The Enid News and Eagle, Enid, OK

August 24, 2013

Uncertainty: Rural hospitals struggle with Medicare cuts, low patient counts

By Robert Barron, Staff Writer
Enid News and Eagle

ENID, Okla. — Many rural hospitals are struggling these days because of low patient counts, Medicare cuts and some Medicare definitions that affect how they are paid.

And, the future is uncertain as the sweeping new federal health care plan gets set to usher in a new concept in medical costs.

“There are a lot of different things affecting rural hospitals,” said Shelly Dunham, CEO of Okeene Municipal Hospital.

Hospitals in larger urban areas receive adjustments to their payments based on several criteria. Okeene is defined as a critical-access hospital by Medicare, and its payments took a 1 percent to 2 percent reduction April 1, due to the across-the-board federal budget cuts known as sequestration.

“That was one big hit to all the hospitals,” Dunham said.

Because patient numbers are low, it is a struggle for the Okeene hospital, she said, but there are other factors, too.

“We work really hard to keep expenses just as slim as they could be to help us make sure we will still be here,” Dunham said.

The average daily census for Okeene the past two months has been three patients.

“Looking at the year as a total, it’s more like one and a half or two,” she said.

Hospital payments

The critical-access hospital definition indicates the way Medicare pays the hospital. There is a difference between critical-access definitions and PPS, or prospective payment system, definitions. Prospective payment system definitions are intended to motivate providers to deliver patient care effectively, efficiently and without over-utilization of services, while critical-access payments may be up to 100 percent of the costs of services.

Dunham said PPS hospitals and larger urban hospitals have enough volume they can live off the payment system.

“Medicare is saying, if you have pneumonia and will pay this much, it’s up to them to do a good enough job to get patients well and out within that cost structure,” Dunham said about the PPS payment system.

However, Candace Allen, CEO of Share Medical Center in Alva, said her hospital is a PPS-designated hospital and the average daily census is about one to one and a half people. Share was denied the critical-access designation because it is too close to Kiowa, Kan., which is a critical-access hospital.

Critical-access hospitals can’t depend on volume, Dunham said, and are paid based on cost. During the past year, 65 percent of Okeene patients were Medicare patients, she said. Payment is made per item, and the percentage is examined during the year.

“Sometimes you get it back, and sometimes you lose it,” Dunham said.

The amount received was lowered from 102 percent to 99 percent this year due to sequestration. Hospitals must make sure enough of the other patients have commercial insurance or Medicaid, because they may be able to receive enough revenue to pay the rest of the costs, she said.

“More and more commercial insurance companies are curbing and reducing payment,” she said.

Dunham doesn’t know how the new federal health care act will affect her hospital. Gov. Mary Fallin refused to accept the federal governments Medicaid expansion proposal, which was allowed by the U.S. Supreme Court. That refusal will cost the Okeene hospital funding, but Dunham does not know how much. The new health care act will mean more people in the state will have insurance, Dunham said, but not as many as would have if the Medicaid expansion was accepted.

“Because the choice was made not to accept those federal funds, it makes what we thought we would get not happen,” Dunham said.

Hospital care

When people present themselves to the hospital, the hospital must examine them, Dunham said. Once that has been done, the hospital has options. If the patient is determined not to have an emergency, hospital staff can send them away to see their physician. Dunham said they have not sent patients away, but are considering taking that action in the future if there is no emergency.

“Once you have determined they are not an emergency, you can ask them to pay up front,” Dunham said. “We haven’t done that, but some of our colleagues have begun that policy to reduce bad debt out of the emergency room.”

When people do not have insurance, the hospital is the first place to go when they are ill, Dunham said, and they usually wait until their illnesses are worse and cost more to treat.

At Share Medical Center, Allen said the average daily population in July was 1.7 people. The previous month is was 0.77.

“A lot has to do with patients not meeting Medicare necessities in the hospital,” Allen said. “Medicare has rules. We use a software program that follows to see if a patients meets certain criteria. If they don’t meet that, then Medicare will not pay for admission.”

Those patients are cared for on an outpatient basis, she said.

Less revenue

At Share Medical Center, cuts to the Medicare program over the years have whittled away the hospital’s margin, Allen said.

“We can’t cut ourselves to a profit,” she said.

In 2011, the hospital made cuts of $11 million. In 2012, the total of cuts came to a little more than $10 million. She also anticipates spending more than $2 million to upgrade electronic record-keeping required by Medicare. Funding will come partly from Medicare, and the hospital has spent $1 million of its funds to get the program going, she said.

Share Trust helped the hospital survive during tough times. Alva residents donate to the trust to help the hospital.

“We have a very, very supportive community that wants to see the hospital be successful. It’s a difficult time, definitely,” Allen said.

The refusal of Fallin to accept Medicaid expansion will cost Share Medical Center about $10,000 per month, Allen said. It’s money they can’t afford to lose, with no way to make up the funds, she said. Loss of funds through sequestration also financially has hurt the hospital.

 Share Medical Center recently entered a cooperative contract with St. Anthony Hospital in Oklahoma City, to be an affiliate hospital. Other hospitals in northwest Oklahoma also have entered contracts with St. Anthony. The contract allows Share to utilize St. Anthony resources it could not otherwise afford, Allen said. Share has started telemedicine programs, and a registered cardiologist comes from St. Anthony to Alva on a regular basis. Allen said Share is trying to keep services in Alva so patients don’t have to go out of town.

Rural struggles

At Harper County Community Hospital in Buffalo, administrator Georganna Buss said they always struggle, as do most rural hospitals.

“We’re very conservative,” she said. “We haven’t done any new projects. We have a 50 year-old hospital and we’re fixing what we can.”

Buss doubts the community will be able to build a new hospital, but it is holding its own financially. Changes coming through the federal health care plan are unknown, she said, although cutbacks through sequestration and Medicare financially have hurt the hospital.

Harper County Community Hospital is considered a critical-access hospital, which Buss said helps. Some places are struggling if they don’t have secure providers, but Buffalo is recruiting another doctor, who probably will be in place next year.

The average daily census in recent months has been one patient. The average for the year is two and a half to three.

“The summer months hurt. It has been real, real slow since May,” Buss said.

Part of the slowness is due to insurance companies, plus as a St. Anthony affiliate, Harper County Community Hospital transfers a number of patients. St. Anthony has benefited Buss’ hospital in terms of group purchasing and obtaining electronic health records.

“We’re surviving. We’re a county hospital, and we’re keeping the doors open,” she said.

Five years ago, Harper County installed a CT scan at a cost of $200,000. She called that a good purchase that has paid for itself. Last month, it installed an upgraded CT scan system, which has been an asset to the hospital.

“You almost have to have one to rule out things,” Buss said. “That is one project we are able to do that had paid for itself by having it. But we can’t do large projects.

“Many times, rural hospitals have saved lives and are very important to the county and the community,” she said.