Rural Hospitals Stagger Under ‘Unpaid Burden,’ CEO Says

The Affordable Care Act didn’t help rural hospitals as much as projected, says a Nebraska hospital executive. Around the country, small hospitals are having daily discussions about how to remain open.

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In the course of one day, a rural hospital, like their urban counterparts, may see everything from accidental gunshot wounds to a woman delivering on their doorstep to a family of five injured in a car wreck on the interstate.

While they handle the same issues as urban hospitals, they do so with less money and fewer, as well as the elevated stress that if they shut their doors, the domino effect on their community could devastate the lives of those they safe daily.

Nebraska’s Lexington Regional Hospital CEO Leslie Marsh

In Lexington, Nebraska, Leslie Marsh, CEO of Lexington Regional Health Center, likens it to a horse race with handicapping, in which some horses carry additional weight. “One has to wonder how the owners of the horse carrying the most weight feel when their horse finishes fourth,” Marsh said in an email interview. “Did the horse deserve to lose, or did the handicapper steal what should have been a victory?

“But it is as if there is an external handicapper who reaches into our operations and adds more weight through legislation, regulation, and external payer pressure. We need a reprieve so that our rural communities can recover.”

She said she’s grateful for federally funded research that focuses on rural healthcare, “but we have reached a critical tipping point with 62-plus million lives at stake.”

As more rural hospitals close, those that remain open are finding that they have to carry a higher unpaid burden, while keeping up with higher demands on their time and resources.

Also in this series: A Tale of Two Hospitals: One Survived, the Other Didn’t

As of March 20, 2019, more than 100 rural hospitals had closed across the country, many in the South. Since 2010, 17 hospitals have closed in Texas, 10 in Tennessee, and three in Georgia, according to the North Carolina Rural Health Research Program. The program tracked hospitals that stopped providing inpatient services.

Some estimates put nearly a quarter of all rural hospitals at risk of closure, with 430 experiencing significant financial challenges.

Those that have remained open, like Lexington Regional, struggle to stay solvent, Marsh said.

“Being a CEO of a rural hospital today feels a bit like being Atlas in Greek mythology – the harder we strive to keep the doors open, the more regulatory and reimbursement weight is added,” Marsh said. “The current financial and regulatory environment makes it very difficult for small hospitals to remain profitable… In 2017, that national average operating margin for Critical Access Hospitals was on 0.27 percent, and in 21 states that average operating margin was negative.”

Among the challenges are government regulations that were designed to help but hinder by shifting the responsibility for payment from the insurer to the hospital.

“Of course, the signature policy change in the last 10 years was passage of the Affordable Care Act,” Marsh said. “While the ACA successfully decreased the total number of uninsured people, the act did not have the same positive impact on rural hospitals as it did on urban hospitals. In my community, like other rural communities, we see families struggle with the high deductibles, which range from $5,000-$10,000. These high deductibles are not manageable for many people; so for Lexington Regional Health Center, uncompensated care has continued to increase.”

And, Marsh said, because the federal government expected the decrease in uninsured to reduce the rate of uncompensated care, it also reduced payment that provided a safety net to rural hospitals, like the disproportionate share program – a program that provides financial support to hospitals that provide services to areas with a disproportionate share of low-income families.

“Health care policy designed at the national level has not worked well in rural areas,” Marsh said. “For example, our patients often come into the ER with serious accidents – farming and outdoor activities can be dangerous. If a patient comes in with a gunshot wound, or was injured in a tractor roll-over, or kicked in the head by a bull, we stabilize and transfer the patient. Our portion of the total charges is submitted to their insurance company and is then applied to the deductible. If the patient cannot pay the deductible, we take the loss. Meanwhile, the care at the tertiary hospital [which treats the patient after transport from a rural hospital] is covered by the insurance company because it is beyond the deductible.”

A message from the Rural Assembly

To combat that, Marsh said her hospital had shifted its focus to outpatient services.

