Heats up over Duluth’s Earned Sick and Safe Time,” Duluth News Tribune, July 9, 2017;

Dan Hanger, “St Luke’s Comes Out Against ‘Earned Sick and Safe Time’ Ordinance,” Fox21Online, April 4, 2018, https://www.fox21online.com/2018/04/04/st-lukes-comes-earned-sick-safe-time-ordinance/.

[14] Peter Passi, “DEDA to Aid St. Luke’s Growth,” Duluth News Tribune, November 29, 2018, sec. State and Regional News.

[15] Andee Erickson, “St. Luke’s CEO, President Steps Down,” Duluth News Tribune, December 2, 2020, https://www.duluthnewstribune.com/newsmd/st-lukes-ceo-president-steps-down;

John Lundy, “John Strange Draws Fond Words after Sudden Early Retirement from St. Luke’s,” Duluth News Tribune, February 9, 2019;

Brooks Johnson, “Co-CEOs Will Continue to Run St. Luke’s in Duluth,” Star Tribune, March 11, 2021, Metro edition, sec. Business.

[16] Brooks Johnson, “‘Taking the Time to Learn’: Q&A with St. Luke’s New CEO,” Duluth News Tribune, August 15, 2019.

[17] John Lundy, “Hospitals Understaffed, Duluth Nurses Say,” Duluth News Tribune, March 30, 2019, sec. Business and Financial News.

[18] Minnesota Nurses Association and National Nurses United, “Minnesota’s Most — and Least — Expensive Hospitals,” March 4, 2019. https://mnnurses.org/wp-content/uploads/2019/03/190304_MNA_Most-LeastExpensive_report.pdf.

[19] Kelly Busche, “With Signs and Fervor, Duluth Nurses Picket Essentia, St. Luke’s,” Duluth News Tribune, August 21, 2019, sec. Business and Financial News.

[20] John Lundy, “Duluth Hospitals Accused of Ignoring Mental Health in Their Plans,” Duluth News Tribune, August 20, 2019, sec. Business, https://www.duluthnewstribune.com/business/duluth-hospitals-accused-of-ignoring-mental-health-in-their-plans.

[21] John Lundy and Kelly Busche, “Duluth’s Hillside Neighborhoods Face Some of the Worst Health Outcomes in the City — and the Medical District Aims to Change That,” Duluth News Tribune, October 26, 2019, https://www.duluthnewstribune.com/news/duluths-hillside-neighborhoods-face-some-of-the-worst-health-outcomes-in-the-city-and-the-medical-district-aims-to-change-that.

[22] John Lundy, “Pricing Mandate Unsettles Essentia, St. Luke’s,” Duluth News Tribune, November 24, 2019, sec. Business and Financial News.

[23] John Lundy, “Maltreatment Finding at St. Luke’s: Was Staffing an Issue?,” Duluth News Tribune, December 27, 2019, sec. Business and Financial News.

[24] Kelly Busche, “Essentia, St. Luke’s Receive Millions in COVID-19 Stimulus Funding, but It Isn’t Enough to Make up for Lost Revenue,” Duluth News Tribune, June 11, 2020, sec. Business and Financial News.

[25] Brooks Johnson, “Duluth Hospitals See Rebound, but Need More Patients,” Star Tribune, March 15, 2021, Metro edition, sec. Business.

[26] “Newly Remodeled Lake View Hospital Unveiled,” Pharma & Healthcare Monitor Worldwide, September 16, 2020.

[27] National Nurses United, “Fleecing Patients: Hospitals Charge Patients More Than Four Times the Cost of Care,” November 2020, https://www.nationalnursesunited.org/sites/default/files/nnu/graphics/documents/1120_CostChargeRatios_Report_FINAL_PP.pdf.

[28] John Paul Scott and Laura Butterbrodt, “Northland Facilities Penalized for Hospital-Acquired Conditions,” Duluth-News Tribune, February 17, 2022, sec. NewsMD, https://www.duluthnewstribune.com/newsmd/northland-facilities-penalized-for-hospital-acquired-conditions;

Jordan Rau, “Look Up Your Hospital: Is It Being Penalized By Medicare?,” Kaiser Health News (blog), February 3, 2022, https://khn.org/news/hospital-penalties/.