Budget cuts hit Tennessee rural hospitals

Budget cuts hit Tennessee rural hospitals

December 2nd, 2013 by The Tennessean in Local Regional News

Additional Facts

Life or death

For every 100,000 people who gain health coverage through a Medicaid program, 19.6 lives are saved, with the best improvements occurring among people between 35 and 64, minorities and residents of poor counties.

Source: A review of health data from expansions of Medicaid eligibility in New York, Maine and Arizona since 2000, published in 2012 in the New England Journal of Medicine

Frances Waller is a regular at Trousdale Medical Center, a hospital dwarfed by the trees that surround it.

The 88-year-old woman gets checked every six weeks at the small rural hospital in Hartsville to make sure the blood thinner she takes is the right dosage.

"It's the cleanest hospital you'll ever go in," Waller said. "We get over there at 6:30 a.m. when the hospital opens up. You could eat your breakfast off the floor. We're so lucky to have one here in our town so if we get hurt or whatever, we can run up there."

Trousdale is a 25-bed hospital -- the same size as one in Scott County that has been closed for more than a year but will reopen today and try to make a go of it again, this time without obstetrics services.

Funding changes brought about by the Affordable Care Act and the political battles that rage on about the federal health law threaten rural hospitals of all sizes in Tennessee. Their administrators have been laying off workers, reducing services and worrying about the future.

They are losing millions of dollars in federal grants -- funding that was supposed to be replaced through expansion of TennCare, the state Medicaid program. The law made Medicaid expansion almost a certainty until the U.S. Supreme Court struck down that provision, leaving it up to individual states to decide whether to accept federal money to cover an uninsured person making less than $15,856 or a family of four with a household income below $32,499.

But wealthier people in rural areas also are at risk of losing access to care because hospitals may close or cut back on services. There are so many people with low incomes and so few folks with good insurance that rural hospitals need expansion to operate in the black.

Survival at stake

About 8,000 more people would get coverage in the counties served by Henry County Medical Center if Tennessee expanded its Medicaid program, said Tom Gee, the hospital's chief executive officer. He described the financial problems exacerbated by political conflicts over the health law as "the most serious threat to our institution" in the 23 years he has been at the helm.

The hospital lost $1.2 million last year. In October, it reduced its workforce by 25 positions. Gee is contemplating whether to stop offering oncology services and to ask the county to pick up the costs of ambulance services.

"Our future survival is heavily dependent on expansion of Medicaid and signing people up in the health exchange," Gee said. "That's the only place we're going to replace the lost volume and lower reimbursements we're seeing right now."

He had hoped state politicians would work something out last spring. Gov. Bill Haslam has been working on a Tennessee plan, trying to design a framework that will satisfy the Obama administration without rankling fellow Republicans in the Legislature.

The federal government will pick up 100 percent of the cost through 2016 of insuring people newly eligible for Medicaid in states that expand their programs. It then phases down the federal match to a permanent 90 percent in 2020.

Gee said he has urged his state representative to support expansion.

"I think he is caught up in the politics himself of 'What do I do? Do I look at the jobs in my community and the needs of the largest employer in the community, or do I try to play the politics of everything?'" Gee said. "It's a really frustrating process right now."

Fight for expansion

Last spring, the Tennessee Hospital Association lobbied hard for Medi-caid expansion on Capitol Hill and failed. This time around, the organization is focusing on a grass-roots campaign.

"The vast majority of our hospitals that are financially distressed right now are in our rural areas," said Craig Becker, president of the Tennessee Hospital Association.

The federal health law reduced reimbursements to Tennessee hospitals by $5.6 billion over the next 10 years. But the state hospital association estimates that Tennessee would receive $6.4 billion in new federal funds during the first 5 years of Medicaid expansion. The state's financial commitment would be $199 million over that time frame, which works out to receiving $32 from the federal government for every state dollar spent.

However, Republican leaders in the Tennessee Legislature doubt that the federal government will stand by that obligation and say the state would end up with a much larger bill. State expenditures are supported primarily by sales taxes.

But Tennesseans are already paying for expansion as money gets deducted from their paychecks or owed from their business and investment incomes for new federal taxes tied to the law.

