‘More independent rural hospitals will seek some type of affiliation with a larger hospital.’

More than 40% of the country’s rural hospitals that have been operating in the red as they try to manage care for a declining population that is often older, sicker and poorer than their urban counterparts.

The city of Greenville, Ala., purchased L.V. Stabler Memorial Hospital in November 2017, but it needed help from the community and the University of Alabama Birmingham to keep it open.
Quorum Health sold the 74-bed facility for a discounted price of $2.8 million. The move restored local decision-making, said Greenville Mayor Dexter McClendon, who also chairs the hospital’s board of trustees.

Residents of Greenville, population 8,100, voted to support a half-cent sales tax increase that helped pay for the loan used to buy the hospital and will provide the community hospital $825,000 a year through 2032. Still, L.V. Stabler needs a major restructuring to rectify its $2.5 million operating loss in 2017, stemming from declining admissions and growing expenses.

Partnering with the University of Alabama Birmingham was like landing a five-star recruit, McClendon said.

“Without UAB and the sales tax, we would’ve closed,” he said.

L.V. Stabler could be the poster child for many rural hospitals—44% of rural facilities across the nation are operating in the red as they try to manage care for a shrinking population that is often older, sicker and poorer than their urban counterparts, according to analysis from the Chartis Center for Rural Health.

Independent government-owned hospitals, many of which are in rural areas, had an average annual operating margin of negative 16.6% and a $15.8 million operating loss in 2016 compared with a negative 7.9% operating margin and $8.4 million operating loss for their system-owned peers, according to a white paper from Healthcare Management Partners, Waller Lansden Dortch & Davis, and Taggart, Rimes & Graham that analyzed more than 70,000 Medicare cost reports. Those in the mid-South region—Alabama, Arkansas, Mississippi, Tennessee and Texas—are far worse, reporting a negative 41.9% operating margin and a $26.6 million operating loss.

Independent critical-access hospitals in the mid-South, which have fewer than 25 beds and are at least 35 miles away from another hospital, averaged a negative 20.3% operating margin and a $3 million operating loss.
“Southern states with a higher share of the aging population combined with lower incomes—that’s where you see more chronic cases of obesity and lifestyle challenges,” said Bret Schroeder, partner of PA Consulting Group. “Providers in these rural communities experience the most pain.”

More than 70% of all government-owned hospitals reported an operating loss in 2015 and 2016, researchers found.

Government ownership requires a level of public accountability and scrutiny that often set hospitals’ even further back, the white paper said. Reimbursement levels also favor urban and system-owned hospitals. Bundled purchases, centralized administrative functions and access to better technology help system-owned hospitals drive costs down, one of the most valuable metrics in the industry’s changing payment paradigm.

Left out

The situation is magnified in states that did not expand Medicaid coverage, like Alabama.
Rural hospitals in those states had higher rates of uncompensated care as a percentage of revenue than hospitals in expansion states, according to a 2015 study published in Health Affairs.

“It’s a heck of a challenge keeping a hospital open in a town of 8,100, especially when our governor did not take the Medicaid money,” McClendon said. “For a county like us, it almost shot our legs out from under us and nearly made it impossible.”

Payers compound the problem, said Farrell Turner, president-elect of the Alabama Rural Health Association. They often will perform an internal audit and take back money that was doled out two years ago, he said.

“Payers are just beating us up,” Turner said. “Payers are constantly changing the rules and small rural hospitals, physicians and clinics in those communities don’t have a lot of resources to stay up to date.”

Twelve hospitals in the state have closed since 2011, six were in rural areas, according to the Alabama Hospital Association. The median rural hospital in Alabama operated at a negative 12.2% margin in 2016 and 88% were losing money. Charitable donations dropped by a quarter. Nearly two-thirds reported an increase in uninsured patients while nearly half reported an increase in Medicaid beneficiaries. Nearly three-quarters experienced a increase in emergency department visits. Half reported a drop in inpatient admissions.

“Access to care in the Black Belt of Alabama is already lacking; we can’t afford to lose anything more,” said Danne Howard, the hospital association’s chief policy officer.

Without the right partnerships in place, maintaining a rural hospital is often a losing battle.

UAB started to partner with rural hospitals about eight years ago as a way to protect referral sources, but it has evolved into much more, said Don Lilly, senior vice president of clinical network development and director at UAB Health System.

The largest health system in the state partners with medical providers in Anniston, Alexander City, Bessemer, Camden, Demopolis, Florence, Greenville, Mobile and Montgomery.

UAB recently purchased property in Hoover that will be converted into a 39,000-square-foot medical facility to house primary care, OB/GYN, oral surgery and other specialties.

The university system also operates neighborhood clinics in Hoover, Leeds, Inverness and Gardendale, where a free-standing ED and medical office are under construction.

It also has 40 physicians planted in different markets around the state. In addition to a telestroke program it recently rolled out in Demopolis, it has a teleradiology service that 18 hospitals use and a cancer network with 12 centers in Alabama and surrounding states.

