Rural hospital CEOs call for Medicaid expansion

Gov. Roy Cooper and DHHS Sec. Mandy Cohen met with hospital CEOs from rural areas to talk about how Medicaid expansion would benefit their institutions. 

 

A group detailed to Gov. Roy Cooper the problems they have keeping their doors open and bills paid.

At a roundtable meeting Wednesday seven CEOs of rural North Carolina hospitals explained to Gov. Roy Cooper and state Health and Human Services Sec. Mandy Cohen that expanding Medicaid would help their institutions keep the doors open.

There were some common elements to all their stories. For starters, all of their hospitals are operating on thin margins.

The group nodded in agreement as each talked about excessive use of their emergency departments and the uncompensated care resulting from ED patients who were uninsured or unable to pay.
Adding to their problems, many said they have a difficult time recruiting medical professionals, and that their counties are turning into “doctor deserts.”

The consensus was that Medicaid expansion wouldn’t solve all their problems overnight, but they agreed it would go a long way to relieving pressure on their emergency departments and create a healthier patient population.

“We can talk about the present, but we really need to talk about where we are going to be in three to five years,” Chris Lumsden, CEO of Northern Hospital of Surry County, told the group. “This issue is monumental to us. [Medicaid expansion] is something we can do today that will impact patient care and economic development down the road.”

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In North Carolina, there have been six rural hospital closures since 2010. Across the U.S., there have been 104 closures during that same time, according to data compiled by the UNC Sheps Center for Health Services Research. 

Cohen said that 80 percent of the hospital closures nationwide occured in states that didn’t expand Medicaid.

Big employers

The CEOs’ pleas have some backing from the research. Greg Tung, a health economist from the University of Colorado, found in his research that Medicaid expansion has had a positive impact on hospitals’ financial situations and that they were less likely to close their doors.

Rural hospitals are most at risk for closure in states that did not expand, he said.

“Rural hospitals tend to be in a more financially precarious situation compared to urban hospitals,” Tung told NC Health News.

He said this has a trickle-down effect to the rural economy surrounding each institution.
“Rural hospitals are anchor institutions in their communities. They are kind of a pillar of the local community and the local economy, they provide a lot of skilled, well-paying jobs for that area,” he said. “So when a rural hospital closes, it has a disproportionately large impact on that community, especially in comparison to an urban hospital closure.”

Lumsden said the financial stability of his hospital is vital to the health of the surrounding economy.
Northern Hospital employs 900 people, not including physicians, and it’s one of the largest employers in the area.

“The issue of Medicaid expansion needs to be dealt with quickly,” Lumsden said.

Uncompensated care

Lumsden also brought up the large amount of uncompensated mental health care his emergency department provides. Currently, Northern Hospital averages 50 to 60 involuntary commitments a month.

“They are sequestered in the ER department for sometimes days,” he said. “They are complex, difficult patients. Very tough on staff. And we don’t get paid. We provide at least a million dollars of free care to [involuntary commitment] patients and that just adds to the dynamics.”

Michael Nagowski, CEO of Cape Fear Valley Health System, said he has one of the busiest emergency departments in the state with 140,000 visits a year to one ED. More than 20 percent of Cape Fear’s ED visits are uncompensated.

“We see the things that should be handled in the urgent care or primary care, but they won’t accept those patients,” he said. “If you don’t have a payer source, some people just don’t go until it’s a real emergency. Now we have a cost of care issue at another level.”

“And think about the human impact,” he said. “Let’s catch you before you’re diabetic. Let’s catch you before you have heart disease.”

Cohen echoed Nagowski’s remarks, pointing out that conditions such as high blood pressure are manageable with the right medications.

“What happens when you don’t take your blood pressure medicine is you end up in the emergency room with a stroke,” Cohen said. “And caring for a stroke is not only enormously expensive, but that person is not going back to work, certainly not right away.

“Now we’ve not only lost a worker for one of our businesses, but someone who is the breadwinner for their family, and now they are in medical bankruptcy,” she said. “And you have uncompensated care.”

Cohen said she often finds herself explaining to people with health insurance how Medicaid expansion will benefit them.

“It’s actually keeping the hospital doors open for them,” Cohen said. “But also keeping prices down for everyone who is lucky enough to get insurance through their employers.”

‘All of it is negotiable’

Nash UNC Health Care CEO Lee Isley said he’s in favor of Medicaid expansion because “it’s the right thing for the community,” but he had a concern.

According to his calculations, closing the coverage gap would bring Nash UNC about $10 million, but under some Medicaid expansion proposals, the state’s hospitals would take on 10 percent the cost in the form of an assessment. For Nash, that would come to about $7.5 million. He added that moving to Medicaid managed care will likely cost his institution about $1.7 million, bringing his hospital right back to breaking even.

Isley told the governor that hospitals should take on part of that assessment, but he asked if it would be possible to share the cost with other health care entities.

Cooper said he was looking into putting some of that cost on insurance companies.

But does Medicaid expansion have a chance in North Carolina?

Cooper said there are enough votes to pass a GOP-backed version of expansion in the state House right now if the Republican leadership would bring it to the floor for a vote.

He expressed less confidence about prospects in the state Senate.

“Obviously the leadership of the Senate has some concerns about this, but we hope that all of it is negotiable,” he said. “It’s so important for us to take this step here in North Carolina.”

Some have expressed fear that the federal money to expand Medicaid might disappear, but Cooper said he doesn’t think it will. People in Washington D.C. have been trying to do away with these policies for the past two years and have not succeeded, he said.

“They couldn’t kill it,” he said. “One, because people need health care. Two, because Republican and Democrat governors in states that have expanded came to Washington and said, ‘This is working. Don’t take this away.’

