By Tom Baxter
Jimmy Lewis is a man known for dire predictions.
The CEO of HomeTown Health, which represents more than 50 rural Georgia hospitals, he peppers his regular email messages to his clients with urgent warnings to hoard every penny of cash they can get their hands on, and as a lobbyist his testimony has caused the chair of one committee to complain that he always says the sky is falling.
Ominously, his predictions are starting to come true. Lewis forecast at the beginning of the year that five to six rural hospitals might be forced to close in 2013, and already there have been two. Calhoun Memorial Hospital in Arlington closed in February, and Stewart-Webster Hospital in Richland shut its doors last week.
That’s only a foretaste, Lewis says, of what’s going to happen when the Affordable Care Act next year eliminates the subsidies which have been key to the survival of many of these hospitals, and imposes new standards – for instances, penalizing hospitals for readmitting patients in less than 30 days — which will directly impact their bottom line.
“We will probably get hurt worse than any state in the nation,” Lewis said last week. “It’s not like we will be friendly faces to the feds, and they’re going to come in and do major damage to us. ” He’s certainly not an enthusiastic fan of Obamacare, but thinks the state has no choice but to accept the Medicaid expansion which was intended as compensation for what the new law takes away.
“With Obamacare coming down the pike, if we don’t get some kind of relief in (Medicaid) expansion, we will face certain death,” Lewis said.
Georgia’s rural hospitals face all.the problems of rural hospitals in other states, and then some.
A declining and aging population base and a struggling rural economy means fewer and fewer paying customers with increasingly more expensive medical problems. About half the patient traffic in rural hospitals comes from Medicare recipients, with 20 to 30 percent from Medicaid – which in Georgia compensates hospitals at about 85 percent of their costs – and non-payers, who the hospitals are required by law to treat. To break even, hospitals need for about a third of their patients to be fully insured private payers, and that margin is getting increasingly hard to reach.
“We start off with a demographically deprived industry, and we have dropped the payment per capita down to such a low rate that no longer do they cover the cost of the service provided,” Lewis said. “You’ve got a mandated benefit for which their is no social funding.”
These problems are compounded in Georgia, in part due to the state having 159 counties, second only to Texas, which has 254. That led over time to a proliferation of county hospitals, many of which no longer come close to the 40,000 population basis which Lewis estimates they need to survive. Many rural Georgia hospitals have less than 10 days cash on hand, he says, and the most stressed are surviving on virtually a day-to-day basis.
It’s a problem which cries out for more consolidation of facilities and greater flexibility in providing more small-scale solutions, such as stand-alone emergency rooms and nurse practitioners in communities which can no longer attract doctors. But there are both cultural and governmental roadblocks standing in the way.
“The consolidation problem is a function of who won the football game in 1922. My county played your county in 1922, and ya’ll beat us 48-3. We won’t ever forget it, and as a result we will not consolidate,” Lewis said. “When you get out in rural Georgia, it’s the Hatfields and McCoys all over again.”
Metro Atlanta has lots of small clinics where you can get flu shots or treatment for minor injuries, but that’s because we have a lot of people who can afford the service. It’s extremely hard to attract doctors to more remote parts of the state, and the rules for getting a Certificate of Need (CON) to establish facilities like stand-alone ERs don’t work in the favor of rural communities. They were intended to avoid costly and unnecessary duplication of services in growing areas, so that not every hospital would be doing heart surgeries, for instance. The CON program doesn’t do as good a job of addressing the needs of an area where there’s no ob/gyn or delivery room for miles around.
A base assumption of the CON program is that hospitals have a certain permanence, like the churches which are the centerpieces of most small Georgia towns. But the reality, Lewis says, is that with the short margins they’re operating on now, rural hospitals are becoming more like small-town groceries stores which might be open for business on a Monday morning and closed by Friday night. The regulatory system isn’t nearly nimble enough to deal with that financial reality.
“A lot of lawyers and a lot of consultants have made a lot of money because the CON process is so confusing,” said Andy Miller, the CEO and editor of Georgia Health News. Miller also noted that Georgia is one of the most restrictive states in terms of what nurse practitioners are allowed to do.
It’s harder to address these problems, Lewis said, because an increasingly urbanized legislature is more concerned with problems like traffic in the suburbs, big county school systems and air quality on large metro areas.
The problems of rural hospitals are a threat to the economic health of communities as well as the physical health of their residents. When Stewart-Webster closed last week, it took some 80 jobs from an area where unemployment is already substantially higher than it is in Metro Atlanta. The loss of those jobs will in time be reflected in a hit to the county’s tax digest, furthering a vicious cycle.
When a rural area loses a hospital, it makes it that much harder to attract the new businesses it needs to bounce back. Combine this with inadequate broadband service, schools that can’t keep pace and environmental problems that don’t improve with a shrinking population, and pretty soon we may get to something closer to the Third World than the country life many of us remember with such nostalgia. It will be a bad place to get sick, in any case.