Rural Hospitals: Fighting for Survival
The COVID crisis has worsened the plight of the state’s most vulnerable hospitals.
When the doors closed at Cuthbert’s Southwest Georgia Regional Medical Center (SGRMC) last month, Randolph County lost more than a hospital. Jobs and one of its few remaining lures for economic growth disappeared along with the ability to treat patients close to home.
“Rural hospitals are vital parts of the communities they serve,” says SGRMC’s former CEO Kim Gilman, “and when they close, those communities suffer lasting negative impacts.”
The 25-bed critical access hospital had been struggling for years, even with help from the Phoebe Putney Health System, which managed it for the county’s hospital authority. But the COVID crisis did it in.
“COVID-19 reshaped our healthcare delivery model overnight,” says Gilman, who also serves as CEO at Phoebe Worth Medical Center in Sylvester. “The reality of the virus and its impact were far worse than we could have imagined. COVID-19 truly exposed our vulnerabilities as a rural hospital – related to our minimal staffing structure, limited physicians, limited supplies on hand and our aging facilities.”
The very same month Cuthbert lost its hospital, Commerce lost Northridge Medical Center, a 90-bed facility. They were the eighth and ninth rural hospitals to close in Georgia since 2010.
“These hospitals had been in bad shape for quite some time,” says Monty Veazey, president and CEO of Georgia Alliance of Community Hospitals, an advocacy group for not-for-profit facilities.
“Unfortunately, there are probably eight to 10 others across the state that are on life support, too, having a tough time meeting payroll, a tough time meeting the need for capital projects,” like renovations, improvements, even a new roof.
Most of Georgia’s 72 rural hospitals are struggling. Revenue from an affiliated nursing home, outpatient clinic or rehab center helps many, but that isn’t always enough. Some larger rural hospitals, like Coffee Regional Medical Center in Douglas, are helped by elective surgeries; but that avenue isn’t open to all.
“We have ongoing issues we can’t control,” Veazey says, “such as a declining population, an aging population, an uninsured population, which has been increased because of COVID and the resulting unemployment that means many who had health insurance lost it.” This is compounded by a high Medicaid rate, since payments from Medicaid – and Medicare – are less than those from private insurers.
“What you see in these communities [is] generational poverty,” Veazey says, “where some who need to go to the hospital do not have transportation – that’s a big issue.” So is a lack of doctors, especially specialists. “You combine all of those together, and you’ve got a crisis on your hands,” he says, even before the COVID crisis brought more, typically sicker, patients.
“Everything is complex and has been for a while,” says Chuck Adams, executive vice president of the Georgia Hospital Association who heads its Center for Rural Health. “COVID added to that complexity with all our hospitals, but especially rural hospitals because so many of them operate on such a thin margin.”
Overall, he says, federal money made available during the pandemic from the CARES Act and other programs has been a tremendous help, “nothing that has made them flush, but able to maintain, keeping the hospitals paying their bills, keeping their staff.”
There has been help from the state, too, during the crisis, notably when the Georgia Emergency Management Agency stepped in with assistance in staffing. Coffee Regional President and CEO Vicki Lewis calls that “a godsend.”
Adams says some hospitals may have bought some time with the federal funds, but it wasn’t sufficient to fix their long-term problems. “The challenge on the back side of that,” he says, “some of the money has payback provisions. Instead of grants, they were loans. While it’s helped them get through or get to this point, when the payback provisions start kicking in, things like that are going to impact them on the back end as well.”
Rural hospitals have been feeling the squeeze since the 1990s. As far as their ultimate survival, Adams says, it depends on a couple of things: “How quick they can ramp back up volume and get a revenue increase or how they can get some help either to partner with some other facility or get local government help. We’ve seen that before, where counties have stepped in and helped with some financing for hospitals. We know we’ve got a lot of counties that are financially struggling as well. How much can you get out of a county government that has the same problems the hospital is having?”