“Plus you can write safeguards into the legislation that can stop coverage if the federal money dries up,” Cooper said. “But I don’t see this happening. If it didn’t happen in the last two years, it’s certainly not going to happen any time soon in a divided Congress.”

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New tax law may put squeeze on rural hospitals

One of the selling points for the tax bill President Trump signed into law a few weeks ago is that it will spur job growth because corporations will use money they otherwise would have paid in taxes to hire more workers.

But for rural areas and small towns, one provision of the new law may result in the closure of one of their biggest employers – their hospital.

Rural hospitals in general operate on much thinner margins than most big city hospitals, margins so thin that dozens have been forced to close in recent years. In fact, almost all the U.S. hospitals that have been shuttered in recent years have been in rural areas. A recent study (https://www.beckershospitalreview.com/finance/state-by-state-breakdown-of-80-rural-hospital-closures-081517.html) by the North Carolina Rural Health Research Program found that 80 rural hospitals have closed since 2010 and that 673 more are vulnerable to closing. And that was before the tax bill was passed.

The part of the new tax law that puts rural hospitals in further jeopardy is the repeal of the so-called individual mandate, the provision of the Affordable Care Act that required most Americans to have health insurance. Only those who qualified for a hardship exemption could remain uninsured without paying a stiff penalty (https://www.nerdwallet.com/blog/health/how-much-is-the-obamacare-penalty-not-having-health-insurance/). 

Polls consistently showed that the mandate was the most unpopular part of the ACA. Republicans often cited it as a reason for their opposition to the health reform law that President Obama signed in 2010. 

Obama himself was once a critic of the mandate. But insurance company executives and many health policy experts told him and Congress that without it, premiums would become increasingly unaffordable for people who were in greatest need of coverage – people in their 50s and 60s and anyone with a current or preexisting medical condition. They argued that, unless they were required to enroll, many young and healthy people would stay uninsured, making it necessary for insurers to charge older and less healthy applicants much more for their coverage than if those young and healthy people were in the “pool” of insured customers. 

Shortly before Congress passed the tax bill last month, the Congressional Budget Office estimated (https://www.reuters.com/article/us-usa-tax-healthcare/repeal-of-individual-mandate-would-increase-uninsured-premiums-cbo-idUSKBN1D820Q) that repealing the mandate would increase the number of uninsured by 13 million over the next 10 years and cause premiums in the individual market to rise an additional 10 percent.

The American Hospital Association, along with groups representing doctors and health insurers, lobbied hard against repealing the mandate (https://aha.org/news/headline/2017-11-14-aha-others-urge-congress-not-include-individual-mandate-repeal-tax-bills), but their concerns went unheeded.

The repeal will have no effect this year because the mandate was still in effect during last fall’s open enrollment period for individual and family coverage purchased for 2018 on the state insurance exchanges, which were created by the ACA. But no one will be penalized for remaining uninsured in 2019, and that has many rural hospital administrators – especially those in the 19 states that did not expand their Medicaid programs under the ACA – very worried. 

Hospitals in those states are especially vulnerable because more of the patients they treat are those who have remained uninsured – and in many cases unable to pay for their care – than at hospitals in states that did expand Medicaid. 

In states that did not expand, mostly in the South and Midwest, more hospitals have closed in recent years than in states that did (https://www.beckershospitalreview.com/finance/state-by-state-breakdown-of-80-rural-hospital-closures-081517.html). Revenue for hospitals there and elsewhere is expected to decline even further beginning this year, especially in rural areas with higher percentages of older residents than other communities, as the tax bill’s cuts to Medicare (https://www.aarp.org/politics-society/advocacy/info-2017/senate-tax-medicare-cuts-fd.html) are implemented. 

The repeal of the individual mandate penalties, though, may turn out to be the final nail in the coffin of many vulnerable rural hospitals as even more local residents return to the ranks of the uninsured. Many rural hospitals already provide more uncompensated care (https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2014.1340) than their urban counterparts. For one thing, much of the emergency care provided by rural hospitals is classified as uncompensated because uninsured residents, unable to get care in doctors’ offices, often resort to the emergency department (https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2014.1340) where they cannot be turned away. 

It is called uncompensated care because many uninsured patients cannot pay their bills, and no small number of them are forced into bankruptcy. Hospitals try to make up for care their patients can’t pay for by charging insured patients more, but small rural hospitals are less able to do that than large urban hospitals that can demand higher compensation from insurance companies. That’s because small hospitals treat fewer of an insurer’s customers than big hospitals do. 

The last thing rural hospitals need are more patients who can’t pay their bills, but that is likely what they will get when the individual mandate penalties go away. Many rural hospitals will not survive. 

When a rural hospital closes, local residents not only have to travel farther for care, including potentially life-saving emergency care, but the area also loses many good-paying jobs, and in many cases, its largest employer. In the rural communities that lose their hospitals in the years to come, the tax bill may turn out to be more of a job killer than a job creator. 

Are you concerned about how Congressional action may affect the future of healthcare in rural America? Send me your questions, concerns and personal stories at Wendell@Tarbell.com.

Wendell Potter is a former health insurance executive, author and founder of the journalism nonprofit Tarbell.org.

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Hospitals In States That Expanded Medicaid Less Likely To Close

The expansion of Medicaid helps rural hospitals stay afloat in states like Colorado, which added 400,000 people to the health insurance program under the Affordable Care Act.

Hospitals in states that expanded Medicaid were about 6 times less likely to close than hospitals in non-expansion states, according to a study by researchers at the University of Colorado Anschutz Medical Campus.

The study was published Monday in the January edition of the journal Health Affairs.

