Oil Boom Crunches Rural Medical Facilities

An influx of new workers, lots more massive machines, and hot competition for employees have rural hospitals scrambling in the North Dakota oil patch.

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The Bakken oil boom in western North Dakota has put tremendous strain on the region’s small hospitals. An older population (eligible for Medicare) is declining, as a younger population, many of them uninsured, is rapidly expanding. There’s major overload on emergency facilities, accompanied by skyrocketing bad debt. Nurse and staff recruitments have become much more difficult due to high housing prices and high competitive wages in the oil patch. And attracting physicians, always a problem for rural areas, has gotten tougher, even as needs soar.

Randall Pederson, yawns, seated in a cramped office behind a desk piled high with papers surrounded by shelves also piled high with papers. Pederson is President and CEO of the Tioga Medical Center, a 25-bed hospital in Tioga, ND. As of the 2010 Census, the town’s population was 1230, but Pederson says it’s anybody’s guess how many people live here now. Several towns have more than doubled in size in the last couple of years.

Pederson not only runs the Tioga hospital, he also serves on the town’s volunteer ambulance squad. Thus the yawn. The squad is now making a lot more runs in the middle of the night. “They say New York City never sleeps,” Pederson says. “Well, I don’t know if western North Dakota ever sleeps.”

Like many small town hospitals around here, the Tioga Medical Center has seen a dramatic leap in ambulance runs and emergency room patients. “In 2007 we would see 600 patients in ER per year,” Pederson says. “In 2012, we anticipate seeing over 2,000.” That means in a five-year period, Tioga’s emergency room visits have more than tripled.

“We are seeing a lot more industrial accidents, major trauma, many of those involving car accidents, because there’s a lot more vehicles on the roads these days,” Pederson explains. Many accidents involve 40-ton tank trucks colliding with 5,000-pound passenger cars, incidents that can bring several patients with horrible injuries into the small ER at the same time. The one doctor on call has to scramble for help.

John McChesney
Dr. Tyrone Langager has seen emergency room visits at Montrail County Medical Center in Stanley, ND, grow by over 400% since the oil boom.
Dr. Tyrone Langager at the Montrail County Medical Center in Stanley says the emergency room load there is four to five times what it was a few years ago. In Watford City, a town whose population has grown from 1,500 to 6,000 in 18 months, McKenzie County Hospital CEO Dan Kelly says his ER load has doubled in a year.

At the larger Mercy Hospital in Williston, CEO Matt Grimshaw says the emergency room in pre-boom times saw 8,000 visits in a normal year. For 2013, he says the staff expects that number to more than triple. Echoing Randall Pederson in Tioga, Grimshaw says the current kinds of ER injuries are different. Mercy has seen a doubling of traumatic orthopedic injuries in the last couple of years, from both oil field and highway accidents.

Western North Dakota is experiencing a dramatic demographic shift: an aging population is dying off, as well as moving away from the hubbub of oil activity. Most of the hospitals in the area are so-called Critical Access Hospitals, which receive higher Medicare reimbursement so that they can serve rural areas. Now Medicare patients are being displaced by younger people employed in the oil field, many of whom are uninsured. And according to Darrold Bertsch, president of North Dakota’s Rural Health Association, private insurers pay less in North Dakota than in most other states. Regional hospital margins are shrinking rapidly.

Bad Debt Rising

Compounding all the additional strain on the region’s medical centers, many of these ER patients don’t pay their bills. Randall Pederson in Tioga says the hospital had to write off $270,000 in bad debt. “That’s a huge number for us, as a small community hospital. We’re not deep pockets by any means. Whether we’ll be able to absorb those kinds of debts is a concern to me.”

Pederson says that often the medical center can’t find patients who’ve used the ER services. “We can take a copy of everything in their wallet or purse, like their ID or driver’s license and mail a statement out to them asking them to pay their bill,” Pederson says. Then he waves at two huge bundles of envelopes in the corner: “They’ve been returned by the post office, ‘addressee not found.’  And you can’t hunt them down using telephone numbers, because they don’t have landlines, only cell phones.”

John McChesney
Dan Kelly, CEO of McKenzie County Hospital, says his facility will lose more than half a million dollars this year because of patients’ unpaid bills.
The collections at other regional hospitals are similar. At Montrail County Medical Center in Stanley, bad debt peels off 25 to 30 percent of revenue. McKenzie County Hospital CEO Dan Kelly says he will lose $650,000 this year, a loss that cannot be sustained.

