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Rural hospitals meet challenges to continue serving critical needs

In recent years, the number of rural hospitals closing in Mississippi has decreased significantly. But these hospitals that serve primarily low-income residents of sparsely populated rural areas have unique challenges as they struggle to stay financially viable while meeting critical health care needs in their communities.

Dr. Joan Exline, associate professor of health policy and administration at the University of Southern Mississippi, recently did a study of 15 small hospitals surrounding the Hattiesburg area.

“I interviewed them all and talked about the issues they faced, and what they anticipate for their future,” Exline said. “They have a very challenging situation particularly in terms of getting capital. Many of these hospitals were built with Hill Burton Funds, money given to states to build hospitals in rural areas back in 1947. Now they are having to struggle with deteriorating physical plants, and finding ways to fund technology which, of course, is always changing.”

Another big issue for rural hospitals is deciding what services they should be providing versus services that would be more appropriate in a larger hospital setting. Getting a good handle on that issue helps rural hospitals remain financially viable.

“Rural hospitals have to find services that make sense in their setting,” she said. “They can’t be all things to all people. That can’t happen. They have to find their niché.”

Most of the rural hospitals in the Pine Belt area are independent. A couple of them have a relationship with Forrest General Hospital, and one has a relationship with a hospital in Jackson.

“Many of these hospitals want to try to stay as independent facilities, but a few of them realize they might have to work cooperatively with large hospitals just to survive and continue to meet the needs of rural populations,” Exline said. “Several of them are applying for critical access status, and that gives them a little bit of a break in terms of reimbursement rates. That is keeping some of the hospitals afloat right now.”

Mendal Kemp, director of the Mississippi Hospital Association (MHA) Center for Rural Health, works on a national grant that is given to states each year to help keep rural hospitals viable.

“We assist hospitals in meeting the challenges of rural hospitals today,” Kemp said. “One of the main things is to help them convert to a different kind of certification status. Being designated a critical- access hospital puts them on a cost-based reimbursement system, which is better than the prospective payment system that most hospitals are on.”

With the regular plan, Medicare will reimburse for a certain amount for a condition no matter how long the patient stays or the amount of cost incurred by the hospital.
Patients with the same diagnosis might stay up to eight days. In large hospitals, they can make up the loss from private-paying patients. But Kemp said in a small rural hospital, they don’t have a great number of private-pay patients. They can’t make it up.

The federal government passed a law in 1998 to let small rural hospitals with high Medicare occupancy rates (some rural hospitals have 80% to 90% Medicare patients) to change over to critical access hospital status.

“Nationwide there are 850 critical access hospitals,” Kemp said. “It is estimated that half of those hospitals would have closed by now if it had not been for critical- access status. In Mississippi, we have 16 hospitals that are certified critical access. They are doing better than they were before. Their financial condition is better. We have seven more that are going to convert on October 1. It is a good program, and it is really helping the small hospitals survive.”

Critical-access hospitals have two limitations: there is a four-day limit for hospital stays. If patients need more time, they are transferred to a larger hospital. They are also limited to 25 beds.

“That hasn’t hurt many of them because they average fewer patients than that anyhow,” Kemp said. “Everything else is the same as other hospitals. They must have a strong emergency department. This is very important in these rural areas. The whole idea is to maintain and make healthcare accessible in these rural areas because they need an emergency room, and they need critical care for elderly patients and all the other patients in these rural areas.”

Another effort to help rural hospitals was launched two years ago when MHA set up a center to provide services for small hospitals. MHA has three practice managers who go out and give technical assistance to hospitals to help improve their business office practices, their clinical practices and all other areas of hospital operation.

“We think it is helping a lot improving their quality services, as well as improving their business practices,” Kemp said. “Therefore, the hospitals survive and flourish.”

Approximately 20 rural hospitals in Mississippi have closed since 1992. But Kemp said in recent years only one hospital located near Houston has closed. The hospital closed because the doctor moved away.

Helping rural hospitals survive and thrive requires engaging local residents in understanding the importance of their hospitals.

“We have shown through economic impact studies what healthcare means to the economy,” Kemp said. “In most rural towns, hospitals are the second leading employer, and contribute a lot to the community. What we want is for the community to utilize the local hospital more. Bigger isn’t always better. A lot of times the community is not aware what is available at local hospitals. In talking to civic groups and community leaders, we’re asking them not to drive 50 miles to big hospitals and give their local hospitals a chance.

“There are people re-looking at local hospitals. That is why we have to improve services, too. We don’t want them to be disappointed and go somewhere else. Sometimes a family member had a bad experience 25 years ago, and says, ‘We aren’t going to go there any more.’ But things change, and that situation might not be like it was.”

Kemp said people should realize problems happen in big hospitals, too, and that many small, rural hospitals in the state are doing an outstanding job.

There can be an important domino effect. If a small hospital is thriving, it is easier to attract good staff. Staff salaries are important to the local economy. And good healthcare including especially having an emergency room at the local hospital is critical.