Colorado was one of 32 states to expand Medicaid under the Affordable Care Act. That cut the state's uninsured rate in half. The biggest group that got coverage was childless adults.

Richard Lindrooth, a professor at the Colorado School of Public Health and lead author of the study, says hospitals saw more people showing up to hospitals with that insurance — so Medicaid payments increased. That helped the hospitals' bottom line.

"It's not as though Medicaid is an extremely profitable form of reimbursement, but it is something," says Lindrooth, a professor the University of Colorado's School of Public Health. "On the margins, it certainly helps the hospitals' cash flow."

Lindrooth says he and his colleagues hypothesized that hospitals in expansion states stood a better chance of remaining financially viable. So they examined national hospital data and local market conditions.

They compared four years before the Affordable Care Act went into effect (2008-2012) with years right after the launch of the ACA (2015-2016). Lindrooth says the results were noteworthy, especially for rural hospitals, which often struggle to stay open.

"Rural hospitals tend to be in more of a financially tenuous position, even prior to the Medicaid expansions," Lindrooth says. "We found that really about half of the closures that did occur in non-expansion states could have been averted through the expansion."

With more insured people in expansion states, hospitals made more money and provided less free care. "So overall their margins improved," he says. Rural hospitals in non-expansion states didn't have that advantage.

Rural health leaders said the study confirmed what they've seen on the ground.

Jason Cleckler, CEO of Delta Memorial Hospital in Delta, Colo., in the rural western part of the state, said the Medicaid expansion helped his hospital's finances. He compared the numbers in 2011 with 2016, after expansion. The hospital's Medicaid population grew from 10 percent to 20 percent, and the hospital was left with less uncompensated care. It saved the hospital more than $3 million.

"I think that really speaks to what the researchers found. So Medicaid doubled, our bad debt decreased significantly, and the uninsured rate decreased significantly," Cleckler says. "It's pretty remarkable, and I would venture to say that most hospitals, even ones with a lower percentage of Medicaid, have experienced a similar story."

Cleckler did describe Medicaid coverage as a "mixed bag" for rural providers. Reimbursement rates can be paltry, he says. A hospital that pays $100 for a lab test may only be reimbursed $20. Another problem, he said, is many doctors and providers either won't accept or limit the number of Medicaid patients due to low reimbursement rates.

An average of 30 percent to 50 percent of rural patients are covered by Medicaid, noted Michelle Mills, CEO of Colorado Rural Health Center, which offers rural health providers education and training. Mills says the population in rural areas is generally "older, sicker and poorer" than in urban communities.

She says the expansion plus a bump in Medicaid reimbursement rates "has helped rural Colorado hospitals from closing." The jobs generated by those hospitals are key to rural economies, with health care one of the top three rural employers in Colorado.

"The importance of Medicaid expansion in our state cannot be understated," says Cara Welch, director of communications with the Colorado Hospital Association.

Welch says other factors also provided a boost, including the state's strong economy and its hospital provider fee. That fee helps reimburse hospitals for uncompensated care from the indigent population and those paying with Medicaid.

Brock Slabach, senior vice president of the National Rural Health Association, says the study correlates with data the group has reviewed. "If state legislatures and Congress want to cure the rural hospital closure problem, expanding Medicaid and not block-granting this important program would be the answer," he says.

Members of the Republican majority in Congress have suggested changing Medicaid to a block grant. That means that instead of the federal and state governments sharing payment for every enrollee who qualifies, the federal government would provide each state a set amount of money, capping total Medicaid spending. It would let states decide how to spend the money. But health care and hospital advocates worry that the change would likely lead to cuts over time.

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Rural hospitals pressured to close as healthcare system changes

In January, Linden Texas native Richard Bowden suffered a mild stroke. Within minutes, medics had taken the 68-year-old to the local hospital emergency room, less than a block from his house.
 
“They checked me out real good,” said the former city councilor, whose East Texas community of nearly 2,000 has relied on the Linden hospital since the 1960s.

Shortly after returning home, Bowden learned he would outlast the hospital itself: the facility was about to close because there weren't enough patients. “It blindsided me,” he said. “It's 15 miles to the next hospital. Out in the country, that seems like a long way.”

Small, rural hospitals like Linden have always struggled to remain viable, but things are getting worse, fast. Rural communities are shrinking at a time when healthcare providers are being pressured to cut costs and release patients sooner.

Twenty-four rural hospitals have closed across the country since the start of 2013, double the pace of the previous 20 months, according to the North Carolina Rural Health Research Program.

 Closed hospitals since the beginning of 2013 

Hospitals are shuttering or converting to clinics at a faster pace and

most often in states that have not expanded Medicaid

(click for full size map)

   “Even with community support, investment in quality personnel and equipment, patient activity was not at a sustainable level,” Steve Altmiller, president and chief executive of Linden hospital's owner, Good Shepherd Health System, said in a statement announcing the closure. “The decision to close the Linden facility, while difficult, is one that is occurring across the country."

Now the Affordable Care Act, better known as Obamacare, is bringing additional pressure. Obamacare is designed to fold the poor and uninsured into the healthcare system, but changes in how the federal government pays for the disadvantaged are already pressuring the hospitals that cater to them, such as rural ones.

Reformers are eager to see some hospitals close, including many out in the country. They argue that good care in the form of clinics and modern ambulances can tend to residents much better than decades ago, undercutting the need for local emergency rooms.

Investors are being warned of the change. Standard & Poor's Ratings Service in August concluded that the nonprofit hospital sector is “at a tipping point” from the drop in the number of patients cared for. Moody's Investors Service reported hospital revenue growth and operating margins are at all-time lows. Fitch Ratings wrote that the Affordable Care Act has accelerated the transition of patients out of the hospital and into clinics by tightening reimbursements and emphasizing technology.