We realize there is no single “fix” to magically boost our bottom line, and have embarked upon an array of fundamental changes in the way we do business. The hospital campus was more than 40 years old, and was designed for inpatient services. We have completed a much needed renovation and expansion – minimizing cost by leveraging New Market Tax Credits and financing with a low long-term fixed rate through the USDA. Most of the $25 million went to outpatient services. We have added an Urgent Care, three rural health clinics, and have increased marketing efforts to recapture market share. We partnered with the local beef-packing plant and have on-site rehab (staffed with occupational therapists and physical therapists five days a week) and occupational medicine clinic (staffed by a nurse practitioner two afternoons a week. Tyson employs 2,500 people so this relationship is essential to our financial health.

The hospital has also worked to provide more specialized services that were needed in the community and identified in the hospital’s Community Health Needs Assessment. The assessment also helped the hospital get a better understanding of the problems facing patients after they leave the hospital, and led to the creation of a transition care team. Part of their expanded efforts includes providing behavioral health specialists, pregnancy care and translators for the Latinx and Somali population in the area.

Pat Schou, executive director for the Illinois Critical Access Hospital Network, said staying open and figuring out what direction to take is a daily conversation she has with hospitals across the country.

“Healthcare has become very complicated,” she said. “There are more regulations to follow. We face a difficulty recruiting qualified staff and support staff. Sometimes management at hospitals isn’t always the best and decisions aren’t always easy. It’s challenging.”

To combat closure, Schou said rural hospitals need to educate themselves on their communities and the healthcare services around them.

“Hospitals are not an island anymore,” Schou said. “They rely on others. And in some cases they can become part of a larger system if they find the right partner organizations.”

Sharing resources, like financial staff, specialists and equipment, can help hospitals cut costs.

It’s also important for hospitals to get the buy-in support of their communities, she said.

Community support is critical, because it’s a two-way street, Marsh said. While the community relies on the hospital to provide it with healthcare, the hospital relies on the community for support as well.

And if one of them fails, the other does too, Marsh said.

The short answer is that a hospital closure is an unmitigated economic disaster for the individual community.  Main Street retail falters. Your house loses most of its value. The school doesn’t get enough tax revenue to meet its payroll. There is an increase in all the bad behaviors linked to economic stress – more alcohol abuse, more drugs, more domestic violence, more crime. Retirees, young professionals and new business will not locate in the community if there is no timely access to care, and existing business will move away. Major industry would be forced to leave so our beef-packing plant, with its 2,500 jobs, would no longer be located in Lexington if there was not hospital. Just one industrial accident can send 25-plus workers to the emergency room.

The hospital, Marsh said, has come a long way from some fairly dark days.

“In 2014, we lost all of our primary care providers except one,” Marsh said. “That same month, we lost our orthopedic surgeon in a traumatic and fatal accident. It was pretty grim and we were not sure what the future would look like.

“We are a poor working class community, so provider recruitment is challenging in the best of times… Through shared sacrifice and an incredible effort by my staff, we came back from the edge. Working with UNMC, we now have a resident every month, which has had a positive impact on recruitment. Since 2015, we have recruited five MDs, two Pas, and eight NPs. We are ending the year with a positive margin, have increased our cash reserves… with 175 days cash on hand, and designed a 40-year investment strategy so that the community has the resources to provide some services well into the future.”

But more needs to be done, Marsh said, to help rural hospitals survive. For the most part, Marsh said, rural hospitals just need a break to catch up, for the benefit of themselves and their community.

“Small hospitals are an easy target because we lack economic power and political influence,” Marsh said. “Our institutions can be rocked by even a small number of untimely events… As we scramble to provide the needed care, regulators and payers keep adding weights – sequestration, the continual churning of new program roll-outs that are costly to implement and associated with unknown unintended consequences. It is time to staunch the blood flow and remember that we are not just a small big city hospital – we are rural and we are all that our community has.”

A message from the Rural Assembly

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