“Rural hospitals’ survival and their ultimate effectiveness benefit everybody, including payers,” Lilly said. “Keeping patients in local markets and out of higher-end tertiary facilities saves money and improves quality.”

UAB Hospital’s 1,157 beds have been nearly full for two years, he added.

The health system is working with local jurisdictions to recruit family medicine doctors to boost primary care, pre-natal, and labor and delivery services in Alabama.

The 99-bed Bryan Whitfield Hospital in Demopolis—a town with a population of 8,000 about 60 miles south of Tuscaloosa—staffs about 57 beds and runs at around 60% occupancy. The hospital closed its labor and delivery unit in 2014.

About 45% of rural communities do not have a hospital with dedicated maternity care. Nearly 1 in 10 rural counties lost their hospital-based obstetrics programs from 2004 to 2014, according to research published in Health Affairs in September.

“I understand first and foremost that not every county in every state can have a hospital—the financial challenges we face are astronomical,” said Arthur Evans, CEO of Bryan Whitfield Hospital. “Given that however, each county has to assess what their healthcare needs are, whether they require a hospital, an emergency room, ambulatory or other services.”

One of main issues is that Alabama has the lowest Medicare reimbursement rates in the country, Howard said. Alabama hospitals are reimbursed significantly below the national average, primarily due to a formula implemented in the 1980s known as the Medicare wage index that weights other states like California higher based in part on cost of living, according to the Alabama Hospital Association.

“That’s why rural hospitals can’t make capital equipment purchases, they have to freeze wages, eliminate service lines and stop delivering babies,” Howard said. “They are looking into telemedicine and mergers, but the fact is without adequate reimbursement, rural hospitals aren’t appealing to larger systems.”

That’s partly why UAB is driving change on the legislative front, university executives said.

Bill of health

UAB lobbied for state legislation that would create a resource center for rural hospitals.

To be housed at UAB, the center would help fund rural public hospitals in Alabama improve revenue cycle, purchasing and supply chain functions, strategic planning, insurance and cost reporting, coding, recruitment, and compliance. It would also provide funding for administrative residents to work in rural hospitals. Signed into law in March, the program has not yet been funded.

It’s also proposing legislation that would implement a global budgeting model for rural hospitals. A board would perform a needs assessment for each community, which would shape a statewide budget. Local, regional and state authorities would agree on specific amount of revenue for the upcoming fiscal year, regardless of the volume of services. The bill was shelved in April, but Alabama has been selected as one of five states to participate in a state policy academy on global budgeting for rural hospitals.

“They wouldn’t have to worry about doing what they can to keep the doors open, they would be able to do what’s right,” said Will Ferniany, CEO of UAB Health System.

It creates true statewide health planning in areas that don’t have a collective measurement of what services are needed or redundant, Lilly said.

UAB will try to work out the kinks in a pilot program that will test the global budgeting model in two to three areas of the state.

“It takes away the financial risk,” Lilly said.

UAB will continue to build out its telemedicine network. Bryan Whitfield Hospital launched a telemedicine-equipped stroke center in late April with the help of UAB.

“Telehealth is something that will push us to next level," Evans said. "Transportation is a major issue all the time. We can do these services cheaper here than in an urban facility, which may be overburdened, and patients are happier seeing their local doctors.”

Staying connected

Providers are using telemedicine to not only increase access to specialists, but also train physicians in rural areas.

MD Anderson Cancer Center in Houston teamed up with providers in the Rio Grande Valley in Texas to identify the early stages of cervical cancer. MD Anderson uses Project ECHO’s (Extension for Community Healthcare Outcomes) telehealth technology to mentor non-gynecology doctors and discuss their de-identified cases.

Since the program’s implementation four years ago, the cancer center has helped screen more than 16,000 women and perform 200 procedures to eliminate early-stage cervical cancer.

“We teach local providers who aren’t specialists to do specialty care, which is critical because Texas has some of the highest rates of cervix cancer in the country,” said Dr. Kathleen Schmeler, an associate professor at MD Anderson.

Specialists from MD Anderson, the University of Texas Medical Branch and the University of Texas Rio Grande Valley coordinate virtual visits with rural providers in the Rio Grande Valley twice a month. The 1-hour sessions include a 15-minute didactic so they can get continuing medical education credits, which are tough to secure in rural areas, Schmeler said.

It also offers some hands-on training courses to teach colposcopies, cervical biopsies and loop electrosurgical excisions with providers in Harlingen, Laredo and Sherman.

“We need to help increase access, which is a problem in these underserved areas,” Schmeler said.

“They need to get screened locally with a nurse they trust rather than traveling to Houston.”

Many won’t travel at all because they are undocumented, she added.

The cancer center also helped the University of Texas start a school-based HPV vaccination pilot program in Rio Grande City to help prevent cervical cancer.

“We need to demonopolize and democratize knowledge and get it out of an academic medical center and get it to communities that need the support and can share specialty knowledge,” Schmeler said.

St. Louis-based Mercy health system implemented a telehospitalist program that’s eased the workload of physicians in rural hospitals, said Diana Smalley, regional president of west communities for Mercy.

