|
 “They checked me out real good,” said the former city councilor,
whose East Texas community of nearly 2,000 has relied on the Linden
hospital since the 1960s.
Shortly after returning home, Bowden learned he would outlast the
hospital itself: the facility was about to close because there
weren't enough patients. “It blindsided me,” he said. “It's 15 miles
to the next hospital. Out in the country, that seems like a long
way.”
Small, rural hospitals like Linden have always struggled to remain
viable, but things are getting worse, fast. Rural communities are
shrinking at a time when healthcare providers are being pressured to
cut costs and release patients sooner.
Twenty-four rural hospitals have closed across the county since the
start of 2013, double the pace of the previous 20 months, according
to the North Carolina Rural Health Research Program. For graphic
see: http://reut.rs/1lGqpBb.
“Even with community support, investment in quality personnel and
equipment, patient activity was not at a sustainable level,” Steve
Altmiller, president and chief executive of Linden hospital's owner,
Good Shepherd Health System, said in a statement announcing the
closure. “The decision to close the Linden facility, while
difficult, is one that is occurring across the country."
Now the Affordable Care Act, better known as Obamacare, is bringing
additional pressure. Obamacare is designed to fold the poor and
uninsured into the healthcare system, but changes in how the federal
government pays for the disadvantaged are already pressuring the
hospitals that cater to them, such as rural ones.
Reformers are eager to see some hospitals close, including many out
in the country. They argue that good care in the form of clinics and
modern ambulances can tend to residents much better than decades
ago, undercutting the need for local emergency rooms.
Investors are being warned of the change. Standard & Poor's Ratings
Service in August concluded that the nonprofit hospital sector is
“at a tipping point” from the drop in the number of patients cared
for. Moody's Investors Service reported hospital revenue growth and
operating margins are at all-time lows. Fitch Ratings wrote that the
Affordable Care Act has accelerated the transition of patients out
of the hospital and into clinics by tightening reimbursements and
emphasizing technology.
“There is a big transition happening,” said Mark Claster, president
of investment firm Carl Marks & Co and vice chairman of North
Shore-Long Island Jewish Health System board of trustees. “I don't
think smaller hospitals are prepared, and I don't think they can be.
I don't think they have the economic wherewithal.”
A PAUCITY OF PATIENTS
Good Shepherd acquired Linden from the city nine years ago and spent
$6 million on renovations, including revamping the emergency room.
“It was very modern,” said Linden Mayor Clarence Burns.
The hospital's net revenues grew from almost $8 million in 2006, the
year after the acquisition, to $13.3 million in 2010, according to
Texas Department of State Health Services data.
But operating losses were constant and accelerated, along with bad
debt, which grew to nearly $3 million in 2012 from $990,000 in 2006.
By 2013, the little hospital had a cumulative $11 million in losses
under Good Shepherd, according to the nonprofit's financial
statements.
Good Shepherd declined to discuss finances with Reuters. Public
statements by the company, financial records in bond disclosures,
and the state of Texas data describe changes over the years.
Two trends hurt the hospital: the number of patients shrank, as did
hospital reimbursements from Medicare and Medicaid, two primary
payment sources for rural facilities. Further issues lay ahead,
including changes in federal funding for indigent patients and rural
hospitals.
In the six years leading up to 2012, Linden's admissions dropped to
just over four patients a day on average, from about 10 patients in
2007, according to state data. Fewer than one person per hour came
to the emergency room in 2014.
Linden had 1,988 residents in the 2010 census, down nearly 12
percent in a decade.
Good Shepherd blamed losses on a paucity of patients and federal
cuts to reimbursement in Medicaid and Medicare. For example,
Medicare payments were cut 2 percent as part of the sequestration
federal budget battle in 2013.
Larger health systems with a variety of services and fewer Medicare
patients can try to shift offerings, raising revenue by providing
specialty surgeries, such as a hip replacement, or oncology
services. But smaller hospitals with fewer resources have less
flexibility.
[to top of second column] |
Implementation of the Affordable Care Act may exacerbate the problem
for small facilities.
“Revenues are coming down and expenses are not coming down as
quickly,” said George Huang, municipal securities research director
at Wells Fargo Securities. “The smaller guys have fewer resources
available to them.”
The federal government historically has supported rural hospitals.
Since 1997 it designated many as "critical access" facilities,
recognizing that their small size meant they could only focus on
essential medical services. Such hospitals got extra federal funds.
Last year, the U.S. Department of Health and Human Services' Office
of Inspector General recommended the government tighten rules on
critical access hospitals to save money. That would likely to cut
the number of such facilities by two-thirds.
Funding for the poorest also is changing, as the Affordable Care Act
cuts payments for indigent care, in the expectation that many
impoverished and uninsured will move to Medicaid. But 23 states have
not expanded Medicaid, fearing it could eventually leave them with
financial burdens. So in those states, a gap in federal support for
the poor has emerged.
Hospitals in states that don't expand Medicaid will see their profit
margins drop by a few percentage-points by 2021, reported research
firm The Advisory Board Company. "For many, that could be the
difference between being profitable, and being in the red," the firm
wrote on its website in July.
The majority of rural residents in the United States live in states
which are not expanding Medicaid, reported the North Carolina Rural
Health Research Program. A majority of the 24 hospitals closed since
the start of 2013 are in those states.
“In states that are not expanding Medicaid, we're seeing hospitals
close. The finances are just not working out," said Tim Jost,
Washington and Lee University School of Law professor.
'LONG LIVE FEWER HOSPITALS'
Making healthcare more affordable and efficient is a good thing, say
analysts. As the dominant provider in the marketplace, hospitals
have “become incredibly inefficient,” because there was less
incentive to keep costs down, said Jason Hockenberry, health policy
and management professor at Emory's Rollins School of Public Health.
One in five hospitals, over 1,000 at least, will close by 2020,
forecasted Ezekiel Emanuel, a White House health policy special
advisor who helped shape the Affordable Care Act.
“Long live fewer hospitals. Welcome to the new age of digital
medicine,” Emanuel wrote in his book, Reinventing American Health
Care. Clinics can more efficiently take on many duties performed by
hospitals, leaving hospitals to focus on the severely ill, he said.
Emanuel predicts the first hospitals to go will be smaller ones,
which already operate with less than half of their beds filled. When
Linden closed, less than 20 percent of its beds were occupied on any
given night.
For Linden resident Bowden, the next trip to the hospital would
certainly be longer, although it would be in an emergency vehicle
that is a different technological breed from when the little
hospital was built.
For decades he's heard ambulances “ripping up to the hospital.” Now
that it is closed, he says, it has been real quiet.
(Reporting By Robin Respaut; editing by Peter Henderson)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