Jimmy Lewis, CEO of HomeTown Health, a network of rural healthcare providers and organizations, says hospitals were ill prepared for a pandemic. In addition to personal protective equipment (PPE) shortages, capacity and staffing were out of sync. “Hospitals were overwhelmed by bed consumption, and [in some cases we] had the crazy situation we had available beds but no skilled services to man the hospitals to provide care. July and August and the first part of September, we had real problems,” he says.
But there is no doubt the government’s infusion of cash saved patients’ lives, he says.
In Cuthbert, Gilman says “a sparse and declining local population” in a very poor county was a major factor in the SGRMC closing. Randolph County has a population of 6,700 that is projected to decline another 12% in the coming years. The poverty rate is nearly 31%, and the number of uninsured patients is high.
“Fewer insured patients equates to less available cash,” Gilman says. “There’s not enough available cash to invest in needed infrastructure, building improvements, equipment, or staffing recruitment and pay increases, and barely enough to cover day-to-day operations.”
Engineering reports showed that the Cuthbert hospital needed more than $10 million in improvements, but the hospital authority was unable to secure funding.
“Health issues and consumer choices don’t support a facility where the building and its infrastructure are failing and where [patients] know they’ll not be able to obtain all the care they need due to gaps in equipment, technology and the services offered,” Gilman says. “Once patients begin seeking care from other places, the sources of cash are even more negatively impacted, and the downward spiral just continues.”
It’s no secret that SGRMC was able to hang on as along as it did because of Phoebe’s help, including no-interest loans and some services provided for no cost. The hospital authority paid only $5,000 a year in management fees, substantially lower than other hospitals pay for similar services elsewhere.
Federal money from the CARES Act helped but could not go toward physical plant needs. A hospital management company’s assessment confirmed that the model was not sustainable. Ultimately, Gilman says, the difficult decision to close the hospital was made.
In Douglas, Coffee Regional is facing difficulties, but is clearly in better shape than many other rural hospitals. “We’ve been dealt a better hand,” says Vicki Lewis of the 88-bed facility. The county has a substantial population – about 43,000 – and is even seeing some growth. “We have business and industry in Coffee County, with jobs,” she says. “We’ve got businesses and industries that are hiring and large employers who provide insurance options.”
The hospital has an active outpatient rehab facility and a high surgery volume, as well as a thriving orthopedic practice and busy cardiology and oncology services.
Nonetheless, it took a financial hit from COVID. “We have an unfavorable payer mix,” she says, “made up of a lot of patients who are uninsured, a high percentage of self-pay, high percentage of Medicaid, high percentage of Medicare.”
The hospital stopped doing elective surgery for a while, which Lewis calls devastating. “We are very much dependent on surgical procedures and diagnostic procedures. We shut down elective procedures and diminished pretty dramatically some of the tests we were doing. That created a revenue deficit,” she says.
The crisis made a difference in the hospital’s day-to-day operations, too. “We have had a high census of COVID patients,” she says. “The numbers of staff members and numbers of bedside caregivers required for each patient is higher than it was before COVID. That’s because the patients are so ill. These are patients who have crises – a lot of respiratory symptoms, sometimes they go into kidney failure.
“The stress of the overall level of illness of each patient does take a toll. Many patients on ventilators are quite ill. We’ve been very, very fortunate that the vast majority of patients we’ve cared for have been discharged and gone home, but we have had several patients who have died. So that stress is there. Some of our staff have been ill as well.”
The hospital also saw changes in the emergency room. Creating a separate ER and ICU for COVID patients helped, but she says the volume of patients in the regular ER is still down. “Surgical volume is almost back. Cardiology volumes – we have an interventional cardiac cath lab – are back,” she says.
Vicki Lewis says the hospital is preparing its budget for next year and projecting a further erosion in the payer mix. She expects some of the changes brought by COVID will be permanent. “Once the vaccine rolls out, we’ll take the lessons learned and create a future pathway. We all have learned so much about this, and we’re going to take that to heart.”