Hospitalists in Mercy’s urban markets assist rural medical teams with 24/7 backup and video consultation, allowing physicians to maintain a better work-life balance, Smalley said.

Specialists are notoriously hard to attract and keep in rural communities. But if they are, through debt forgiveness incentive programs for instance, they’re often retained on a temporary basis, which can be costly.

“If we can become less dependent on specialty services in rural markets and focus on primary care and emergent services for diagnosis and initial treatment, we are all better off in the long run,” Smalley said.

Mercy created a community paramedic program in Ada, Okla., where practitioners travel to the homes of about 1,000 emergency department “frequent fliers” and enroll them in a virtual care program. They identify what consumers need in their homes to improve their health and provide them with an iPad and other tools to monitor their blood pressure, glucose levels and other vitals.

In one case, a man kept coming to one of Mercy’s rural EDs because he had trouble breathing. One of the nurses overheard him saying that he was so uncomfortable lying flat to sleep, but didn’t have enough money for an adjustable bed.

Mercy paid for a reclining bed and his number of ED appearances dropped dramatically, Smalley said.

But without the backing of a bigger system, more hospitals, both urban and rural, will inevitably close their doors as demand for inpatient care decreases along with length of stay, Smalley said. It’s a natural byproduct of preventive care, she said.

“I think the overall the state of rural healthcare is somewhat precarious,” Smalley said. “These hospitals are somewhat isolated from a larger healthcare system, so there is not a consistent approach on how to deal with some of the challenges they are facing. More independent rural hospitals will seek some type of affiliation with a larger hospital.”

Team effort

Pharmacists are also helping fill the healthcare services void in rural areas.

Deines Pharmacy in Beatrice, Neb., operates in a town of about 12,000 people 40 miles south of Lincoln, alongside one of the larger critical-access hospitals in the country, Beatrice Community Hospital.

The pharmacy resembles an urgent-care clinic, which Beatrice lacks. Deines Pharmacy has done more strep throat, flu, cholesterol and other point-of-care testing to keep people out of the ED, which aligns with payers’ push to deliver care in lower-cost settings.

People typicaly see their primary-care providers about three times a year while they visit their pharmacy 35 times a year, said Mitch Deines, co-owner of the pharmacy.

“They trust us,” said Deines, who also serves on the Beatrice Community Hospital board. “We are accessible. Then we need to form a closer partnership with the physicians, which improves care.”

Previously, hospitals would get defensive when pharmacies would encroach on their turf and potential reimbursement, Deines said. Now, with the focus on preventive medicine, hospitals champion and promote these types of programs, he said. That shift is taking place across the healthcare industry.

Deines Pharmacy is part of a national clinically integrated network of pharmacists that started in North Carolina. The Community Pharmacy Enhanced Services Network works with insurers to identify ways to better coordinate care for consumers with chronic conditions.

The pharmacy also participates in a pharmacist e-care plan through a pilot project with the Centers for Disease Control and Prevention. Every time pharmacists give a flu shot, they send that data to a statewide network that is integrated with electronic health records, helping to reduce unnecessary care, Deines said.

“We have to close that loop somehow,” he said. “It’s a thought shift for providers. As things get tougher, physicians are looking at us as part of the team.”

The Alabama Hospital Association is also working with Blue Cross and Blue Shield of Alabama to reimburse rural hospitals for imaging and diagnostic services at the same rate as outpatient facilities. While it’s a discounted rate, that could increase access and provide some business for rural providers, Howard said.

Engagement

As for L.V. Stabler Hospital in Greenville, Ala., more changes are coming.

Administrators will probably change the name of the hospital to mark a fresh start, McClendon said.
McClendon hosts a radio show after each city council meeting to keep Greenville residents informed. He also speaks at chamber of commerce events.

Public officials and healthcare executives have a responsibility to keep a running dialogue with the community, McClendon said.

“We do not need to try to be everything to everyone,” he said. “We need to figure out what you need to do that fits our community.”

Editors: Matthew Weinstock, Paul Barr and Aurora Aguilar | Copy editors: David May and Julie A. Johnson | Joanne Kim contributed to this project

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Republican health policy is destroying rural health care

The border between Kentucky and Tennessee runs just over 340 miles in a nearly straight line. It doesn’t waver to follow natural divides, such as rivers or high mountains. It is an entirely artificial designation indicating only a difference on governance.

But oh, what a difference governance can make. On one side of that straight line, rural health care is doing well. On the other, it’s undergoing something close to a collapse.

The roots of that collapse run deep and speak to important aspects of what kind of country we want to be. When President Ronald Reagan signed the Emergency Medical Treatment and Active Labor Act (EMTALA), mandating that hospitals treat desperately ill people without regard for whether they could pay, it was a triumph of humanity over economics. Congress and the president acknowledged that health care has a moral component above other goods and services, and that the market could not be relied upon to fulfill that moral obligation.

The passage of the EMTALA had relatively mild effects on hospitals in wealthy communities, where almost everyone is insured. But in poor areas with large numbers of uninsured, it dropped an existential burden on already frail medical centers. 

