RANGELY I Rangely District Hospital’s recent financial woes mirror those of hundreds of rural hospitals struggling to absorb hits from mandatory federal regulations, health provider shortages and decreased patient volumes, hospital administrators said last week.
In a meeting geared toward community leaders on March 19, the Rangely District Hospital (RDH) Board of Directors and RDH Chief Executive Officer Nick Goshe said five factors have rural hospitals in difficult financial straits.
Currently, the combined cost of three: the Affordable Care Act (ACA) or “Obamacare” regulations, Electronic Medical Records (EMR) reporting requirements and changing Center for Medicare and Medicaid Services (CMS) rules, make up $5 million of RDH’s annual expenses, or one-third of its total budget. Those expenses, he said, minus a small amount for medical inflation, were virtually nonexistent five years ago.
Goshe and the board cited two other factors: health care provider shortages and waning patient volumes, as further affecting rural hospitals’ financial stability.
Since the ACA took effect in 2010, Rangely’s hospital has seen large-scale shifts from private insurers to public carriers like Medicare and Medicaid. Between September 2013 and September 2014, Rio Blanco was one of several counties statewide that saw percentages of Medicaid enrollees increase from between 50 and 67 percent, according to Colorado Health Institute data.
For RDH, that shift has translated into an approximately 50 percent decline in individuals with private insurance and a 25 percent increase in those with Medicaid. In 2010, for instance, 36 percent of the hospital’s net revenue came from Medicaid and Medicare. By 2013, that number had climbed to 54 percent, while payouts from commercial insurances during the same time fell from 22 to 12 percent.
“This (change) has had a profound effect on what the hospital gets in payments and how fast these payments are made,” RDH Chief Compliance Officer Bernie Rice said. “I’ve watched payments go from a crawl to a standstill, even when (insurers) acknowledge they owe us.”
The effects on a business’ financial viability, the board agrees, are significant. Clinic visits that would normally have garnered between $150 and $200 from a private insurer now bring in approximately $50 per visit under Medicaid with future estimates coming in at as little as $16 per visit.
The lag time between when services are provided and when providers get paid has also changed. Medicaid can take as long as 18 months to pay, Rice said, particularly when billers file a claim, then learn it must be resubmitted with changes or begun again from scratch due to changing CMS reporting requirements.
“We have government regulatory agencies telling us to do one thing, and we go through the entire process only to get to the end of it and they tell us, ‘No, we’re going to change 180 degrees and go an entirely different way,’” he said.
Presenters at Thursday’s meeting said similar challenges exist with the EMR system, which mandates health care organizations gather patient information electronically for use by staff and clinicians and for reporting to federal agencies. Users estimate the system’s reporting requirements have quadrupled in recent years, which, Rice said, affects efficiency and necessitates more staff than previously required for the same jobs.
He expressed concern that hospitals are threatened with reduced payments if reporting requirements aren’t met and that EMR opens opportunities for large-scale hacking of sensitive medical information.
As users anticipate the shift from the EMR’s international coding system ICD-9 to ICD-10, now scheduled for October of this year, RDH administrators said qualified coders will also need to learn ICD-10’s 70,000 codes, up from the ICD-9’s 13,000. Another challenge is the potential for CMS payments to temporarily stop if the program goes live immediately and experiences complications.
Although monies built into the 2010 bond issue helped with EMR start-up costs, board president Steve Petersburg said those costs were approximately three times more than initial estimates from the state, with EMR costs expected to rise an additional 10 percent annually for the next decade. As a result of this and other reporting requirements, information technology costs are 10 times higher than in 2011.
Of the other two factors discussed Thursday, presenters said the economy’s role in dropping patient volumes is not isolated to Rangely. According to Monument Medical Consultants, which bills for RDH, many Grand Junction offices are experiencing losses similar to the 35 percent drop in patient volumes Rangely has seen over the last several years.
To blame, Rice said, are rising co-pays and deductibles in conjunction with falling prices in the region’s oil and gas industries. Following the meeting, Goshe cited a 2014 Gallup poll indicating that a third of Americans have delayed getting medical treatment because of rising health costs.
Still, some community members continue to be concerned about RDH’s quality of care and believe it has had a significant impact on patient volumes.
“Most (quality of care) issues have revolved around the use of locum doctors and them not being friendly,” Goshe said in an email response Monday. “At other times … the doctor did not order what the patient wanted. We place a high emphasis on finding and retaining high quality doctors. As of August, we will have three physicians living in town, and the husband of (incoming physician) Dr. Urish may also be joining our staff, so that would be four. For a town of 2,200 approximately, that is really good.”
Another tangible effect on the future of rural healthcare is nursing and physician shortages. With more nurses retiring than graduating and most family practice physicians choosing urban locations for their practices, rural hospitals will need to find new ways to attract qualified staff.
Not an option, Goshe says, is being among the third of Western Slope facilities that healthcare consulting firm Stroudwater & Associates predicted last year will close by 2020.
Goshe and the board maintain that despite current financial challenges, the bond issue that approved a new hospital in 2010 was RDH’s salvation, not a cause of its current instability. Either ongoing life safety building code violations in the old building would have shut the hospital down, Petersburg said, or unlooked-for EMR startup costs would have done it.
Administrators believe the $1 million the hospital plans to cut from its budget will keep the hospital afloat during a “first wave” of rural hospital closures nationwide, including 48 in the last five years, according to the North Carolina Rural Health Research Program (NCRHRP). A closed hospital, according to the NCRHRP, no longer provides short-term, acute inpatient care but may continue to provide outpatient or emergency services. Close to 300 more are “on the bubble” and could be closed in coming months and years, says a bulletin from the National Rural Health Association.
While RDH is not among the 300 hospitals in danger of closing, Goshe believes that if trends continue in the five areas of concern, staying financially viable will become more challenging. Administrators expressed hope that cutting services will not be necessary but said that offerings beyond the standard scope of care—among them Rangely Family Medicine, home health, Emergency Medical Services (EMS) and urgent care clinics—could eventually be vulnerable.
“This hospital’s stronger than most,” Chief Financial Officer Jim Dillon said. “We’re not going to go down with those 300. But there’s a limit … At some point, hopefully, they’ll get a clue that rural hospitals are in trouble. There’s already been some talk in the Senate about that. They’re going to have to help them out to keep them alive.”
For now, RDH will remain viable if three things happen.
“No more unfunded mandates, no more new regulations and no more reductions in revenues,” Goshe said. “I don’t have a crystal ball, but everything I see shows there are attacks on (rural) critical-access hospitals.”
The RDH Board and Goshe encouraged the community to contact local legislators to express concerns over the state of rural health care. For more information or to learn more about last week’s presentation, contact Goshe at email@example.com or at 675-4225.