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In this 2016 staff file photo, state Sen. Bo Watson listens to attendees during the Education Mini-Summit 2016 at the Volkswagen Conference Center in Chattanooga.

NASHVILLE — Struggling hospitals in rural parts of Tennessee could become eligible for state-supported business and technical expertise to maintain or reclaim their financial viability under a bill moving in the General Assembly.

The proposed Tennessee Rural Hospital Transformation Act of 2018, sponsored by Senate Finance Committee Chairman Bo Watson, R-Hixson, easily cleared the Senate Health and General Welfare Committee last week and now heads to the Watson-headed panel.

"At the end of the day, rural hospitals have to make decisions for themselves, but this is to try to give them some access to [help] guide them with their decision-making and try to give them viability," Watson said.

Watson, a physical therapist and the director of Sports Medicine and Therapy Services at Parkridge Medical Center in Chattanooga, had discussed his idea earlier this year, saying rural hospitals often lack "economy of scale" because of the low number of patients.

The bill, sponsored by Rep. Kelly Keisling, R-Byrdstown, in the House, would create a grant program, administered by the Tennessee Department of Economic and Community Development, aimed at identifying consultants to help economically distressed rural hospitals assess their continued viability and come up with concrete recommendations to address problems.

It calls for identifying the most economically distressed hospitals — the facilities are often the largest employer in rural areas and have huge economic impacts in and of themselves. Moreover, whether or not they can provide adequate medical services or even come close can influence other business' decisions to locate, stay or flee an area.

In the past few years, 10 rural Tennessee hospitals have closed their doors. Democrats in the Republican-dominated General Assembly say that is because GOP lawmakers have refused to agree to expanding Medicaid, operated here as TennCare, to some 280,000 low-income Tennesseans. In 2011, Senate Republicans famously torpedoed Republican Gov. Bill Haslam's Medicaid expansion plan not once but twice.

As a result, Democrats argue, the state and hospitals, including rural facilities, have collectively lost billions of dollars.

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Republicans reject that argument, with Watson saying the primary culprit is rural hospitals' difficulty in addressing major changes in any number of areas, including technology. Moreover, they argue it can be difficult for leadership at a small hospital to deal with the pace of change in the fast-moving health care field where the hospital CEO often has any number of responsibilities held by several executives in an urban facility.

"We're putting together the framework for something that will be operational," said Watson, who began working on the effort about three years after attending a conference involving a somewhat similar program in South Carolina. "We [the state] would hire the consultant to go into the hospital because the viability in that community has larger implications than just the health access.

"You're talking about a large employer, you can't have business there without a health care facility," Watson added. "There's a lot of reasons why I've turned this into an economic argument rather than a health care argument."

The bill calls for a hospital "transformation plan," defining it as a strategic plan developed by contractors in close collaboration with target hospitals and community stakeholders to provide recommendations and actionable steps to preserve health care services in a community.

Hospitals would submit applications to Economic and Community Development officials for review and approval to get a consultation. Final plans would include implementation timelines to be submitted to state officials who would then monitor progress.

Watson is hoping that if the measure becomes law, ECD officials could quickly identify two or three hospitals and begin working with them "because we have two or three that are on the bubble right now."

He is working with the Haslam administration to get an agreement on funding.

According to the bill's fiscal note, it would require $305,000 in the first year, with the money going to hire a director and ancillary expenses. But other aspects could hit $1 million or so, according to fiscal analysts.

Based on information from the Tennessee Hospital Association, there are 66 acute-care, rural hospitals in Tennessee. Economic and Community Development officials estimate that 20 of the 66 hospitals will receive consultations with a contractor from ECD in order to develop a transformation plan.

House Minority Leader Craig Fitzhugh, D-Ripley, a fierce advocate for Medicaid expansion, said that "well, of course, I think anything might be helpful."

But Fitzhugh, a candidate for governor, called it "a little strange to me that we're using ECD to try to assist hospitals when we have a cost structure in health care that needs fixing. We're just sort of brushing over, literally, the real thing that wouldn't take a bill. And that's expand Medicaid."

However, House Health Committee Chairman Cameron Sexton, R-Crossville, called the Watson/Keisling measure a "good bill."

"ECD's willing to lend a hand to hospitals who may need a little extra help in doing various things to make sure they can stay afloat or whatever," Sexton said. "It's a good idea."

Keisling's companion comes up in the House Health Subcommittee this week. Sexton said "it should move without problem."

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow on Twitter @AndySher1.

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