Because poverty rates in farm communities are higher than in cities, the cost of Reagan’s unfunded mandate fell hardest on rural hospitals. In addition, the increasingly capital-intensive nature of high-tech medicine favored big hospitals benefiting from economies of scale. Over time, that double whammy increased the fragility of hospitals in America’s small towns until, according to The National Rural Health Association, more than 700 rural hospitals were at risk of going out of business.

The Affordable Care Act’s Medicaid expansion was intended not just to provide more humane treatment for the uninsured, but to ensure that the hospitals serving the working poor would remain viable. North of the Tennessee border, Kentucky’s former Democratic governor enthusiastically embraced and supported the expansion, providing insurance to hundreds of thousands of people, mostly in rural areas. To the south, in Tennessee, the Republicans in charge abandoned Reagan’s humanity in favor of small-government ideology. They refused billions in federal aid, leaving the welfare of their constituents to market forces that are, literally, amoral.

The results, only a few years later, are dramatic. Before the ACA, the uninsured rate on Kentucky’s side of the border was 16 percent; Tennessee’s was 15 percent. According to a Kaiser Family Foundation study, after the ACA Kentucky’s rate has dropped to 7 percent, while Tennessee’s has remained high, at 13 percent. (The national average is 10 percent.)

There is no explanation for the difference that the Kentucky-Tennessee border makes except the two states’ different approaches to the health of their citizens. If Tennessee had accepted the Medicaid expansion and its uninsured rate had fallen as far as Kentucky’s, its health care system would be serving 400,000 fewer uninsured patients. In rough terms, hospitals and clinics would have almost $750 million more to cover operating expenses.

Since the passage of the ACA, 10 Tennessee hospitals have gone out of business, versus only four in Kentucky. (Adjusted for population, Tennessee’s closure rate is about 50 percent more than Kentucky’s.) 

When a rural hospital closes, it impacts not just the area’s health, but its economy. Studies have shown that after a hospital closes, unemployment rises and wages fall. The sense of place the hospitals support weakens, with all the social pathologies that accompany the loss of a sense of community.

“Our politicians are blind to these people,” says Dr. Garrett Adams, who founded the Beersheba Clinic to provide health care in Tennessee’s rural mountains. “It’s like the population nobody cares about.”

In a rational world, our two states would look across the border and adopt the policies most beneficial to their citizens. In fact, nothing of the sort is happening. Kentucky’s new Republican governor is ignoring the lessons of Tennessee and busily hacking away at the state’s successful ACA adoption — which will cost at least 100,000 people their health insurance and cause rural hospitals to close. In Tennessee, Republican resistance to the ACA is so entrenched that adopting the successful policies of the state next door isn’t even under consideration. 

The great irony of this is that the counties most adversely affected by Republican policy are counties that typically vote heavily Republican. The hospitals that go out of business, the patients who go untreated, the small businesses that fold as communities collapse are part of the Republican base. One would imagine that would be of concern to Republican politicians on both sides of our long, straight border. It’s not. 

John Yarmuth (D) is U.S. representative for Kentucky's 3rd Congressional District. Mariah Phillips is a teacher and a Democratic candidate for Congress in Tennessee's 4th District.

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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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13 hospitals join CMS' rural pay experiment

The CMS on Monday added more hospitals to a program that industry executives say has been key to ensuring access to care in underserved communities.

All in all, 13 additional hospitals will participate in the Rural Community Hospital Demonstration Program, which reimburses hospitals for the actual cost of care for inpatient services provided to Medicare beneficiaries rather than standard Medicare rates. Medicare typically pays as little as 80% of inpatient services costs.

The program started in 2014 and was extended last year under the 21st Century Cures Act for an additional five years.

The new participating hospitals include Montrose Memorial Hospital in Colorado, Trinity Regional Medical Center in Iowa and St. John's Medical Center in Wyoming. They join 17 hospitals that were already in the program.

Eligible hospitals have to be located in a rural area, have fewer than 51 acute-care beds, provide 24-hour emergency services, and not be designated as a critical-access hospital.

The program expansion comes as Medicare margins—the difference between revenue and expense—are in free fall. In 2015, the aggregate margin hit negative 7.1% across hospitals according to the Medicare Payment Advisory Commission, and it was expected to hit negative 10% this year.

For Corey Lively, CEO of Great Plains Regional Medical Center in Oklahoma, the demonstration is a godsend. His hospital is one of the 13 joining the experiment.

Before hearing that the CMS was looking for additional hospitals to join the demonstration earlier this year, he was considering scaling back service lines, including cancer treatments, as commercial reimbursement rates continue to drop and Medicare and Medicaid continued to underpay for services.

The demonstration "allows us to maintain a higher level of services that if we didn't provide, some would have to travel 110 to 130 miles to receive," Lively said.

The additional funds drawn through the demonstration have helped Columbus Community Hospital in Nebraska, which has been in the program since the start, keep up with rising costs of technology and medical equipment, according to its CEO, Mike Hansen.

It has also given the hospital the funds necessary to attract staff. Over the past few years, 120 clinicians, physician assistants, nurses and others have been hired.

