Between Dwindling Revenue and Rising Virus Cases, Rural Hospitals Face a Reckoning

April Simpson July 24, 2020

A Covid-19 preparedness tent is set up outside the hospital emergency room entrance at Gritman Medical Center in the northern Idaho city of Moscow. In many parts of rural America, virus cases are on the rise.

Edi­tor’s Note: This arti­cle was orig­i­nal­ly pub­lished by State­line, an ini­tia­tive of The Pew Char­i­ta­ble Trusts.

As the Covid-19 pan­dem­ic bat­tered large, met­ro­pol­i­tan areas this spring, rur­al hos­pi­tals pre­pared to be next on the frontlines.

But in order to ready their facil­i­ties for a poten­tial surge in patients, those small hos­pi­tals had to for­go many of their most prof­itable oper­a­tions. Months lat­er, a few rur­al hos­pi­tals are fight­ing out­breaks. But oth­ers have emp­ty beds, fur­ther threat­en­ing their via­bil­i­ty in an era of shrink­ing health care options for peo­ple liv­ing in rur­al communities.

If you were already in a very thin mar­gin, and you lose a lot of your oper­at­ing rev­enue because you’re mak­ing space and per­son­nel avail­able — and then you’re not using them — it’s pret­ty pow­er­ful log­ic that you’re in big trou­ble,” said Kei­th Mueller, direc­tor of the RUPRI Cen­ter for Rur­al Health Pol­i­cy Analy­sis at Uni­ver­si­ty of Iowa.

Pan­dem­ic-relat­ed fed­er­al mon­ey has helped strug­gling rur­al hos­pi­tals stay afloat. But as Con­gress con­sid­ers addi­tion­al aid this month, advo­cates and pol­i­cy­mak­ers would like to move beyond stop­gap mea­sures to change the hos­pi­tals’ long-term trajectory.

We’re due for reck­on­ing in our rur­al hos­pi­tal pol­i­cy,” said Ge Bai, asso­ciate pro­fes­sor of health pol­i­cy and man­age­ment at the Johns Hop­kins Bloomberg School of Pub­lic Health in Baltimore.

As the pan­dem­ic per­sists, it’s unclear how long strug­gling rur­al hos­pi­tals can hang on.

Rur­al hos­pi­tals have long been fight­ing for their sur­vival. Since 2010, 128 rur­al hos­pi­tals have closed, includ­ing a record 18 hos­pi­tals last year. Even more rur­al hos­pi­tals were on track to shut down this year until Con­gress in March approved $100 bil­lion to health care providers in the CARES Act. The sup­port includ­ed $10 bil­lion in tar­get­ed fund­ing that was allo­cat­ed based on oper­at­ing expens­es before Covid-19.

Ear­li­er this month, the U.S. Health and Human Ser­vices Depart­ment announced anoth­er $1 bil­lion tar­get­ed to cer­tain hos­pi­tals that serve rur­al populations.

The CARES Act sup­port was intend­ed to make hos­pi­tals whole because of lost rev­enue. It was not meant to bol­ster rur­al hos­pi­tals who already were in ter­ri­ble shape, accord­ing to experts. Yet as healthy patients delay care and can­cel elec­tive ser­vices, rur­al hos­pi­tals are strug­gling to keep their doors open,” the Health Depart­ment said in dis­trib­ut­ing the fund­ing.

Addi­tion­al fed­er­al help came in $75 bil­lion from the Pay­check Pro­tec­tion Pro­gram, which pro­vides for­giv­able loans used for pay­roll costs, $150 mil­lion in Small Rur­al Hos­pi­tal Improve­ment grants to sup­port Covid-19 activ­i­ties and increased Medicare pay­ments for treat­ing Covid-19 patients.

At Bibb Med­ical Cen­ter in Cen­tre­ville, Alaba­ma, sta­tions with per­son­al pro­tec­tive equip­ment, known col­lec­tive­ly as PPE, are set up out­side iso­la­tion rooms, includ­ing a nine-bed Covid-19 unit. The cen­ter is func­tion­ing as a step-down facil­i­ty for Covid-19 and oth­er patients who aren’t well enough to return home but don’t need the lev­el of care pro­vid­ed by a ter­tiary hos­pi­tal. It’s fair­ly qui­et giv­en lim­its on vis­i­ta­tion, said CEO Joseph Marchant.

