AP NEWS

Changes to health care industry have rural hospitals on edge

August 21, 2016 GMT

FILLMORE — In late 2013, San Juan Hospital was in dire circumstances.

With less than a month’s worth of cash on hand, the 25-bed critical access hospital in Monticello was on the verge of insolvency.

As part of a federal push to adopt electronic health records, San Juan Hospital had rushed to implement a new system for which it underestimated the cost and overestimated the incentives it would receive in return, said Greg Rosenvall, director of the Utah Rural Independent Hospital Network.

The hospital was saved after a statewide effort involving the help of other health systems, according to Rosenvall. But its story is an increasingly common one for many rural hospitals across the U.S. that are struggling to adapt to major upheavals in the health care landscape in recent years.

To the small towns they serve, rural hospitals are more than just medical centers. They are economic engines, gateways to mental health care and social services, anchor institutions that provide recession-resistant jobs to small communities.

But squeezed by mounting regulations and declining reimbursements, many rural hospital administrators say they are struggling to stay afloat.

“It’s tough times for rural hospitals,” said Alan Morgan, CEO of the National Rural Health Association.

Some challenges are new: a shift to electronic records, which require costly new IT and security systems; a trend toward managed care rather than fee-for-service reimbursement structures; payment cuts to Medicare providers; declining rural populations.

Other problems as old as the hospitals themselves: recruiting and retaining staff; low volume; a high proportion of poor and elderly.

Rural hospital administrators who spoke last week at a conference hosted by Rep. Chris Stewart, R-Utah, in Fillmore said they felt burdened by a steady increase in new regulations that accelerated under the Obama administration.

Mark Dalley, of Gunnison Valley Hospital, said the changes are particularly hard on independent rural hospitals that are not affiliated with a large system like Intermountain Healthcare.

“We just don’t have the depth of positions,” he said. “We don’t have a system to rely on for IT or HIPAA or help with business associations or help with computer security and all the things that are becoming so very important.”

Alberto Vasquez, administrator at Garfield Memorial Hospital, said his hospital is struggling after a rural community hospital demonstration program — worth $1 million in 2014 — expired without being recontinued.

Vasquez said he is now dipping into the hospital’s savings to keep operations going.

“I can’t wait any longer,” he said. “It keeps me up at night, constantly worrying. … ‘Alberto, this broke. This is $5,000, $8,000, $10,000.’ It’s killing me. I’ve got to get that more stable.”

According to Rosenvall, no rural hospitals in Utah have closed in recent memory, which makes them relatively healthy. That’s not the case in the rest of the country.

Seventy-sixrural hospitals have closed since 2010, according to the Rural Health Research Program at the University of North Carolina at Chapel Hill — and the rate is picking up, according Mark Holmes, the program director.

Holmes attributed the trend to changes in how health care is paid for and delivered, declining populations in rural areas and increasingly integrated large health systems.

“There’s no smoking gun,” he said. “It’s just a thousand paper cuts that add up to a real effect.”

That makes solutions more difficult to find because the causes are more multifaceted, Holmes said.

Stewart, who grew up in a small town of 290 people about 40 minutes outside of Logan, said he is sympathetic. He is co-sponsoring several bills that aim to repeal or delay the enforcement of certain onerous regulations and restore some Medicare funding to rural hospitals.

“It didn’t start with President Obama,” Stewart said of the regulatory burden on hospitals. “These regulatory agencies have been powerful entities for a long, long time. But this president is very sympathetic to them.”

However, Stewart warned that legislative solutions may be slow to come.

“I pledge to you we’ll continue to work on these things,” he told administrators Wednesday. “Please be patient with us as we try to push against an enormous machine.”

Rosenvall said a recent survey of 17 rural hospitals conducted by the Utah Hospital Association found that many administrators suggest increasing reimbursements, expanding Medicaid and incentivizing physicians to graduate and come to rural Utah.

Morgan said boosting Medicaid and Medicare is also necessary because many rural hospitals tend to serve elderly and low-income populations. That will require support at the local, state and federal levels, he added.

“It’s an increasing crisis we’re working on now,” Morgan said. “It’s like a perfect storm, and everything is hitting the rural hospitals at the same time.”

Email:dchen@deseretnews.com

Twitter: DaphneChen_