Rescue program creates dilemma for rural hospitals
The deal: Take cash but discharge, transfer patients within 24 hours
It was 3 a.m. at the 10-bed hospital near the River of No Return, and by every measure, Ella Wenrich should have been dead.
Gastrointestinal bleeding had sent her hemoglobin level — typically above 12 — down to 3.3, and she needed an enormous blood transfusion at a larger medical center. But amid a surge in COVID cases, every major facility within 400 miles refused to take her. The smallest hospital in Idaho was, once again, on its own.
The doctor woke the sheriff and sent him barreling north in his pickup truck with a cardboard box lined with ice packs and a mission to bring back blood. Wenrich, 83, known as Ms. Ella, needed seven units. The rush paid off, and she survived. The hospital that saved her may not.
For 46 million Americans, rural hospitals are a lifeline, yet an increasing number of them are closing. The federal government is trying to resuscitate them with a new program that offers a huge infusion of cash to ease their financial strain. But it comes with a bewildering condition: They must end all inpatient care.
The program, which invites more than 1,700 small institutions to become federally designated “rural emergency hospitals,” would inject monthly payments amounting to more than $3 million a year into each of their budgets, a game-changing total for many that would not only keep them open but allow them to expand services and staff. In return, they must commit to discharging or transferring their patients to bigger hospitals within 24 hours.
The government’s reasoning is simple: Many rural hospitals can no longer afford to offer inpatient care. A rural closure is often preceded by a decline in volume, according to a congressional report, and empty beds can drain the hospital’s ability to provide outpatient services the community needs.
But the new opportunity is presenting many institutions with an excruciating choice.
“On one hand, you have a massive incentive, a ‘Wow!’ kind of deal that feels impossible to turn down,” said Harold Miller, president of the nonprofit Center for Healthcare Quality and Payment Reform. “But it’s based on this longstanding myth that they’ve been forced to deliver inpatient services — not that their communities need those services to survive.”
Some rural health care providers and health policy analysts say the officials behind the rule are out of touch with the difficulties of transferring rural patients. Bigger hospitals — bogged down with COVID surges, pediatric RSV patients and their own financial woes — are increasingly unwilling to accept transferred patients, particularly from small field hospitals unaffiliated with their own systems.
There are also blizzards, downed cattle fences and mountain pass roads that close for months at a time.
“I really want to give this policy a chance to work well,” said Katy Kozhimannil, director of the University of Minnesota Rural Health Research Center. But gambling with transfers could mean “some of the most extremely remote and marginalized communities could end up with no care at all — and that’s what we were trying to avoid in the first place.”
More than 180 rural hospitals have closed in the United States since 2005, according to a recent analysis, with a record 19 closings in 2020 alone. Then, the trend seemed to pivot toward a brighter future: In 2021, the number plummeted to just two.
“The total margins look great, but behind them, there’s a sad reality,” said Carrie Cochran-McClain, chief policy officer of the National Rural Health Association. More than $15 billion in pandemic-era federal aid was injected into rural hospitals to keep them open. On Dec. 31, most of it will expire.
Now, labor expenses per patient are up more than a third, and payment rates are lagging. More than 600 rural hospitals — 30 percent of the total — are at risk of shuttering. More than 200 could close within three years, according to a study by the Center for Healthcare Quality and Payment Reform. In 10 states, at least 40 percent of rural hospitals are in danger: In Kansas, 16 could close within three years; in Mississippi, 24.
When rural hospitals close, it is medically and economically devastating for communities. They have supported one in every 12 rural jobs and contributed to about $220 billion in economic activity per year, according to the American Hospital Association. A community’s population typically shrinks soon thereafter.
The new federal program is designed to mitigate that threat. Struggling hospitals that convert themselves to rural emergency hospitals will receive monthly payments of $272,866, with increases based on inflation each year. They will also receive higher Medicare reimbursements than larger hospitals. The new option takes effect on Jan. 1. Cascade Medical Center, where Wenrich was treated, seems like exactly the type of hospital that federal officials had in mind.
This former lumber mill community is home to fewer than 1,000 people, but the hospital serves patients from across 2,800 square miles; patients travel up to eight hours round trip to get treatment.
“We play eight-man football with a nine-person roster,” said Tom Reinhardt, the hospital’s chief executive.
Small rural facilities like Cascade don’t enjoy revenue from lucrative procedures like heart and joint surgeries, which medical systems often capitalize on to increase cash flow. The hospital is operating at a loss of around 20 percent for the third year in a row.
If Cascade Medical Center were to become a rural emergency hospital, it would lose payments from both inpatients and swing beds — the total was more than $624,000 in 2021 — and services those patients would have used, such as lab tests and X-rays. But for a hospital with a total revenue of just $7.3 million in 2021, the new $3.2 million annual payments could still put it significantly ahead.
“The math gets harder and harder,” Reinhardt said. “It would be irresponsible for me to not take this option to the board.”