Health & Science Magazine October 2019

Rural Hospitals Facing Same Challenges


Bo Ryall

A few days ago, I was in my office sorting through a box of old documents when I came across a report issued by the Governor’s Task Force on Rural Hospitals dated Oct. 1, 1988. As I skimmed the report’s introduction, the concern about hospital closures sounded eerily similar to what we’re hearing within the industry – and, increasingly, in the news media – today.

 The report identified hospital closures that had happened in surrounding states and attempted to trace the obstacles to viability that had led to those closures.

 According to the study, the challenges faced by hospitals in 1988 included:

• Declining admissions and average length of stay.

• Constrained reimbursement.

• Uncompensated/indigent care.

• Workforce shortages.

• Poverty in rural areas.

• Perceived quality of care.

• Changes in Medicare and Medicaid caseloads.

• Weak economy in rural areas.

We can certainly say those factors all still have a significant impact on Arkansas hospitals today.

 Fortunately, our state has not seen a wave of hospital closures like other states in our region. Texas, Oklahoma, Missouri, Tennessee and Mississippi combined have seen 44 hospitals close their doors in just the last 10 years. Here’s the main difference: Those states chose not to expand access to health-care coverage, whereas Governors Mike Beebe and Asa Hutchinson and the Arkansas legislature have continued to approve the Arkansas Works program. The additional coverage has saved not only hospitals but also the lives of Arkansans.

 On average, 17,840 Arkansans sought inpatient or outpatient care from the state’s hospitals each day in 2017. Twenty-three of our state’s counties do not have a hospital but wish they did. No one should be forced to drive hours from home to receive health care. We must continue to support our rural hospitals and thereby ensure access to health care for all our citizens.

 Of course, access to care is of primary concern when a hospital faces closure. But much less often recognized is the potential economic impact that could result. Our hospitals employ 45,800 people throughout the state with a total payroll of $3.4 billion. Beyond these direct figures, the economic activity hospitals generate produces an $11.5 billion local impact. A hospital closure can truly devastate a community, when the job loss is compounded by the inability to recruit additional industry to the area.

 The problems have been clear since 1988, but let’s consider some of the most promising solutions for 2019 and beyond.

 Hospitals are generally paid from four “buckets” — commercial insurance, Medicare, Medicaid and self-pay (uninsured). The payer mix of patients is very important to a hospital’s survival. In small, rural communities, you will see less commercial insurance and more Medicaid and Medicare.

 So, taking into account the total number of inpatient payers for all Arkansas hospitals, the breakdown is: 29 percent commercial insurance, 21 percent Medicaid, 42 percent Medicare and 2 percent self-pay. Arkansas hospitals rely on Medicaid and Medicare to pay for 63 percent of their patients, and payments from those programs routinely fall well below the cost of the care provided.

The Centers for Medicare and Medicaid Services (CMS) just approved a Medicare regulation change that increases payments to rural hospitals. This change was supported by the entire Arkansas congressional delegation, to whom we are exceedingly grateful for making their voices heard. 

 At the state level, Gov. Hutchinson has signed an executive order requiring the Department of Human Services to review Medicaid reimbursement rates for all medical providers in Arkansas. This review will reveal that Arkansas hospitals have not received an inpatient reimbursement increase since 2006 and that the last outpatient increase was 1992.

 Hospitals are also looking to innovative models of care. Baptist Memorial Hospital-Crittenden opened a new hospital in 2018 that has 11 patient rooms, 10 ER rooms, two operating rooms and two trauma rooms. The hospital was built in response to the actual needs of the community.

 The future of telemedicine holds great promise that more specialized care can be offered to small and remote communities – not just population centers. Payers can incentivize the development of such tools by reimbursing a reasonable amount to enable hospitals to offer these services.

 As I noted before, adequate workforce persists as a major concern. The state’s two new colleges of osteopathic medicine, along with the University of Arkansas for Medical Sciences, will offer even more opportunities to educate and retain more physicians.

 As we move toward the next legislative session, the Hospital and Medicaid Subcommittee of the Arkansas Legislature is holding hearings in communities throughout the state to hear directly from hospitals about the greatest challenges they face and to seek out solutions before the next legislative session.

 We commend the chairs of the committee, Sen. Eddie Cheatham and Rep. Fred Love, for initiating these hearings. The Arkansas Hospital Association and its members will be actively participating in this committee’s research, and we hope to identify many more solutions to ensure access to quality, affordable health care for all Arkansans.

Bo Ryall is president and CEO of Arkansas Hospital Association.

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