Changes in Washington put rural hospitals in jeopardy

Published 7:45 am Monday, February 15, 2016

WASHINGTON – When Sayre Memorial Hospital closed abruptly in western Oklahoma last week, it became the 67th rural hospital to shut its doors since 2010. Many more could follow.

Another 673 hospitals nationally are teetering on the edge of closure due to a number of federal funding decisions, according to a report prepared in collaboration with an association representing rural hospitals.

In Sayre, located in a county of fewer than 23,000 people, the 35-bed nonprofit hospital seems to have been hit by a “perfect storm” of factors, said Belinda Graham, executive director of the Sayre Chamber of Commerce.

“It’s a terrible loss for our community,” she said.

The nearest hospital now is the Great Plains Regional Medical Center in Elk City. That’s 12 miles away, which could mean life or death if you’re having a heart attack or are severely injured, she said.

Helping the hospitals, though, will cost money – a lot of it – and both hospital executives and their advocates are unsure of the prospects of getting much from Washington. Complicating matters is an election year, when Congress schedules long breaks to go home and campaign, making it difficult to get anything done.

When Sayre shut down Feb. 4, it issued a statement blaming a number of factors.

Maggie Elehwany, the National Rural Health Association’s vice president of government affairs, said its story is familiar.

Federal spending limits that went into effect in 2013 reduced Medicare payments to the Oklahoma hospital by 2 percent, according to its press release.

Nationally, automatic budget cuts have cost rural hospitals $2.8 billion in Medicare reimbursements, according to the study by a consultant, iVantage Health Analytics. Though not funded by the hospital group, the study done with its cooperation was presented at association’s conference in Washington earlier this month.

The government has also cut reimbursements to hospitals that treat uninsured patients, dropping payments from 100 percent of a hospital’s costs to 65 percent, the study found.

President Barack Obama’s health care law was expected to decrease the number of patients without insurance, whose treatment means a financial loss for hospitals, Elehwany said in an interview.

But states including Oklahoma declined to expand Medicaid to more people – a central component of the Obamacare plan.

In addition, more and more insurance plans carry higher deductibles, the study said. Hospitals have more trouble collecting payments from patients and absorb more losses.

The iVantage study judged whether hospitals are vulnerable of closing based on factors such as what they charge compared to the cost of service; if they serve areas with high rates of illness; and the costs of treating those conditions.

Those deemed vulnerable represent about a third of all rural hospitals.

Hospitals in Southern states face the greatest threat. The study found 79 percent of Mississippi’s rural hospitals are vulnerable. The figure was 58 percent in Louisiana. In Georgia, it’s 53 percent, and in Texas it’s 50 percent. The study does not list the financial conditions of specific hospitals.

The rural hospital association is backing a proposal, introduced by Reps. Sam Graves, R-Missouri, and Dave Loebsack, D-Iowa, to put the hospitals on better footing.

It exempts funding for rural hospitals from the automatic budget cuts, among other things. While the federal government cannot force states to expand Medicaid, it can restore reimbursements for treating the uninsured.

“We’re not asking for a dime in new funding – just for the cuts to stop,” Elehwany said.

Budget analysts in Congress have not yet priced the proposal.

“It would be expensive,” said Elehwany. Part of the cost will be offset, she added, by the savings of people who are treated in rural areas, where prices are less expensive, instead of going to urban or suburban hospitals.

“The reason this costs money is that it’s money now being taken out of the pockets of rural hospitals,” she said.

Sen. Chuck Grassley, R-Iowa, said during a call with reporters Wednesday that he’s open to the ideas, but he is skeptical of getting Congress to cough up the money.

Instead, Grassley proposes removing the requirement that hospitals provide inpatient care to get federal funding. They would still be required to provide 24/7 emergency service.

Grassley said his bill, which he hopes to bring to a vote this year, “doesn’t have the huge cost that the House bill has.”

“I can’t tell you whether it’s fiscally possible,” he said, noting that his bill would at least bring some immediate relief.

Sen. Johnny Isakson, R-Georgia, is also preparing legislation to increase Medicare funding for hospitals in lower-income areas, his office said. It would help 14 rural hospitals in Georgia avoid closing.

Sen. James Lankford, R-Oklahoma, is backing Grassley’s bill.

His office didn’t respond when asked about the Graves-Loebsack proposal.

But Lankford sympathized with the plight of rural hospitals in a meeting of the association in Washington earlier this month.

“The threat of closure of rural hospitals is a serious risk to the livelihood of these communities,” he said.

Sen. Jim Inhofe, R-Oklahoma, said his office tried unsuccessfully to find government money to keep Sayre Memorial open. In a statement, he didn’t endorse anyone’s plan but said he continues to seek ways to help rural hospitals find resources.

Elehwany said that Grassley’s and Isakson’s ideas will help rural hospitals, but they face deeper problems.

“One important but small band aid is not going to stop the bleeding,” she said of Isakson’s bill.

Kery Murakami is the Washington, D.C. reporter for CNHI’s newspapers and websites. Reach him at kmurakami@cnhi.com.