“There is a big transition happening,” said Mark Claster, president of investment firm Carl Marks & Co and chairman of North Shore-Long Island Jewish Health System board of trustees. “I don't think smaller hospitals are prepared, and I don't think they can be. I don't think they have the economic wherewithal.”

A PAUCITY OF PATIENTS
Good Shepherd acquired Linden from the city nine years ago and spent $6 million on renovations, including revamping the emergency room. “It was very modern,” said Linden Mayor Clarence Burns.

The hospital's net revenues grew from almost $8 million in 2006, the year after the acquisition, to $13.3 million in 2010, according to Texas Department of State Health Services data.

But operating losses were constant and accelerated, along with bad debt, which grew to nearly $3 million in 2012 from $990,000 in 2006. By 2013, the little hospital had a cumulative $11 million in losses under Good Shepherd, according to the nonprofit's financial statements.

Good Shepherd declined to discuss finances with Reuters. Public statements by the company, financial records in bond disclosures, and the state of Texas data describe changes over the years.

Two trends hurt the hospital: the number of patients shrank, as did hospital reimbursements from Medicare and Medicaid, two primary payment sources for rural facilities. Further issues lay ahead, including changes in federal funding for indigent patients and rural hospitals.

In the six years leading up to 2012, Linden's admissions dropped to just over four patients a day on average, from about 10 patients in 2007, according to state data. Fewer than one person per hour came to the emergency room in 2014.

Linden had 1,988 residents in the 2010 census, down nearly 12 percent in a decade.

Good Shepherd blamed losses on a paucity of patients and federal cuts to reimbursement in Medicaid and Medicare. For example, Medicare payments were cut 2 percent as part of the sequestration federal budget battle in 2013.

Larger health systems with a variety of services and fewer Medicare patients can try to shift offerings, raising revenue by providing specialty surgeries, such as a hip replacement, or oncology services. But smaller hospitals with fewer resources have less flexibility.

Implementation of the Affordable Care Act may exacerbate the problem for small facilities.
“Revenues are coming down and expenses are not coming down as quickly,” said George Huang, municipal securities research director at Wells Fargo Securities. “The smaller guys have fewer resources available to them.”

The federal government historically has supported rural hospitals. Since 1997 it designated many as "critical access" facilities, recognizing that their small size meant they could only focus on essential medical services. Such hospitals got extra federal funds.

Last year, the U.S. Department of Health and Human Services' Office of Inspector General recommended the government tighten rules on critical access hospitals to save money. That would likely to cut the number of such facilities by two-thirds.

Funding for the poorest also is changing, as the Affordable Care Act cuts payments for indigent care, in the expectation that many impoverished and uninsured will move to Medicaid. But 23 states have not expanded Medicaid, fearing it could eventually leave them with financial burdens. So in those states, a gap in federal support for the poor has emerged.

Hospitals in states that don't expand Medicaid will see their profit margins drop by a few percentage-points by 2021, reported research firm The Advisory Board Company. "For many, that could be the difference between being profitable, and being in the red," the firm wrote on its website in July.

The majority of rural residents in the United States live in states which are not expanding Medicaid, reported the North Carolina Rural Health Research Program. A majority of the 24 hospitals closed since the start of 2013 are in those states.

“In states that are not expanding Medicaid, we're seeing hospitals close. The finances are just not working out," said Tim Jost, Washington and Lee University School of Law professor.

'LONG LIVE FEWER HOSPITALS'
Making healthcare more affordable and efficient is a good thing, say analysts. As the dominant provider in the marketplace, hospitals have “become incredibly inefficient,” because there was less incentive to keep costs down, said Jason Hockenberry, health policy and management professor at Emory's Rollins School of Public Health.

One in five hospitals, over 1,000 at least, will close by 2020, forecasted Ezekiel Emanuel, a White House health policy special advisor who helped shape the Affordable Care Act.

“Long live fewer hospitals. Welcome to the new age of digital medicine,” Emanuel wrote in his book, Reinventing American Health Care. Clinics can more efficiently take on many duties performed by hospitals, leaving hospitals to focus on the severely ill, he said.

Emanuel predicts the first hospitals to go will be smaller ones, which already operate with less than half of their beds filled. When Linden closed, less than 20 percent of its beds were occupied on any given night.
For Linden resident Bowden, the next trip to the hospital would certainly be longer, although it would be in an emergency vehicle that is a different technological breed from when the little hospital was built.
For decades he's heard ambulances “ripping up to the hospital.” Now that it is closed, he says, it has been real quiet.

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When rural hospitals close, towns struggle to stay open

There’s a healthcare crisis in America that you might not have heard about: Rural hospitals are closing at a rate that’s starting to get some politicians’ attention. Republicans blame Obamacare, while Democrats blame some states’ refusal to expand Medicaid. In reality, the problem started years before all that.

What's clear is that rural hospitals and the rural economy rise and fall together.

Hancock Memorial Hospital in the tiny town of Sparta, Georgia was among the first of nine rural hospitals that have closed across Georgia since 2000. Today, it’s overgrown with weeds and vines, while the roof caves on the gurneys and computers still inside.

“I mean, it was just not economically feasible to maintain the staff and the equipment,” says Robert Moore, whose family has lived in Hancock County since they were emancipated.

Sparta was once a fancy town with lots of antebellum mansions. But Moore says things really started going south in the 1990s.

“Rural Georgia was based on the textile industry, and when NAFTA was signed, all that moved to Mexico, and… sent everything into a downspin,” Moore says.

