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HEADACHES FOR HOSPITALS — Larger operations can give aid to struggling rural hospitals

cash_vitals_rgbAn estimated 40 percent of rural hospitals in the country are operating at a loss, and the situation is getting worse for many rural hospitals not affiliated with larger healthcare facilities because of increased government regulations combined with reduced reimbursements.

Closure of a rural hospital can have a devastating impact on a small community that is already losing population and businesses. The most recent small hospital to close in Mississippi was the 19-bed Kilmichael Hospital in north central Mississippi, which closed Jan. 18.

Mayor Ryan Wood said that the loss of the hospital that has been there for about 50 years is a major blow that affects not just the local economy, but the self-esteem of the community.

“A lot of people are sad to see it go,” Wood said. “Obviously, it has cost us jobs, and we can already see a decrease as far as everyday traffic in town.”

Mendal Kemp-hs_rgbMany other small rural hospitals, particularly in the Mississippi Delta, are also struggling, said Mendal Kemp, director of the Center for Rural Health, Mississippi Hospital Association. Many of those hospitals have a very high percentage of Medicaid and Medicare patients. With both the programs facing cuts, it leaves the hospitals in a precarious situation.

Kemp said in addition to increased regulations, a big concern is reduced reimbursements including those for disproportionate share hospitals (DSH). The program that gave higher payments to hospitals with a high percentage of Medicaid patients is being reduced or eliminated.

“That is a major concern,” Kemp said. “Now that it is going away or being reduced, it is causing a real dilemma for some hospitals, particularly in the Delta. That is where there is the highest percentage of Medicaid patients. Small rural hospitals, which may have few patients who aren’t Medicaid of Medicare, are affected even more than large hospitals. So if Medicaid and Medicare are cut, and they are barely making costs now, they can’t survive.”

There is hope in the form of the small hospitals partnering with large hospitals. Kemp sees this as becoming a necessity.

“About half of our small hospitals are in partnership and that is continuing,” Kemp said. “Trying to do it by yourself, that doesn’t work. Larger hospitals have more resources, can utilize staff better, and have more resources.”

Kemp pointed to some examples of consolidations or partnerships that have been advantageous including North Mississippi Medical Center, Tupelo, Forrest General Hospital, Hattiesburg, Baptist Health Systems, Jackson, Rush Hospital, in Meridian, and Pioneer Health Services, Magee, all larger, regional hospitals which have multiple small hospitals under their wing.

The market is also driving this movement because of the trend toward fewer inpatients in Mississippi. The hospital census is down all over the state. Higher costs combined with less invasive procedures are steering care to outpatient facilities.

“But there are still needs for inpatients, and they have to keep that emergency room,” Kemp said.

Kevin Cook, CEO of adult hospitals, UMMC, agrees that the consolidations and mergers are becoming ever more important. In order to remain open, the hospitals under the most financial pressure have sought shelter by looking for strong partners, Cook said.

“This has occurred nationally, and a wave of mergers and acquisitions is sweeping the industry,” he said. “By combining into ever larger systems, hospitals can share overhead and reduce costs through scale, better leverage in supply chain and the ability to negotiate with payers more evenly.”

Physicians are also looking at affiliation with larger systems as the business of medicine has become more difficult.

“By joining systems, physicians can focus back on the practice of medicine without worrying about business challenges,” Cook said. “This has made physician recruitment for small, independent hospitals and physician practices even more difficult. By joining larger systems, hospitals can access large physician recruitment networks.”

The dwindling healthcare workforce in Mississippi is another issue. Older physicians are retiring, and it is challenging to recruit to the rural area. Physicians typically want to live in a metropolitan area.

“We are having to adjust practices that way,” Kemp said. “Physicians might visit a small community two or three days a week and then have midlevel practitioners fill in the gap. We are seeing that as a trend.”

If small communities can’t attract a physician, it can have a big impact on the local economy. One physician in a community has the impact of creating an estimated 23 to 24 jobs.

“It balloons into a huge impact,” Kemp said.

Experience has shown that when hospitals close, rarely are they reopened. Back in the 1980s, hospitals were hit with declining reimbursement when changes were made to reimburse a standard amount per diagnosis instead of by the amount of care given a patient.

“That hurt a lot of hospitals,” Kemp said. “We had 20 close and they have not reopened. These communities where they were such as Leland, Hollandale and Lumberton, they just kind of dwindle. They lose population. It is a huge impact. So with this teaming up, and systems development, does help keep care in these communities. That is the good thing.”

An argument can be made that while some of the smaller hospitals, particularly older ones in towns with a declining population, will have to close. If there is another larger hospital within a 15- to 20-minute drive, healthcare won’t necessarily suffer.

“We can’t afford anymore to have a hospital in every community,” Kemp said.

Kemp said in communities where hospitals have closed, other options could help meet the gap in care. One example is extending hours for clinics. But again, that only works if there are doctors and other medical professionals to staff the clinics.

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