Medicaid Expansion Needed
Ask the experts what would help rural hospitals most and you typically get a two-word answer: More Medicaid. Several studies have found that rural hospitals do better financially in states that have expanded Medicaid.
Georgia governors and legislative leaders have been reluctant to go the route of full Medicaid expansion provided by the Affordable Care Act, saying it was too costly. But the state applied for – and was granted by the federal government in October – help in the form of waivers that will allow some flexibility in how coverage is added. Estimates are that some 50,000 Georgians will be added to Medicaid rolls in the next two years, but approximately 350,000 will still be without coverage.
GHA’s Adams says the organization supports any effort to ensure access to affordable healthcare for all Georgians. “That does include [the] waivers,” he says. “That’s going to add additional citizens to an insurance roll that will ultimately help hospitals and providers. Anything we can do to help support access to affordable health insurance we are behind.”
Veazey says the waivers will “move the needle” a bit, but he favors full Medicaid expansion. “That would be the best thing we could do. If you want to see these hospitals continue to close, those populations continue to be underserved, then you don’t expand,” he says. “But to expand it would mean everyone would be insured in that [low-income] population group. They’re the ones that need it the most. Some have to drive 30 miles to see [a doctor]. They just don’t seek care. Then they get sicker. When they get sicker, someone finally gets them to the hospital, then we have our hands full.”
It’s hard to find much good in a crisis that has claimed lives and sickened so many, but the pandemic has boosted the use of telemedicine significantly.
“The telehealth-telemedicine programs we have been talking about for years and years and years but just couldn’t quite get up and running have been huge during this time,” says Adams. Part of the problem of early adoption was some payers’ refusal to reimburse physicians and hospitals for telemedicine visits. But that changed when the Centers for Medicare and Medicaid began to allow it.
“In an instant, telehealth became the buzzword and the tool to use,” says Jimmy Lewis, a long-time board member of the Blackshear-based Global Partnership for Telehealth. “Doctors started to realize it works, it really works,” and they became more comfortable using it.
He believes the technology will be used even more for monitoring patients with chronic conditions like hypertension and diabetes. It’s a real benefit for rural Georgia, where there is a shortage of specialists – heart, pulmonary, urinary. With telemedicine, a rural patient can “see” (and be seen by) a doctor hundreds of miles away.
Even obvious obstacles for rural hospitals – cost and connectivity – are not so formidable as they once were, thanks to technology. A few years ago, for example, a telemedicine “cart” might have cost $40,000, Jimmy Lewis says. “That same equipment today has gone to cloud-based; you can do it for less than $10,000. The cost of implementation has plummeted.” And he believes broadband access will continue to improve.
For many rural facilities, partnerships or affiliations with larger hospitals and health systems are likely to improve their situation.
Those affiliations can work in several ways, says GHA’s Adams. Take, for example, a shared service model where a larger health system can provide specialty services that a smaller hospital lacks.
Such arrangements would benefit both the smaller and larger facilities, he says. “Larger hospitals are the ones that tended to be near capacity even before COVID, based on the ability for them to offer numerous services rural hospitals can’t have. That’s the type of business that’s going to go to those hospitals,” Adams says. “For those other acute care needs, our rural hospitals are perfectly capable of providing that quality and access to care. The road travels both ways – hospitals that develop those relationships have figured that out.”
But things are not going to be easy for the rural hospitals. Adams says ones that are struggling are going to continue to have problems and are going to have to rethink their service models. “It may be that what some of our rural hospitals have to do is kind of retool themselves to provide the care the community desires and needs – but maybe not in the traditional sense we know.”
Yet Adams remains a steadfast advocate of rural hospitals: “I think the pandemic has proven the need,” he says. “Without these hospitals, without the extra capacity to take care of patients when censuses are going through the roof, when patients are not able to travel – I can’t imagine what kind of issues we would have if we were not to have the rural hospitals we have.”