Hancock County Commission Chair Sistie Hudson says it’s not surprising that a population so small and so poor can't support a whole hospital. “There’s about 2,600 people [in Hancock County] that still work, out of the little more than 8,000 that we have,” she says.

But with Hancock Memorial boarded up, the prospects for future growth are even worse. When Hudson tries to recruit a new industrial employer, one of the first things they ask is: “Do you have a hospital?”
“You just really need a local facility just in case somebody gets hurt in these factories, you know? It’s something that they like to see,” Hudson says.

Just imagine what having no emergency room nearby would do to a company’s workers comp and other insurance costs. It’s a non-starter for most businesses. 

University of North Carolina professor Mark Holmes studied the economic impact of 140 rural hospital closures nationwide.  He found that three years out, losing a hospital costs a community, on average, “about 1.6 percentage points in unemployment, about $700 in per capita income, and that was in [year] 2000 dollars so that’d be probably about $1,000 currently."

And that’s only the effect on economic health. What about health?

Speaking on the subject a few weeks ago, Georgia state Senator David Lucas paused several times to weep as he addressed his colleagues this spring: “[It] ends up with rural communities, such as Hancock County, where 39 percent of the folks who have a stroke or have a heart attack die." That’s a lot higher than in counties with hospitals close by.

Georgia officials are exploring solutions to this problem that could become a national model – basically, a medical facility that does more than an urgent care clinic, but isn’t as big a whole hospital. But Georgia’s Community Health Commissioner Clyde Reese says America’s healthcare system doesn’t provide enough ways for the operator of that kind of place to get paid.

“They’re not going to be hospitals, they won’t be reimbursed as hospitals, they won’t be able to charge a facility fee, they won’t get the Medicaid add-on rate, etc.,” Reese says.

Reese is working on ways to fix that. Because without reimbursements, there will be no emergency care. And with no emergency care, there probably will be no new jobs in Hancock County.

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St. Vincent's Hospital in New York to Close

St. Vincent's Catholic Medical Center, the last Catholic general hospital in New York City, has voted to close its inpatient and acute care centers, effectively closing the hospital after more than 160 years.

The vote, confirmed by a hospital spokesman, came as St. Vincent's has struggled for six months with a budget deficit and has perched on the brink of bankruptcy, just a few years after emerging from an earlier bankruptcy filing. The hospital has tried for months to find a partner or new owner. A potential deal with Mt. Sinai Medical Center fell through last week.

The State of New York pumped $9 million in emergency loans so the hospital could keep running and meet its payroll, Gov. David Paterson's office said.

St. Vincent's will cease elective surgeries on April 14, the spokesman said. Officials are working with the state Department of Health on the timetable to wind down its operations, a spokesman said. The hospital said it will end behavioral health care, but continue to operate its outpatient centers for cancer care and HIV-AIDS treatment.

St. Vincent's is one of the city's oldest hospitals and was esteemed for its emergency care.


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Kindred Hospital Modesto to close

MODESTO, Calif.,12/02/2009 — Kindred Hospital Modesto will be closing its doors after the healthcare company that operates it said it couldn't find a buyer.
Kindred Healthcare Inc. announced Wednesday that it would be shutting down the 64-bed facility.

The Kentucky-based provider of long-term healthcare services said last year it was putting the hospital up for sale because it was no longer profitable.

A notice filed with local government officials say the closure will put 127 employees out of work.

Before the facility is closed some time early next year, Kindred will be required to follow a state-approved closure plan for identifying the health needs of patients and moving them to new care facilities.

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Many officials project ‘catastrophic’ impact if Northside closes

Youngstown would lose about $1.5 million annually in city income tax.

YOUNGSTOWN — Does the ouster of Walter “Buzz” Pishkur as Forum Health’s chief executive officer mean the closing or downsizing of the financially strapped Northside Medical Center isn’t far behind?

And if that happened, what would be the impact on the community and Forum’s employees?

Forum filed for protection under Chapter 11 of the U.S. Bankruptcy Code on March 16. An agreement reached between Forum Health and its creditors this past weekend would seem to provide a temporary measure of security for Northside.

Forum also operates Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland.

The deal led to Pishkur’s resignation and creditors taking off the table a termination plan for Northside and working with Forum toward a consensual reorganization plan expected to be finalized by the end of the year.

But Northside’s long-term future remains the subject of much conjecture. Northside is not just a medical facility; it also has 1,400 workers, making it one of the city’s largest employers.

Youngstown would lose about $1.5 million annually in city income tax if Northside closed, said city Finance Director David Bozanich.

“They’re a major economic driver in the city, particularly on the city’s North Side,” Bozanich said. “The employees have a tremendous impact on the small businesses around the hospital.”

Youngstown has a 2.75 percent income tax on wages earned by those working and/or living in the city, which is expected to fuel about $41 million in income tax collections this year.

The city already is facing financial hardships with city officials expecting the general fund to finish this year with a shortfall of more than $1 million.

The city’s finances would be worse if it didn’t recently lay off seven full-time workers and 11 part-timers, and make other cuts.

If Northside closes, there is no doubt the city would have to eliminate more of its employees and make deeper budget cuts to make up for the income tax shortfall, said Youngstown Mayor Jay Williams.

But losing the medical facility wouldn’t only be devastating to the city’s finances, the mayor added.

“It’s access to health care and the quality of health care that would be lost,” he said. “There’s not an institution, individual or business in this community not adversely impacted if the Northside Medical Center closes. No one in the Mahoning Valley would escape the impact of the closing of Northside.”

Those in need of medical care would go elsewhere taxing the area’s health-care system, Williams said.

The impact on others

The closing of Northside would eliminate jobs not just at the hospital, but also at suppliers, said Walt Good, vice president of economic development at the Youngstown/Warren Regional Chamber.