"Those dollars are leaving the state, and nothing is coming back for it," Becker said.

He expects hospitals to cut back on birthing services, oncology programs and specialized trauma services to reduce costs in the short term.

"Human cost"

Tammie Brunson said she's grateful NorthCrest Medical Center in Springfield has a birthing center, where her grandson was just born.

"If you got someone in labor, problems could arise -- and if you're driving on the interstate for 40 minutes and you've got an issue, it could turn into a bad issue," Brunson said.

NorthCrest is an independent, locally controlled hospital in Springfield with strong community support and a full line of services, including plastic surgery. The only thing that looks rural about the hospital is its campus of rolling hills and scenic views.

But even it is vulnerable. It serves a population that is largely low income, and 12 percent to 14 percent of its patients do not have health insurance. The hospital is operating in the black, but it faces challenges.

Only 72 of its 109 licensed beds are active. The hospital has cut jobs in recent months, instituted a hiring freeze and temporarily suspended vacation accrual.

"There has been a reduction in force," said Randy Davis, the chief executive officer at NorthCrest. "We're a small organization. The numbers I'm talking about aren't Vanderbilt numbers, but we're looking at anywhere from 11 to 15 people that were, in fact, let go."

The hospital is looking at divesting itself of some real estate holdings to beef up its cash reserves, he said, but that's only a short-term fix.

"There has to be an end in sight," Davis said. "There has to be something that gives. It's a matter of can you hang on for that one or two years of purgatory while waiting for all this stuff to work itself out."

Newly promoted to CEO on Oct. 1, he directed that a press release be issued about two weeks later when vacation accruals were temporarily suspended.

"I need the realization of this community and of Middle Tennessee and the entire state and of anyone who will listen that this is real," Davis said. "This has real impact. It is serious. Even indecision and passivity are dangerous. It comes at a real cost. That is the human cost."

"A sad situation"

Scott Morton, a small-business owner in Springfield, has good insurance and could have gone to any hospital in Nashville he wanted for knee surgery. He chose to get care close to home.

He doesn't have much confidence in politicians on one side of the aisle or the other to do anything to help his hospital.

"It's just a sad situation," Morton said. "I think in the old days a politician was for the people. That summed it up. 'I want to do something to make a difference and for the people.' Now, it doesn't matter what a person thinks. It's just what the party is. As long as it is set up that way, no wonder we can't get things resolved."

While layoffs at Vanderbilt University Medical Center and Saint Thomas Health have generated news stories, the smaller but steady trickle of job losses at rural hospitals has gone largely unreported.

Maury Regional Medical Center is eliminating positions if possible when retirements and resignations occur. The system is considering cutting some services. Its flagship hospital is losing $10.7 million a year because of the federal health law, the impact of sequestration and other budget cuts.

Wayne Medical Center is losing $807,000 a year. Marshall Medical Center is losing $257,000.

"The cuts that were part of the Affordable Care Act have already taken effect as of Oct. 1," said Alan Watson, chief executive officer of Maury Regional. "Those were predicated on people getting insurance through either the exchanges or Medicaid expansion. We're already experiencing cuts and have had not even a good thought of getting people covered through the expansion of Medicaid in the state -- let alone the difficulties that are going on with the exchanges."

Capella Healthcare has eliminated positions at its hospitals in McMinnville, Sparta, Woodbury and Smithville. Total staff has been reduced from about 700 at this time last year to about 650, said Mark Medley, president of hospital operations for Capella.

Hospitals have been cutting costs for more than a decade as the state made reductions to the TennCare program. On top of that, about 8 percent of the patients served at the four hospitals have no insurance. Medley has crunched numbers and determined that Medicaid expansion would bring in more than $1 million a year for Capella's hospitals.

But he can't count on that number, so his financial team is having to do more subtracting than adding.

"With the exception of probably River Park Hospital (in McMinnville), I would say the other three facilities are pretty much core staffing," Medley said. "If there is going to be full service in these communities as it exists today, it is going to be difficult for us to reduce the staffing much further."

"We have already, frankly, reduced services to the point that it just can't be cut any more unless you change materially the hospital's ability to provide inpatient services. That's not something that is on the table right now, but it could be."