"It's difficult to recruit to small rural towns, but the demonstration has certainly been key in helping to allow us do that," Hansen said.

Jason Cleckler, CEO of Delta County Memorial Hospital in Colorado, agreed the demonstration funds are key to recruitment efforts and noted that it also helps keep the salaries of current staffers competitive.

"This program is really important for rural hospitals that are facing difficult challenges when it comes to reimbursement and payer mix," Cleckler said.

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Rural Community Hospital Demonstration Fact Sheet

Medicaid Is Great, but Rural Maine Needs Hospitals, Too

LEWISTON, Me. — This week Maine voted to become the 32nd state to expand Medicaid despite opposition by Gov. Paul LePage, who had vetoed five previous expansion bills passed by the state legislature and has now threatened to block the results of the ballot initiative. Unless Mr. LePage succeeds, about 80,000 more Mainers will be eligible for coverage, a victory in an unsettling year for health care in America.

With the Affordable Care Act under constant threat from the Trump administration and out-of-pocket costs rising faster than wages, health care topped the list of the most important issues facing Americans this year.

However, Maine and other rural states face a health care crisis that Medicaid expansion can’t fix on its own. It’s not about affordable coverage; it’s about access: For too many rural areas, doctors and hospitals are scarce.

In the postwar era, America made hospital construction and modernization a priority. On Aug. 13, 1946, Harry Truman signed the Hill-Burton Act, giving communities grants and loans for hospital construction. By 1975, almost one-third of American hospitals owed their creation to the law. Financing for Hill-Burton health care construction ended in 1997, but one rule from the original bill still applied: These hospitals had to give free or reduced care to people who couldn’t afford services. As rural areas aged and the population shrank because of manufacturing’s decline and the rise of a technology-driven economy centered on urban areas, hospitals struggled to stay in operation.

Under the Affordable Care Act, hospitals started shutting down at worrisome rates because of an increase in financial penalties for noncompliance with A.C.A. mandates, the cost of tighter reporting standards and smaller reimbursements for certain procedures. Since the A.C.A. became law in 2010, over 80 rural hospitals have closed nationwide. Maine alone has lost three hospitals in that time, about 10 percent of its rural total.

If closings continue at this rate, 25 percent of America’s rural hospitals will have disappeared in the decade after Obamacare’s passage. This does not take into account facility deterioration, doctor departures or department closures.

This is a big problem for Maine, which has the highest percentage of rural residents in the country, according to the most recent census data. Calais Regional Hospital in Down East Maine recently oversaw its last childbirth. The obstetrics department closed in late summer, forcing women in labor to drive 50 minutes to deliver their babies. Despite an opioid crisis that increases the chance of high-risk pregnancies, this same privately owned hospital shut down its pediatrics wing and intensive care unit in recent years, because of financial pressure from the management company halfway across the country in Tennessee.

This was hardly an isolated example in Maine. The town of Jackman closed its 24-hour emergency room in September, and Boothbay lost its only hospital in 2013. Rangeley, where my wife’s family lives, is an hour away from the nearest hospital and has no doctor in town.

Meanwhile, Maine Med in Portland, Maine’s largest city, is about to break ground for a $512 million addition just a few years after it finished a $40 million renovation. While rural Maine’s hospitals and departments are closing because of large losses, Maine Med had, for 2016, a $61 million surplus.

Medicaid expansion is a welcome source of new revenue to rural hospitals in Maine because more insured patients mean fewer uncompensated treatments. Still, it comes nowhere close to fixing the problem or, politically, putting any meaningful points on the Democratic scoreboard.

In 2016, Donald Trump won Maine’s rural congressional district by a 10-point margin and rural counties in America at large by a 26-point margin on a message of repealing and replacing Obamacare. As Maggie Elehwany of the National Rural Health Association said in an NPR interview this year, rural Americans voted for Mr. Trump in part because of health care. “They see their hospitals closing,” she noted. “And one hospital C.E.O. described it as a three-pronged stool. It’s the churches, the hospitals and the schools. If you lose one of those legs of that stool, the whole community collapses.”

Since President Trump hasn’t been able to deliver on any meaningful legislation to support rural voters, it is the Democrats’ time to deliver. One good step is a bill sponsored by the Democratic senators Tim Kaine of Virginia and Michael Bennet of Colorado called Medicare-X. It would give a public option to Americans in rural counties where limited competition has yielded higher-priced health insurance options.

It still doesn’t solve the heart of the rural problem. Democrats can’t just lower premiums and expand Medicaid. We must strengthen rural communities by making access to high-quality health care services a priority of any proposal. In any future legislation, we should demand grants for new hospitals, funds to modernize crumbling ones and financial incentives for top doctors to work in these areas. This will not only make rural communities healthier, but also more welcoming for growth and new business.

No person suffering from a heart attack should die because a hospital is too far. No pregnant mother should have to risk the health of her baby because she can’t make it to a delivery room in time. As Democrats, we believe that health care is a right. It would be a big mistake to expand health care insurance but offer no place to use it.