The con­tin­ued chal­lenge for the rur­al facil­i­ties is just under­stand­ing while there’s been some fund­ing pro­vid­ed ear­ly on, we real­ly feel like these chal­lenges are going to go on for quite a while,” Marchant said. We hope this sup­port con­tin­ues to help some of these facil­i­ties that are operating.” 

A Slow Recovery

Hos­pi­tal loss­es may far out­weigh fed­er­al relief. The Amer­i­can Hos­pi­tal Asso­ci­a­tion esti­mates hos­pi­tals and health sys­tems lost $202.6 bil­lion between March and June and are pro­ject­ed to lose an addi­tion­al $120.5 bil­lion through the end of 2020. The slow recov­ery of inpa­tient and out­pa­tient vol­umes adds to the strain.

The association’s find­ings are based on an elec­tron­ic sur­vey rep­re­sent­ing 1,360 mem­ber hos­pi­tals across 48 states and Wash­ing­ton, D.C. Rur­al hos­pi­tals and health care sys­tems rep­re­sent­ed about one-third of respondents.

When you add Covid, there’s no ques­tion that the tar­get­ed rur­al fund­ing with the oth­er CARES Act fund­ing has helped, but we’ve not cov­ered at this point the cost of lost rev­enue, nor the expens­es asso­ci­at­ed with Covid,” said Dr. Don­ald Williamson, pres­i­dent and CEO of the Alaba­ma Hos­pi­tal Association.

Rur­al hos­pi­tals are buy­ing N95 masks, gowns and oth­er PPE that are being used with all patients regard­less of Covid-19 sta­tus. The addi­tion­al costs cut fur­ther into their already thin mar­gins. Before the pan­dem­ic, 47% of rur­al providers oper­at­ed in the red.

So far this year, 12 rur­al hos­pi­tals have closed across the coun­try, includ­ing four in April before they could ben­e­fit from fed­er­al support. 

Texas leads the coun­try in rur­al hos­pi­tal clo­sures. Rough­ly half of the state’s rur­al hos­pi­tals are con­sid­ered vul­ner­a­ble, accord­ing to the Char­tis Group, a health­care ana­lyt­ics firm. Pri­or to the fed­er­al relief, John Hen­der­son, pres­i­dent and CEO of the Texas Orga­ni­za­tion of Rur­al and Com­mu­ni­ty Hos­pi­tals (TORCH), wor­ried that the pan­dem­ic would force any­where from six to 12 rur­al Texas hos­pi­tals to shut­ter this year. 

No doubt when this thing’s over, if we don’t reimag­ine the way we take care of peo­ple and the way we fund ser­vices, rur­al hos­pi­tals will still have chal­lenges,” Hen­der­son said.

Try­ing Times

To pre­pare for a surge in Covid-19 patients, many states required that hos­pi­tals sus­pend or reduce elec­tive surg­eries, such as prof­itable knee or hip replace­ments, or post­pone or divert patients to a dif­fer­ent clin­i­cal environment.

All hos­pi­tals suf­fered when they respond­ed imme­di­ate­ly to the request to try to flat­ten the curve of the pan­dem­ic by essen­tial­ly shut­ting down every way you make mon­ey,” said Peg­gy Wheel­er, vice pres­i­dent of rur­al health and gov­er­nance at the Cal­i­for­nia Hos­pi­tal Association.

Out­pa­tient care accounts for 50 – 70% of rur­al hos­pi­tals’ income, said Mag­gie Ele­hwany, gov­ern­ment affairs and pol­i­cy vice pres­i­dent at the Nation­al Rur­al Health Asso­ci­a­tion. Some hos­pi­tals in rur­al and small­er met­ro­pol­i­tan areas have fur­loughed employ­ees to main­tain finan­cial stability.

Williamson in Alaba­ma is brac­ing for the pos­si­bil­i­ty hos­pi­tals will once again reduce elec­tive pro­ce­dures as new cas­es rise.

Over the past month, Texas Gov. Greg Abbott, a Repub­li­can, has reversed course. After allow­ing pro­ce­dures to return in the spring, he again sus­pend­ed them in most of the state with the excep­tion of pro­ce­dures deemed press­ing and med­ical­ly necessary.”