“Hospitals are an important economic development issue,” Kemp said. “Anyone who moves to a community first looks at the educational system, and then at the healthcare system. If you don’t have those two things, people aren’t going to locate in your town.”

Any rural hospital has its peaks and valley, said Debra Griffin, administrator of the Humphreys County Memorial Hospital in Belzoni.

“By virtue of where rural hospitals are located, patients are predominantly Medicaid and Medicare or no pay,” Griffin said. “There are few industries in the area. If the government makes a regulation to cut, then you cut. We are at the whim of whatever the government does. All we do is reinvent ourselves and stay creative. We have struggled, but we’re never going to close.”

Rural hospitals could be hurt by the removal of 65,000 people from the state Medicaid program, with most being shifted over to the federal Medicare program. That action originally scheduled for early July has been postponed until September.

Griffin said Medicaid picks up co-pays and deductibles. Medicare doesn’t. She said most patients can’t afford co-pays and deductibles. So, hospitals that serve those patients could end up with fewer revenues.

Griffin said many people don’t realize who Medicaid patients are. There is a perception that healthy adults who are able to work are on the program. She said that isn’t true. Eligibility doesn’t allow able-bodied people on the program, which is designed for children and people with certain medical disabilities.

“I think now the masses of people are starting to understand who is on the Medicaid program,” Griffin said.

Medicaid and Medicare set the rates paid to hospitals, and hospitals must stay within those rates. Griffin said most of the people her hospital serves are unemployed or underemployed.

“They don’t have the ability to pay when accessing services,” Griffin said. “That is what puts rural hospitals in such a predicament because they are trying to provide care to people without the ability to pay while providing competitive salaries and making sure they have up to date equipment. We’re surviving. But operating a hospital is different from many businesses because of how you get paid. When you are running an emergency room at a public hospital, you have to see all comers.

“Communities need to look at their small hospitals. I think they take them for granted. Many people think government gives you your budget. That’s not how it works. It’s a business. And it is the only business I know that you are required to take care of people who can’t pay. Then you have to balance the budget.”

Griffin said community support is vital. She believes a hospital can never be stronger than the community it serves.

“There is no them and us,” Griffin said. “We are all the same. One of the things I have been blessed with here as an administrator is I have had a good board that has worked with me. If something doesn’t work, they will say, ‘Let’s try something else.’ We have to be creative and proactive. Most of the issues we encounter we see ahead. You know you’re going into a bad year. You can tell. And you find ways to try to offset that.”

One example is one time when revenues were down, hours were reduced for everyone including the administrator. Griffin said people were still just as productive as when they got their full 80 hours in the two-week working period.
To get community support, small hospitals need to work to overcome the “bigger is better” philosophy.

“Small hospitals give very adequate and competent primary and emergency care,” Griffin said. “You have to make sure you are offering the best care you can, and get that out to the community. When it comes to emergency care, local people don’t have a choice. An ambulance is responding, and you’re the piece that will get them to the other piece they need, a bigger hospital.”

One strategy for helping rural hospitals survive is being associated with a larger medical center. One such case is the North Mississippi Medical Center-Pontotoc, a division of the North Mississippi Health Services based in nearby Tupelo. Fred B. Hood, administrator of the hospital in Pontotoc, said most of their patients come from Tupelo.

Patients have been in the Tupelo hospital and still need some level of institutional care, but not at the level and cost of a 600-bed medical center.

“They are transferred over here to what we call our swing bed program, or our sub acute program,” Hood said. “They are still in need of some institutional care, but not at the level of intensity you would find over in Tupelo. There is less cost on the facility, and less cost to the patient or their insurer to finish out their hospital stay here. On any given day, two-thirds of my patient census has been transferred from Tupelo.”

Hood said they know on the front end there will be a financial loss on many of those patients. But there is less of a loss on the system in Pontotoc rather than Tupelo. And the patient load stabilizes the Pontotoc hospital.

“If I had to depend on local physician patients, sometimes I would have only five or six patients,” Hood said. “For patients on the downhill side of their stay, it helps stabilize this hospital. We also do a lot of outpatient work, more than inpatient work. Then we have a very active emergency department for a community our size. We’re just completing construction of a new $1.7-million emergency department. We have had a 15% increase in emergency room volume over the past two years. There is growth in this area because Pontotoc County is a very desirable place to live in this part of the state.”

The continuing challenge is to please customers while remaining financially viable.
Hood said an issue is that, as opposed to most business situations, “our customer did not want to be in our store to begin with. That is something you have to bear in mind. You don’t go to McRae’s and not want to do that. But in my store, my customers typically don’t want to be here in the first place. You are starting behind the eight ball to achieve a positive experience when someone did not want to be having that experience anyhow. People feel they are paying more than they should for services they didn’t want to receive in the first place. And that is a significant challenge.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

About Becky Gillette

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