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Republicans' Proposed Medicaid Cuts Would Hit Rural Patients Hard

For the hundreds of rural U.S. hospitals struggling to stay in business, health policy decisions made in Washington, D.C., this summer could make survival a lot tougher.

Since 2010, at least 79 rural hospitals have closed across the country, and nearly 700 more are at risk of closing. These hospitals serve a largely older, poorer and sicker population than most hospitals, making them particularly vulnerable to changes made to Medicaid funding.

"A lot of hospitals like [ours] could get hurt," says Kerry Noble, CEO of Pemiscot Memorial Health Systems, which runs the public hospital in Pemiscot County, one of the poorest in Missouri.

The GOP's American Health Care Act would cut Medicaid — the public insurance program for many low-income families, children and elderly Americans, as well as people with disabilities — by as much as $834 billion. The Congressional Budget Office has said that would result in 23 million more people being uninsured in the next 10 years. Even more could lose coverage under the budget proposed by President Trump, which suggests an additional $610 billion in cuts to the program.

That is a problem for small rural hospitals like Pemiscot Memorial, which depend on Medicaid. The hospital serves an agricultural county that ranks worst in Missouri for most health indicators, including premature deaths, quality of life and even adult smoking rates. Closing the county's hospital could make those much worse.

And a rural hospital closure goes beyond people losing health care. Jobs, property values and even schools can suffer. Pemiscot County already has the state's highest unemployment rate. Losing the hospital would mean losing the county's largest employer.

"It would be devastating economically," Noble says. "Our annual payrolls are around $20 million a year."

All of that weighs on Noble's mind when he ponders the hospital's future. Pemiscot's story is a lesson in how decisions made by state and federal lawmakers have put these small hospitals on the edge of collapse.

Back in 2005, things were very different. The hospital was doing well, and Noble commissioned a $16 million plan to completely overhaul the facility, which was built in 1951.

"We were going to pay for the first phase of that in cash. We didn't even need to borrow any money for it," Noble says while thumbing through the old blueprints in his office at the hospital.

But those renovations never happened. In 2005, the Missouri legislature passed sweeping cuts to Medicaid. More than 100,000 Missourians lost their health coverage, and this had an immediate impact on Pemiscot Memorial's bottom line. About 40 percent of their patients were enrolled in Medicaid at the time, and nearly half of them lost their insurance in the cuts.

Those now-uninsured patients still needed care, though, and as a public hospital, Pemiscot Memorial had to take them in.

"So we're still providing care, but we're no longer being compensated," Noble says.

And as the cost of treating the uninsured went up, the hospital's already slim margins shrunk. The hospital went into survival mode.

The Affordable Care Act was supposed to help with the problem of uncompensated care. It offered rural hospitals a potential lifeline by giving states the option to expand Medicaid to a larger segment of their populations. In Missouri, that would have covered about 300,000 people.

"It was the fundamental building block [of the ACA] that was supposed to cover low-income Americans," says Sidney Watson, a St. Louis University health law professor.

In Missouri, Kerry Noble and Pemiscot Memorial became the poster children for Medicaid expansion. In 2013, Noble went to the state capital to make the case for expansion on behalf of the hospital.

"Our facility will no longer be in existence if this expansion does not occur," Noble told a crowd at a press conference.

"Medicaid cuts are always hard to rural hospitals," Watson says. "People have less employer-sponsored coverage in rural areas and people are relying more on Medicaid and on Medicare."
But the Missouri legislature voted against expansion.

For now, the doors of Pemiscot Memorial are still open. The hospital has cut some costly programs — like obstetrics — outsourced its ambulance service and has skipped upgrades.

"People might look at us and say, 'See, you didn't need Medicaid expansion. You're still there,' " Noble says. "But how long are we going to be here if we don't get some relief?"

Relief for rural hospitals is not what is being debated in Washington right now. Under the GOP House plan, even states like Missouri that did not expand Medicaid could see tens of thousands of residents losing their Medicaid coverage.

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Hospitals tackle uncompensated care costs

ATLANTA – Georgia’s hospitals continue to be a major economic force in spite of growing uncompensated care costs statewide, according to a new report.

An annual report from the Georgia Hospital Association, an advocacy group, concluded that hospitals in the state contributed nearly $47.8 billion to the economy statewide in 2015.

Across the state, facilities collectively had more than 141,000 full-time employees on their payroll and indirectly created more than 344,000 jobs, with hospital purchases supporting medical supply businesses and others.

South Georgia Medical Center in Valdosta had 2,003 full-time employees in 2015, according to hospital spokeswoman Laura Love. More than 4,800 jobs were indirectly created by SGMC, the report says.

The hospital's Valdosta campus provided $23,206,976 in uncompensated care that year, $6.6 million less than in 2012. SGMC's two satellite campuses, in Berrien and Lanier counties, provided uncompensated care valued at $1,166,450 and $1,328,496, respectively, in 2015, according to the report.

In communities such as Moultrie, the hospital represents one of the largest employers. Colquitt Regional Medical Center had 1,114 employees in 2015, with another 2,709 jobs indirectly created.
Yet, Colquitt Regional has also seen its uncompensated care grow to $11.5 million in 2015, which is a 37 percent jump since 2011.