“Historically, we knew the patients we were dealing with, and North Dakotans have a strong ethic,” Kelly asserts. “If they say they are going to pay, they will. But I have a different caliber of patient today, a small percentage that ruins it for everyone.”

In Williston, Mercy Hospital’s bad debt has sky rocketed from a pre-boom $2 million a year to $7 million this year. CEO Matt Grimshaw says most of those charges have been billed to people who have jobs and could afford to pay, but he just can’t find them. Could Obamacare help here, with its mandate that everyone have insurance? In this red state, no one wanted to answer that question.

Small Hospitals Can’t Compete with Oil Companies on Wages

Dan Kelly at McKenzie County Hospital says he used to be able to hire the children and wives of local farmers, but if they have come into oil money on their land, they don’t need to work. “Another factor is that the oil industry and the service industry that serves the oil industry can offer salaries that are far superior to what I can offer,” he says. Housekeepers at the hospital earn $11 and hour; “I’ve had one go to clean a man camp for $24 an hour,” says Kelly. “I can’t afford those kinds of wages.”

John McChesney
Matt Grimshaw, CEO of Mercy Hospital in Williston, ND, can’t keep housekeepers because the oil companies are paying so much more for cleaning services.
And even if he could, Kelly would not be able to find housing that staff or nurses could afford. The area is suffering a severe shortage of affordable housing. Matt Grimshaw at Williston’s Mercy reports, “We have about 65 vacancies. We have applicants from all over the country who could fill every one of our vacancies if we had housing and day care in the community.”  Grimshaw says perhaps the only way out of this dead end will be for the hospital to build its own low cost housing.

Recruiting Doctors is Not Easy

A shortage of doctors at these rural hospitals — always a problem — is now exacerbated by the burgeoning demands for care. Dr. Langager at the Montrail County hospital says recruitment is extremely difficult, partly because of housing, but for other reasons as well. “When you recruit a physician, you also recruit his family,” Langager says. “They have grown up and trained in areas where there are a lot more cultural and educational opportunities.  The other difficulty is the workload; it’s quite easy for a physician to burn out.” It’s not uncommon, he says, for doctors at these hospitals to work 24-hour shifts.

Dr. Rob Kemp, who is with Mercy Hospital in Williston, says there are other reasons that recruitment is difficult. He grew up in the region, and he says many doctors used to come here for outdoor activities like hunting and fishing, but “the people who enjoy hunting are now inundated with heavy rigs and vehicles and noise and pollution from oil activity.”  

John McChesney
Dr. Rob Kemp, who pracices at Williston’s Mercy Hospital, says many doctors are fearful of working in rural locales without backup from other medical specialists.
Even though the pay is competitive, fear deters many doctors from working in such a setting. “I think there’s apprehension about going out to a rural site because there is no cardiologist, there is no neurologist, there is no intensive care doctor. If you are working the ER you may have to deal with horrible automobile accident trauma on your own. So I think that creates a huge amount of apprehension when you feel like you are isolated and by yourself.”

Kemp says, “You have to come to peace with the fact that some people die because you don’t have the ability to take care of that problem. And that’s happened, and people here are very accepting of that. I don’t know about the new people coming in here.”

There are both state and federal student loan forgiveness programs in place for doctors who serve in rural areas, but several health officials contend that funding for such programs needs to be increased, especially at the state level, for western North Dakota.

What to do?

Some hospital officials believe that the energy companies in the oil patch should ante up more to meet the crisis their drilling has created, but the oil industry has argued that it is already paying the state a severance tax, so it’s the state’s responsibility to tackle the problem. North Dakota has increasingly, albeit slowly, taken into account the impact of the oil boom on physical infrastructure like roads and sewers, but health care apparently hasn’t been on the governor’s or the legislature’s radar.

The oil patch hospitals are trying to change that before the legislature begins its biennial session in January 2013. They’ve hired a third-party company to analyze their situation and come up with recommendations to take to state officials. The hospitals are discovering day-to-day that declining health care resources, a side effect of the boom, can no longer be ignored.

John McChesney directs the Rural West Initiative, Bill Lane Center for the American West, at Stanford University. RWI first published this article.

 

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