The try­ing times will be the next few weeks to get through the surge,” said Kel­ly Cheek, pres­i­dent of the Texas Rur­al Health Asso­ci­a­tion board of directors.

Most rur­al hos­pi­tals say they are in good shape with regard to PPE, said Hen­der­son with TORCH.

There’s sig­nif­i­cant bed capac­i­ty in rur­al Texas,” Hen­der­son said, but there aren’t nurs­es and there aren’t ventilators.”

Staffing is anoth­er chal­lenge. Short­ages prompt­ed Med­ical Cen­ter Health Sys­tem, a 403-bed facil­i­ty with mul­ti­ple clin­ics through­out Odessa and serv­ing 17 West Texas coun­ties, to decline trans­fer patients ear­li­er this month from region­al hos­pi­tals out­side of Ector Coun­ty. Between 40 and 50 staff are cur­rent­ly out because they’re quar­an­ti­ning at home with the virus or have a fam­i­ly mem­ber who’s pos­i­tive. The hos­pi­tal announced last week that one of its employ­ees died after con­tract­ing the virus.

The cen­ter has week­ly calls with its rur­al part­ner hos­pi­tals to share infor­ma­tion and resources. While the hos­pi­tals would typ­i­cal­ly send their sick­est patients to the trans­fer facil­i­ty, Med­ical Cen­ter Health Sys­tem is coun­sel­ing some of the small­er hos­pi­tals to retain patients instead, said CEO Rus­sell Tippin.

We’re just try­ing to keep our beds open for the sick­est of the sick,” Tip­pin said. When those small hos­pi­tals have sick peo­ple — and no doubt they’re sick — I think our job as the region­al trans­fer facil­i­ty is to work with them and help them gain skills and confidence.”

For small­er hos­pi­tals, treat­ing Covid-19 is forc­ing doc­tors into new, often dif­fi­cult sit­u­a­tions, Tip­pin added. For all my friends in the rur­al areas, I know they’re scared,” he said. They’re hav­ing to get out of their com­fort zones, but they are pro­vid­ing the same care we are providing.”

In Texas’ Covid-19 hotspots, such as Hidal­go Coun­ty on the Mex­i­co bor­der clos­er to the Gulf Coast, hos­pi­tals have strug­gled to find beds for new patients.

Ear­li­er this week, Mis­sis­sip­pi’s state health direc­tor warned that hos­pi­tal­iza­tions are on the verge of push­ing the sys­tem over capac­i­ty. On Mon­day, there were nine hos­pi­tals with zero inten­sive care unit beds statewide, said Dr. Thomas Dobbs, and one bed avail­able among the four largest med­ical cen­ters in the Jack­son-met­ro­pol­i­tan area.

Prepar­ing for a rush of Covid-19 patients has been cost­ly to rur­al Penn­syl­va­nia hos­pi­tals that invest­ed in PPE and cut back on out­pa­tient ser­vices and elec­tive surgeries.

They’re not see­ing large num­bers of Covid-19-pos­i­tive or poten­tial­ly pos­i­tive patients, said Lisa Davis, direc­tor of the Penn­syl­va­nia Office of Rur­al Health. Many patients who test pos­i­tive are being sent home to recov­er. Mean­while, most inpa­tient stays come in as a result of an emer­gency depart­ment vis­it, and few­er peo­ple are being treat­ed. As a result, hos­pi­tals are a lit­tle bit emp­ty,” Davis said.

To stay alive, they need patients in the beds,” said Ger­ard Ander­son, pro­fes­sor of health pol­i­cy and man­age­ment at the Johns Hop­kins Uni­ver­si­ty Bloomberg School of Pub­lic Health.

April Simp­son reports on rur­al issues at State­line. Before join­ing Pew, April was asso­ciate edi­tor of Cur­rent, where she cov­ered pub­lic broad­cast­ing and non­prof­it media. April was a Ful­bright fel­low in Botswana and East­ern Demo­c­ra­t­ic Repub­lic of Con­go fel­low with the Inter­na­tion­al Women’s Media Foun­da­tion. She has writ­ten for the Seat­tle Times and the Boston Globe, among oth­er pub­li­ca­tions. April is a grad­u­ate of Smith Col­lege and the Lon­don School of Eco­nom­ics and Polit­i­cal Science.
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