Hospitals across the state provided more than $1.7 billion in services for which they were not paid in 2015.

“Throughout Georgia, hospitals are the only source of medical care for most uninsured residents,” Earl Rogers, the association’s president and CEO, said in a statement.

“Add to that a growing number of residents who actually have insurance but cannot pay their high insurance deductibles, and hospitals end up absorbing even more losses. These dynamics are not sustainable long term,” Rogers added.

A high rate of uninsured Georgians and a Medicaid reimbursement rate that does not cover a hospital’s actual costs have compounded the losses, according to the association.

About 42 percent of all Georgia hospitals reported they operated in the red in 2015, according to the report.

Rural hospitals were hit particularly hard, with 68 percent losing money. Six hospitals have shuttered since 2013, hampering local efforts to attract new industry and leaving residents traveling farther for medical care.

Colquitt Regional is among the minority of rural hospitals that reported a positive margin.

CEO Jim Matney said in an interview this week the hospital spends about $6 million a year on technology to keep the facility’s service offerings current and attractive to the community.

“What causes rural hospitals to close down is not the fact that they’re just rural,” Matney said. “But because they can’t keep up with the services that are being offered.

“For example, if you had to have your gall bladder taken out, would you want it done robotically and have one little stitch or would you rather them go ahead and open you all the way up? That’s a real scenario,” he added.

While South Georgia Medical Center's network as a whole finished in the black in 2015 with a 7.8 percent margin, the Lanier and Berrien campuses lost money, Love said. The Berrien campus lost $403,000, the Lanier campus lost 4165,000, and the Lakeland Villa — a nursing facility alongside the Lanier hospital facility — lost $310,000.

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A state-by-state breakdown of 77 rural hospital closures

Of the 25 states that have seen at least one rural hospital close since 2010, those with the most closures are located in the South, according to research from the North Carolina Rural Health Research Program.

Ten hospitals in Texas have closed since 2010, the most of any state. Tennessee has seen the second-most closures, with eight hospitals closing since 2010. In third place is Georgia with six closures followed by Alabama, which has seen five hospitals close over the past six years.

Listed below are the 77 rural hospitals that have closed since 2010, as tracked by the NCRHRP. For the purposes of its analysis, the NCRHRP defined a hospital closure as the cessation in the provision of inpatient services. Although all of the facilities listed below no longer provide inpatient care, many of them still offer other services, including outpatient care, imaging, emergency care, urgent care, primary care or skilled nursing and rehabilitation services

Alabama
Chilton Medical Center (Clanton)
Elba (Ala.) General Hospital
Florala (Ala.) Memorial Hospital
Randolph Medical Center (Roanoke)
South West Alabama Medical Center (Thomasville)
Arizona
Cochise Regional Hospital (Douglas)
Florence (Ariz.) Community Healthcare
Hualapai Mountain Medical Center (Kingman)
California
Colusa (Calif.) Regional Medical Center
Corcoran (Calif.) District Hospital
Kingsburg (Calif.) Medical Center
Georgia
Calhoun Memorial Hospital (Arlington)
Charlton Memorial Hospital (Folkston)
Hart County Hospital (Hartwell)
Lower Oconee Community Hospital (Glenwood)
North Georgia Medical Enter (Ellijay)
Stewart-Webster Hospital (Richland)
Illinois
St. Mary's Hospital (Streator)
Kansas
Central Kansas Medical Center (Great Bend)
Mercy Hospital Independence (Kan.)
Kentucky
New Horizons Medical Center (Owenton) 
Nicholas County Hospital (Carlisle)
Parkway Regional Hospital (Fulton)
Westlake Regional Hospital (Columbia)
Maine
Parkview Adventist Medical Center (Brunswick)
Southern Maine Health Care – Sanford Medical Center
St. Andrews Hospital (Boothbay Harbor)
Massachusetts
North Adams (Mass.) Regional Hospital
Michigan
Cheboygan (Mich.) Memorial Hospital
Minnesota
Albany (Minn.) Area Hospital 
Lakeside Medical Center (Pine City)
Mississippi
Kilmichael (Miss.) Hospital
Merit Health Natchez (Miss.) – Community Campus
Patient's Choice Medical Center of Humphreys County (Belzoni)
Pioneer Community Hospital of Newton (Miss.)
Missouri
Parkland Health Center – Weber Road (Farmington) 
Sac-Osage Hospital (Osceola)
SoutheastHEALTH Center of Reynolds County (Ellington)
Nebraska
Tilden (Neb.) Community Hospital
Nevada
Nye Regional Medical Center (Tonopah)
North Carolina
Blowing Rock (N.C.) Hospital
Franklin Regional Medical Center (Louisburg) Vidant Pungo Hospital (Belhaven)Yadkin Valley Community Hospital (Yadkinville)
Ohio
Doctors Hospital of Nelsonville (Ohio)
Physicians Choice Hospital-Fremont (Ohio)
Oklahoma
Epic Medical Center (Eufaula)
Memorial Hospital & Physician Group (Frederick)
Muskogee (Okla.) Community Hospital
Sayre (Okla.) Memorial Hospital
Pennsylvania
Mid-Valley Hospital (Peckville)
Saint Catherine Medical Center Fountain Springs (Ashland)
South Carolina
Bamberg (S.C.) County Memorial Hospital
Marlboro Park Hospital (Bennettsville)
Southern Palmetto Hospital (Barnwell)
Williamsburg Regional Hospital (Kingstree)
South Dakota
Holy Infant Hospital (Hoven)
Tennessee
Gibson General Hospital (Trenton)
Haywood Park Community Hospital (Brownsville)
Humboldt (Tenn.) General Hospital
McNairy Regional Hospital(Selmer)
Parkridge West Hospital (Jasper)
Pioneer Community Hospital of Scott (Oneida)
Starr Regional Medical Center-Etowah (Tenn.)
United Regional Medical Center (Manchester)
Texas
Bowie (Texas) Memorial
East Texas Medical Center-Clarksville
East Texas Medical Center-Gilmer
East Texas Medical Center-Mount Vernon
Good Shepherd Medical Center (Linden)
Hunt Regional Hospital of Commerce (Texas)
Lake Whitney Medical Center (Whitney)
Renaissance Hospital Terrell (Texas)
Shelby Regional Medical Center (Center)
Wise Regional Health System-Bridgeport (Texas)
Virginia
Lee Regional Medical Center (Pennington Gap)
Wisconsin
Franciscan Skemp Medical Center (Arcadia)
More information on the rural hospitals that have closed since 2010 can be accessed here. 