Even if some workers, such as nurses, found other jobs, the city would suffer an overall loss of jobs and income tax revenue, he said.

The chamber is working on determining the overall impact on the community, he said. Chamber officials may talk to some local suppliers to see just how many local jobs are at risk, he said.

“We’re talking office supplies, medical supplies, linens. Any service function we’re trying to look at,” he said.

“If Forum drops Northside ... the worst case is a vacant building. You would hope someone would come in and operate it to some extent. But, keeping all of Forum’s operations viable is the community focus at this point,” Good said.

Keeping the faith

Eric Williams, president of the Youngstown General Duty Nurses Association’s 400 members at Northside, said Pishkur did more to help Northside and Forum than all the other recent CEOs combined.

“We have a reorganization plan to become profitable for each of the next three years, based on union concessions, which are set to take effect this month, and other internal cost-cutting measures initiated under his leadership that have begun to bear fruit,” Williams said.

“The creditors’ plan has been all along to get rid of Northside, by selling or closing, which would then force liquidation of TMH so they [the creditors] could get at TMH’s money and get out of town. It appears the creditors wanted to act before Northside could prove it could be profitable,” Williams said.

Of the 1,400 jobs at Northside, more than 400 are nurses.

“The loss of Northside would devastate the local economy. These are good-paying jobs,” he said.

Williams confidence is buoyed by the hope that Forum and the creditors will reach consensual agreement on a reorganization plan that has Northside profitable for the next three years — 2010, 2011 and 2012 — with no layoffs involved.

Linda Warino, staff representative for the Ohio Nurses Association, said she refuses to even consider what would happen if Northside closes.

“I may be naive, but Michael Seelman [Northside chief operating officer] told us in front of a room full of community leaders and state legislators that the plan hasn’t changed, and I expect the plan to be followed,” Warino said.

‘You can’t operate at a loss’

Thomas Connelly, president of American Federation of State, County and Municipal Employees Local 2026, which represents 425 workers at Trumbull Memorial, including registered nurses, has a different take on the events of the past few days.

He said he was surprised at the way it played out, but considered Forum not filing a reorganization plan by the Sept. 15 deadline “tweaking the bankruptcy judge’s nose.”

“We feel, respectfully, that we’ve known all along what the plan is: Northside needs to be made smaller and economically viable and live within its means to get creditors off everybody’s back,” Connelly said.

Connelly believes there will be drastic changes at the Youngstown hospital; and is hopeful that the Warren hospital will continue to make improvements and stay on course.

“I don’t debate that we need two hospitals in Youngstown, and I don’t want to see Northside demolished and gone. But, you can’t operate at a loss. I don’t want to see anybody lose their jobs, but neither do I want to see everybody lose their jobs,” Connelly added.

“If the whole thing [Forum)] was to crash, the loss of jobs and revenue to the tax base would be catastrophic.”

What’s next for Northside?

In a prepared statement Monday, the creditors, through their spokesman Lance Ignon, said: “The agreement stems from a shared desire among all the parties, including the lenders, to develop a consensual reorganization plan that will stabilize Forum and allow it to continue serving the community for years to come.”

But, the agreement also grants the creditors’ wish that an interim CEO with health-care experience be hired to run Forum.

One of the knocks on Pishkur was that he came to the job without that experience beyond serving on the Forum Board of Trustees.

The nurses’ union at TMH issued a “vote of no confidence” in Forum’s management and board. In bankruptcy court filings, the creditors also criticized Forum’s leadership.

The new leader

“In conjunction with the employees, Buzz Pishkur did more to help position [Northside] as a viable entity than had been done by everyone else in the previous several years,” Mayor Williams said. “He was an unyielding force against those who wanted Forum to jettison Northside.”

Williams wants Pishkur’s replacement to have that same commitment to keeping Northside open.

“We need to be very cautious with who is chosen as his replacement,” Williams said. “I’m very concerned that a replacement not digress from the progress made by the employees and Buzz. We seem to have finally pointed the ship in the right direction. I’m concerned about the liquidation of Northside under new leadership.”

“I believe Forum is on the right path. The creditors have accepted the reorganization plan, but I’m not privy to what it is,” said Connelly, who thinks Forum will have an interim CEO in place by the beginning of October.

But, he said, “we are displeased this had to be necessary. Now, we are again faced with somebody coming in from the outside who will likely institute huge changes in our lifestyle and working conditions. It’s just one more part of the roller coaster ride we’re on,” he said.

Asked to elaborate on Monday’s prepared statement and discuss the likelihood that Northside would remain a part of Forum, Ignon remained guarded late Tuesday, writing “We would prefer to see Northside remain a part of Forum Health, as long as the restructuring committee and the new CEO can find a way to make the facility financially viable.”

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Bon Secours Hospital - Baltimore

City hospital at risk
Bon Secours needs $5 million to stay afloat while it seeks a new business model for serving the poor; the state should throw it a lifeline.
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Lawmakers iron out budget differences
Putting the finishing touches on the state's $13.8 billion operating budget, lawmakers also decided to throw a $5 million lifeline to Bon Secours Hospital. The grant would not be delivered until the struggling hospital's board devises a long-term plan to solve its financial problems.
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Facing hard times, Shriners may close 6 hospitals

Shriners hospitals, which have provided free care since before the Great Depression, are considering closing a quarter of their facilities as donations stagnate, costs increase and the charity's endowment shrivels.

The group's director says it's the only viable option.

