Across the country, many rural hospitals are closing. In the past 25 years, more than 470 rural hospitals have closed. Since 2010 rural America has seen over 1500 hospital beds vanish. According to the National Rural Health Association (NRHA) 43 rural hospitals have closed in the past three years, with almost a third of the closures occurring since January 2014. West Tennessee is not immune to the trend, since it has seen its share of closings in the past few years.
Shifts from fee-for-service to pay-for-performance reimbursement models, an overall cut in reimbursements and Congressional gridlock have taken a negative toll on U.S. hospitals’ bottom lines. But rural hospitals are hit particularly hard, because they are caught between a rock and a hard place where they serve higher rates of uninsured patients but are also more likely to be located in states that have rejected health reform and the funds to cover the uninsured that come with it. Add to that, other adjustments that benefited rural hospitals are being phased out. The U.S. Supreme Court’s summer 2012 ruling on the constitutionality of the Affordable Care Act gave states the ability to opt out of Medicaid expansion. Only 25 states and the District of Columbia chose to expand. More than 40 percent of rural hospitals nationwide are operating in the red and most hospital closures are in states not expanding healthcare coverage, according to the NRHA.
When the Affordable Care Act (ACA) was signed, the expectation was that virtually all of the nation’s 48 million uninsured would gain health insurance either through subsidized health insurance policies purchased on health exchanges or through expanded state Medicaid programs. In anticipation of this outcome, significant changes were made to the Medicare and Medicaid payments system. Most notably the ACA requires that the federal government begin making deep cuts in so-called Disproportionate Share Hospital (DSH) payments to hospitals serving areas with high numbers of Medicaid patients and people without insurance. Rural Americans are more likely to fall in the low-to moderate income range and less likely to have health insurance. Fifteen percent of rural Americans fall into the “coverage gap,” where they are not eligible for Medicaid coverage, but earn too little to afford health insurance in the Affordable Care Act (ACA) marketplace.
According to Tennessee Hospital Association President Craig Becker in an article in the Memphis Daily News, between the ACA and other cuts, which begin in 2016, Tennessee is looking at $7.4 billion in cuts over a 10-year period. Becker anticipates that in 2019 Tennessee hospitals could face $1 billion in cuts. The impact on Tennessee for not expanding its Medicaid program is missing out on $2.3 billion in federal funds.
Declining inpatient volume, falling reimbursement rates and failure to bring in enough revenue make rural hospitals the most vulnerable to closure as demonstrated by the most recent string of closure announcements. Four have closed in West Tennessee – Haywood Park Community Hospital in Brownsville, Camden General, Gibson General and Methodist Fayette in the past year and a half.
Haywood Park Community Hospital, the only hospital in the county, shut down its inpatient and emergency room services on July 31, 2014 and converted the 62-bed hospital into an urgent care clinic. According to a release from the hospital, inpatient admissions had dropped from 1300 in 2009 to less than 250 in 2013. The Emergency Room had also experienced a sharp decline and was averaging 15 or fewer patients per day. The release attributed the hospital’s demise to changes in guidelines for inpatient admissions and federal reimbursement cuts under the ACA that had not been set off by Medicaid expansion in Tennessee, which made maintaining a full service hospital unsustainable.
In an article on the closing in The Tennessean, Tennessee Hospital Association President Craig Becker noted that the Brownsville conversion was the first Tennessee hospital closure publicly linked by it operators to the state’s refusal to expand its Medicaid program. He said this would only be the start of such closings. “Hospitals cannot just accept the cuts that are coming in the ACA versus not having the Medicaid expansion.”
Prior to the Haywood Park closing, West Tennessee Healthcare announced that in January 2014, Gibson General Hospital would become an outpatient center and was renamed Trenton Medical Center. In February 2015, construction was started on a new medical facility that is set to open in late 2015. The facility will consolidate the Medical Center and Sports Plus Rehab Center on a 2.83-acre site. Also in Gibson County, WTH’s Humboldt General Hospital has undergone some changes to become an emergency center operating as the north campus of Jackson-Madison County General Emergency Room. The facility also offers outpatient clinical and rehabilitation services.
Methodist Healthcare announced its hospital in Somerville, Tennessee, Methodist Fayette Hospital would close Friday, March 27. The hospital has been averaging a daily inpatient census of approximately one patient, which was down from 2010 when the average daily census was 5.1. In a press release Gary Shorb, CEO for Methodist Healthcare, cited the low census as simply not sustainable.
Fayette’s situation is rather unique as the community has easy road access to a number of communities and Fayette residents were choosing to drive to a larger hospital rather than go to Methodist Fayette.
When a hospital closes, it is a slow death says Tom Gee, CEO of Henry County Medical Center. “There is just only so much overhead you can carry to keep things running,” he said. “By the time a hospital closes, there is really minimal impact because 60-70 percent of the staff is already gone. When your census is down you still have to have a certain level of staff to maintain services but you have already scaled back by that point. Many patients have already found another facility for their care as they have slowly matriculated before you close.”
“While we have seen no change in the number of patients from outlying communities who have sought care here over the past year, we do expect to see more patients in the coming months as our hospital has become a part of all BlueCross/BlueShield plans in the area,” said Lisa Ragsdale, Director of Marketing for Regional Hospital of Jackson.
Gee described the financial problems exacerbated by political conflicts over health law as “the most serious threat to our institution” in the 23 years he has been at the helm of Henry County Medical Center. The Tennessee Hospital Association was quoted in an article in The Tennessean as saying that the hospitals struggling the most are in West Tennessee, which has been more economically stressed than the rest of the state.
Gee knows the issues keeping a rural hospital afloat, and in order to do that he has reduced workforce by 25 positions, contemplated discontinuing services such as oncology and asked the county to pick up the costs of ambulance services. To survive Gee says you have to go with your gut instincts. “Watch volumes constantly and make sure you have a great mix of surgical specialties. Increase outpatient volumes while watching and reducing inpatient costs, keep charges low and be the low cost provider while demonstrating you are providing quality care and watch cash flows,” he said. “We are doing ok despite the many cuts we have had due to ACA. The next five years are going to be tough if we do not get some relief. With the current reimbursement as it is, it will be a tough row to hoe.”
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