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Expanding, Not Shrinking, Saves A Small Rural Hospital

Missouri cattle farmer Greg Fleshman became so concerned about keeping his local hospital open that in 2011 he joined its governing board.

"I mean they've saved my dad's life twice," Fleshman says. "He had a heart attack and a stroke and they life-flighted him out of here both times." Keeping the doors open at Putnam County Memorial Hospital in Unionville, Mo., seemed crucial to the community — but maybe an impossible task.

"Things were just falling apart, is really what it was," Fleshman says — "financially, and morale of the employees. And it just seemed to get worse and worse."

Putnam County Memorial was ailing from the same conditions squeezing the finances of many of the nation's rural hospitals. At least 55 have closed since 2010 across the U.S., with another 1 in 10 at risk of going under, by one talley. Only about 5,000 people live in Putnam County, and they tend to be older, poorer, sicker and less insured than the rest of the state.

Health care analysts says Medicare and Medicaid's relatively low reimbursements, combined with dwindling populations in rural regions, are forcing many hospitals like Putnam to operate with tighter profit margins than suburban institutions — and sometimes even at a loss.

Like a lot of institutions, Putnam County Memorial initially looked to cut costs by reducing staff and services. But eventually, as more and more patients went to bigger towns for treatment, the hospital came to the brink.

Fleshman vividly recalls those darkest days: "We had about $8,000 in the bank," he says, and faced a payroll of about $70,000 or $80,000. Two CEOs quit, and the board started calculating what it would cost to close down the facility.

"We didn't think we could get anybody to come in," Fleshman says.

Then a key phone call and strikingly different strategy turned everything around. A doctor in the area called Jerry Cummings, who was then running a medical consulting business with his wife Cindy in central Missouri. Instead of closing its doors, Putnam County Memorial should expand, the couple advised.

The hospital could convert an unused 10-bed unit into a psychiatric wing to bring in new revenue, suggested the Cummings, and offer other medical services that Putnam County residents were driving hours away to get.

The board was convinced, and hired the couple to run the hospital — Cindy Cummings as CEO, and Jerry as COO. The two packed up their home in Jefferson City, Mo., and moved three hours north to Putnam County.

"Immediately, within 30 days, I brought in three other brand new physicians" Jerry Cummings says. He and Cindy brought new specialties to the hospital: anesthesiology, gynecology and cardiology. They also rallied the county to pass a roughly $7 million dollar bond initiative to buy out the hospital's old debt and renovate.

And patients started coming back.

"Our revenues went from $4 million to $22 million — a huge increase," Jerry Cummings says. "Our average daily [patient] census, it was less than 1 patient per day. Our average daily census now is around 11 to 12 patients."

And, according to a report published by the health panel of the Rural Policy Research Institute last November; more cash-strapped rural hospitals could thrive by taking the same tack.

"We think that's the way forward for rural hospitals, rather than just sort of a bunker mentality — saying that we can't proceed," says Tim McBride, a health care economist at Washington University in St. Louis, and one of the study's authors.

In some ways the Putnam County story is unique McBride says. But expanding certain services instead of contracting, might work to save other hospitals, too.

"We believe that rural hospitals often can provide very high quality services," he says.

The community in Unionville had to have that same faith, says Greg Fleshman, that they weren't just throwing good money after bad.

"I think, people had to decide, Fleshman says. " 'Are we going to have a hospital or not?' — and they wanted it here."

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