Officials at the Florida-based organization say it is siphoning $1 million a day from its endowment to balance the budget for 22 hospitals in the U.S., Canada and Mexico. Meanwhile, they say, that fund has fallen to $5 billion from $8 billion in less than a year because of the sputtering stock market and a charitable giving slump that has hurt philanthropies nationwide. The fund has been declining since 2001. The group will vote this summer on the closures.

"Unless we do something, the clock is ticking and within five to seven years we'll probably be out of the hospital business and not have any hospitals," Ralph Semb, chief executive officer of Shriners Hospitals for Children, told The Associated Press.

In cities where hospitals may close, supporters and hospital staff are scheduling fundraisers and posting online messages of support on social networking Web sites.

In Greenville, S.C., Bridget Myers and her daughter are turning to churches and friends, collecting money in a bucket tagged with pictures of X-rays and Shriners patients.

"I've collected $92 dollars in two days," said Brooklynn Myers, 14, who received scoliosis treatment at the Shriners' Greenville hospital. "Me and my mom feel like it's heartbreaking we'd have to drive all the way to Lexington (Kentucky) and we've made special bonds here."

Widely known today for burn and orthopedic care for children, the Shriners Hospitals system opened in 1922 with a facility in Shreveport, La., that specialized in treating polio. By the 1960s, the group had hospitals nationwide and expanded its care to include spinal cord injury rehabilitation, cleft lip and palate care and medical research.

More than 1 million children have been treated at the hospitals, which were created by the fraternal organization of the same name whose members are known for wearing red fezzes and driving miniature cars in parades. The care is free to all.

In 2007, the fraternal group was hit with accusations it used money intended for the hospitals to throw parties — but only a fraction of the hospitals' funds are raised by the group. Most of the money to operate the hospitals has come from interest from the endowment, Semb said.

Semb said this year's operating budget for the hospital system is $856 million. The budget has risen by $100 million each of the past two years while donation levels remained static, he said.

Last month, the Shiners' board of trustees voted to close four of the group's eight research centers and lay off about 40 people at its administrative office.

At the organization's annual meeting July 6-8 in San Antonio, about 1,200 Shriners will vote whether to close hospitals in Shreveport, La.; Erie, Pa.; Spokane, Wash.; Springfield, Mass., and Greenville. Semb said they were chosen mainly because of too many vacant beds. Patients would be sent to other Shriners hospitals that specialize in their ailments.

The organization also will consider whether a hospital in Galveston, Texas — closed temporarily after damage from Hurricane Ike — will remain shuttered.

"The outlook is not good, but we know that we can right it," Semb said. "And we can within a five-year period of time get our expenses down far enough to equal the income we have coming in and hopefully start building on that endowment fund."

Closing these hospitals is the only viable option, Semb said. While members will also consider keeping all 22 facilities open — or a nationwide 30 percent budget cut — Semb contends doing either would be a death knell to the organization. He said to continue functioning as they do now with all the hospitals open, Shriners would have to grow the endowment to about $12 billion by 2014 — unlikely, given the economy and nationwide trend toward less large-sum charitable giving.

Fewer groups and individuals gave gifts of more than $1 million in 2007 compared to 2008, and such donations fell even more in the final two quarters of last year, according to preliminary findings of a study due out this summer from The Center on Philanthropy at Indiana University. Even when giving was more robust — from 1991 to 2005 — gifts to health care groups grew at a much slower rate than those for other entities, like universities, said Melissa Brown, associate director of research for the center.

She said the aging of once-prominent fraternal organizations might be affecting their ability to grow donations. "It could be that what they are seeing is a generational shift," Brown said.

Getting the two-thirds majority needed to close the hospitals will not be easy, Semb said.

Patients and their families are vowing to rally at the annual meeting. And some Shiners who have spent years raising money and volunteering say they'll oppose the move. They've done it before: A plan to close hospitals in 2003 was quickly voted down despite warnings of financial problems.

In Greenville, letters of support from patients cover the wall of one hallway at the 50-bed hospital.

Jason Burbage, who was born with no fingers, has been going to Shriners Hospitals since he was born in 1976 — first as a patient and now as a volunteer to give encouragement to patients. The work has become more difficult because of the financial troubles, he said.

"We don't want the patients to focus on it," said Burbage, a 33-year-old Greenville businessman. "It's not a done deal."

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Coastside Family Medical Center shuts doors permanently

The Coastside Family Medical Center closed its doors Friday, shutting down the only medical facility of its kind for Half Moon Bay and its outlying communities. The medical center at Shoreline Station announced that it had to immediately close due to longstanding problems of declining revenues and a lack of financial support. The recent swell of economic troubles reportedly made it impossible for the medical center to continue.

The medical facility was an important source of health care for the Coastside, particularly for the uninsured, who have represented about 40 percent of its patients. Its closure means that most former patients will have to travel over to the Bayside to get most medical treatments.

The closure reportedly came as a surprise to the center's employees, who were told about the severe funding problem in a meeting today. Physicians working at the facility had reportedly scheduled Friday appointments with patients that had to be quickly cancelled.

The medical center is expected to file for Chapter 7 bankruptcy, according to CFMC directors. If bankruptcy proceedings are followed, directors of the medical center say they will appoint a trustee to handle giving medical files back to patients.

Officials strongly recommend that patients quickly contact them to obtain their medical records by mailing them at 225 S. Cabrillo Highway, St. 100A, Half Moon Bay, CA 94019, ATTN: "Medical Records," or by faxing to (650) 726-9317.

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News Briefs

Pa. Hospital & Healthsystem Association says economy worse than in Dec.
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Grady is among many Georgia hospitals that have suffered under the failing economy. More than half of Georgia hospitals have cut staff or considered it, and more than one-third have reduced services or contemplated such a move, according to a recent survey by the Georgia Hospital Association.
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About 44 percent of the hospitals surveyed by Novation, a Texas-based company that manages contracts between suppliers and 14,500 health providers, are seeing declines in their surgery loads. Nearly half of them plan to reduce staffing, and 69 percent expect to delay or cancel equipment purchases, Novation said in a report released Feb. 26.

