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Assessment of rural hospitals warns of fiscal trials and tribulations ahead

HospitalMany of Mississippi’s rural public hospitals owe their existence to the Hill-Burton Act, a post-World War 11 initiative that provided grants and loans to build the hospitals.

Today, their futures are increasingly tied to the resourcefulness of public officials and medical managers. Can they adjust to changes in delivery of services, reimbursements for services and the pressures of treating more and more patients who have neither money nor insurance?

If not, the landscape of the future is going to look mighty rugged for them, according to an April 2 report issued by Mississippi State Auditor Stacey Pickering titled “The Financial Health of Publicly Owned Rural Mississippi Hospitals.”

By way of history, Pickering notes that the fiscal health of Mississippi’s rural hospitals built under Hill-Burton eventually became closely tied to reimbursement payments for Medicare and Medicaid services. “As those payments decline, new management and funding models need to be examined, developed, and/or modified,” Pickering writes in his executive summary.

Pickering says the Performance Audit Division did the assessment of years 2009 through 2012 to help prepare the state’s rural communities as well as state leaders to address dramatic changes ahead in the healthcare sector.

Some good news from Pickering’s audit: Fifteen of Mississippi’s 25 publicly owned rural hospitals exceeded national standards for fiscal soundness while a half dozen met the standards.

Some not-so-good news: Four rural hospitals fell short of national financial standards and have been designated for a “Watchline.” They are Tallahatchie County General Hospital, Tippah County Hospital, Natchez Regional Medical Center in Adams County and Montfort Jones Memorial Hospital in Attala County.

“While the study seems to provide the very good news that most of Mississippi’s rural, publicly owned hospitals appear to be well managed financially, there are some that face downward financial pressures, including the federal government’s cuts in the reimbursement rates for medical services,” Pickering says in the executive summary.

Thus, new management and funding models must be examined, developed or modified, he says.

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The Center for Mississippi Health Policy sees the Pickering assessment as a possible springboard for further study, says Therese Hanna, the Center’s executive director.

“I think it is important,” she says of the auditor’s report. “They looked at the current financial status. I think there is a need for more research.

“We are considering a study on what the future holds. We’ll ask, ‘What are some of the options for these hospitals in light of the changing conditions?’”

The study would address any changes in policy that could help rural hospitals survive, according to Hanna.

Over the last decade, some of Mississippi’s public rural hospitals have partnered with larger regional hospitals to achieve economies, gain management expertise and maintain or even increase services. “These larger hospitals can run the smaller hospitals and provide the backup support and use them as feeders” to bring patients into the mother hospital, Hanna says.

In some instances, the smaller rural hospital is getting an expansion, renovation or an entirely new facility, says Mendal Kemp, director of the Mississippi Hospital Association’s Center for Rural Health.

“These old Hill-Burton hospitals are needing replacement. They are insisting on getting a replacement out of it.”

For instance, in negotiations with Jackson’s Baptist Health Systems to sell Leake Memorial Hospital/Extended Care and Clinic facilities, Leake County officials received a pledge of renovations of the facilities, more long-term care and specialty services and more physician recruitment, Kemp notes.

One of Pickering’s “Watchline” hospitals, Montfort Jones Memorial in Kosciusko, has had interest from potential partners, says John Dawson, administrator. “The (Attala County) Board of Supervisors has been looking for a larger facility to affiliate with,” he says, with the idea being to gain the benefits of being leased or owned by a bigger hospital.

“We know our position relative to other hospitals. We have been dealing with the fact we are financially distressed for some time.”

Kemp, meanwhile, says it is important for a rural hospital to look closely at its service area and determine “what people need.”

Some may see a need for more out-patient services and others may conclude more specialty services are needed, he says.

Donald Eicher III assesses hospital needs throughout Mississippi as director of the state Department of Health’s Office of Health Policy and Planning. He says it is important for publicly owned rural hospitals to be realistic. For instance, Eicher says, they must examine whether it is genuinely cost effective to concentrate on in-patient admissions when the hospital has only two or three a day. “Could it be eliminated or drawn back further than it is now? Eicher says hospitals must ask themselves.

Others have successfully carved out specialty niches that serve a community need, he notes.

North Sunflower in Ruleville, for instance, has turned itself around by assessing what its communities need and marketing itself in that direction, Eicher says.

The process can begin with some “window dressing” which can be as simple as enhancing the hospital’s outside appearances, he says, emphasizing the need to get the public involved.

“The next step is determining what services are needed and what services can we provide to make money or at least break even.”

That process led North Sunflower to add a wellness center, a sleep apnea center and a state-of-the art surgery suite to the Ruleville facility. Surgeons from out of town now come to perform surgeries there, Eicher says.


Without some help…

Kemp of the MHA’s Center for Rural Health says the hospitals addressed in the Pickering Report are safety net facilities for their communities. Even the ones deemed financially strong in the 2009-to-2012 period face threats all around, he says.

“Things are not going to be like that next year,” he says of their fiscal future.

Chiefly, the current threats are coming from reduced Medicare and Medicaid reimbursements. But large on the horizon is the federal government’s promise to begin diverting tens of millions of dollars from Mississippi that now goes to help reimburse hospitals for treating the uninsured. The federal Affordable Care Act mandates that the money, more than $150 million a year in Mississippi’s case, must go to pay for expansion of Medicaid in other states since Mississippi refused to expand Medicaid to the state’s working poor.

Gov. Phil Bryant and legislative leaders refused the expansion knowing the risk of losing the money but have indicated they do not believe the federal government will ultimately remove the money. They cite the Obama administration’s two-year extension of a deadline to begin lowering the Disproportionate Share Hospital (DSH) payments.

Kemp and others say the threat of losing DSH payments is real and should be seen as a promise that the ACA requires the government to keep.

“Year two is going to surprise a lot of folks,” says Kemp, referring to the end of the two-year extension of the close of the federal government’s 2015 fiscal year.

“Without some help… I see the future looking very bleak.”



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