The stock analysis firm Longbow Research said in January that nearly half of the 30 hospitals it surveyed in 10 states, including California, had reported lower admission rates during the last three months of 2008 compared with the same period a year earlier.

One of the survey's most telling findings was a 24 percent drop in admissions among patients with private or employer-based insurance. Hospitals rely on that population to balance out losses they incur when treating the uninsured or people covered by lower-paying government programs such as Medicare.

“The acute-care hospital industry is facing difficult head winds,” said analysts for Longbow, which is based in Independence, Ohio.
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GREENWOOD, SC — Citing the downturn in the economy combined with lower inpatient volumes, Self Regional Healthcare officials today announced plans to proportionately reduce labor expenses in the coming months through attrition and planned staffing decreases.

This staff reduction could ultimately affect from 170 to 200 hospital employees, which represents 8.5 percent of Self Regional’s staff.
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The Iowa Hospital Association says the down economy is having an impact on the state's 117 hospitals. I.H.A. spokesman Scott McIntyre says the economy is hitting hospitals hard on a couple of fronts.

McIntyre says the amount of charity care and bad debt has gone up by 13-percent, and the economy had eaten away at hospital investments, which has reduced hospital margins below one percent. McIntyre says the increase in charity care reflects the increase in unemployment.

He says more people are losing their jobs and losing their health insurance and needing more help from hospitals. McIntyre says hospitals experience big losses with Medicare and Medicaid -- but the federal stimulus package does have some Medicaid money in it.
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Southern NJ hospital ends full service operations

A southern New Jersey hospital is ceasing operations as an acute care facility.

Kessler Memorial Hospital in Hammonton closed Thursday, just days after it appeared the financially troubled facility appeared to have a buyer.

But an apparent agreement to sell the hospital to cardiovascular surgeon B. Reddy Dandolu for $7.5 million fell through.

Hospital officials say there is a tentative agreement with AtlantiCare Regional Medical Center to establish satellite emergency services at Kessler, and the hospital emergency room is treating walk-in patients.

Officials issued a statement saying that "every effort will be made" to ensure that employees receive all pay they are due. A payroll shortfall prevented them from being paid last week.

The 106-bed hospital, which opened in 1964, was Hammonton's largest employer with 400 workers.

Councilman Eric Gioia rips hospital closings in Queens

Graffiti on the plywood at St. John's Queens Hospital, which boarded up its doors Sunday.

A lone ambulance from Wyckoff hospital sits in front of St. John's. Mary Immaculate Hospital closed its doors and now lies empty.

The doors of two Queens hospitals were boarded up Sunday with graffiti-scarred wood planks, the latest victims of the tanking economy.

The message, say critics: Don't get sick in Queens.

"You already have overburdened hospitals," said Councilman Eric Gioia (D-Queens). "Good luck trying to get a loved one to emergency care."

Ambulances stood at the ready outside St. John's Queens Hospital in Elmhurst and Mary Immaculate Hospital in Jamaica in case patients showed up unaware the hospitals were closed.

They shut their doors late Saturday night after budget woes sent them into bankruptcy. Some 3,000 workers lost their jobs at the facilities.

"It's a real failure of government to set priorities and manage them properly," Gioia said. "They throw up their hands when the money runs out and say, 'What can we do?' That's not good enough."

Mayor Bloomberg called the closures "sad" and said the city has to do more with less in these tough economic times.

"Having said that, there is no reason for us to ... walk away from our basic functions of government," he said, adding that the Fire Department will dispatch more ambulances in Queens and for other hospitals to fill the void.

Carlos Quiles, a nurse who lost his job at St. John's, said the next best option for care in Queens is Elmhurst Hospital Center, which is already filled to capacity.

"I can't understand the wisdom behind closing the hospitals," he said. "The politicians clearly have no understanding of the ramifications."

Quiles is worried about finding a new job in a tough economy.

"I just have to leave it all in the hands of God," he said.

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From the New Jersey Hospital Asssociation

• Eight N.J. hospitals have closed in the last 18 months.

• Just 15 years ago, New Jersey had 112 acute care hospitals. Only 74 are left today.

• Of those 74, half lost money last year.

• And five N.J. hospitals filed for bankruptcy in the last 18 months.

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North Oakland Medical Center closes door on almost a century of service

The North Oakland Medical Center officially closed for business at 5 p.m. Tuesday, ending almost 100 years of service to the residents of northern Oakland County and leaving many of the 800 staffers without work, The Detroit News reported.

Oakland Physicians Medical Center, which agreed to buy the failing hospital earlier this year, was unable to raise enough capital for the project due to the latest credit crunch and a sluggish state and national economy.

"It's something that we certainly knew could happen," the hospital's current Chief Financial Officer Mike DeRubeis told The Detroit News. "It just kind of fell apart at the end. It was very disappointing."

No new patients were admitted as of late last week, and about 64 patients were discharged or transferred from the hospital this week, he said.

The hospital's decline can be attributed, in part, to providing medical care to patients who couldn't afford to pay, putting the hospital in debt up to $100 million, and preventing it from updating its medical technology for procedures that produce revenue.

Patients will be able to pick up their medical files in the coming weeks, and the hospital will work to transfer custody of the files to a local hospital.

DeRubeis will serve as interim president and CEO/CFO starting Nov. 1, overseeing 40 to 60 employees who will help complete the approximately four-month corporate wind down of the hospital.

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