Since 2010, seven rural hospitals have closed in Tennessee. Nationally, some 283 are considered vulnerable for future closure, with two of those located in Tennessee.
With increased distances to emergency rooms, longer driving times can mean the difference between life and death. In many rural communities, jobs are also at stake, all of which beg the question: How do we save our rural hospitals?
Expanding Medicaid is naive and ignores the problems both with health care in a rural setting and the very reasons the Affordable Care Act, or Obamacare, the law under which such an expansion would occur, is crumbling around us.
Obamacare has failed to address health care financing. It fails to incentivize people to save and shop for care. Small businesses and individuals are hit with the insurers’ continual rate increases to cover hundreds of millions of dollars lost in the exchange. Now BlueCross BlueShield of Tennessee is dropping coverage to over 100,000 Tennesseans as they abandon the exchange market in three key cities.
Further, the suggestion that Medicaid expansion is the cure for what ails rural hospitals fails to address the economics of health care. Patients tend to gravitate to doctors and hospitals who have done more of a particular procedure. Let’s face it, if you or I need brain surgery, we will pick the surgical team who does 500 per year over the guy who does five per year every time. Even the medical literature supports this reasoning.
This movement of care to the major medical centers is making it harder by the day to profitably operate rural hospitals. The loss of revenue streams threatens more facilities, lost jobs and longer drives to emergency departments.
So, how do we expand revenue streams for rural facilities in service lines where patient care is just as good in a rural setting and, at the same time, not add to the debt and not expand the problems of Obamacare?
Let’s start with the Certificate of Need, or CON, process required of all health facilities to build assets and provide services. Right now, Tennessee hospitals are prevented from using the assets they have to provide skilled nursing care.
These certificates are sometimes difficult to obtain and are often rejected because of perceived competition and political considerations. Currently, rural hospitals with empty beds must apply to have those beds changed from acute care to other uses, a costly and time-consuming process.
They already possess staff and basic treatment modalities necessary to provide nursing home type care. Lifting the CON process for rural hospitals to provide such care could be a hospital-saver.
Currently, TennCare pays an average of $187.93 per day per nursing home bed. Skilled nursing in a hospital setting often pays even more. If these rural hospitals were able to average just 15 additional nursing home patients a day, that would produce an additional $1 million annually with hardly any increase in capital or fixed costs.
This added revenue could reverse their financial fortunes and allow them to provide the important emergency services these communities need.
Looking specifically at five hospital closures since 2012, one 63-bed facility had net positive revenues over $1 million in the year it was consolidated into another facility in its county. A second 62-bed hospital had a loss of over $5 million.
This shows there is more to the problem than just being a rural facility. However, the remaining three facilities, 77, 62 and 46 beds respectively, had losses ranging from $1.6 million to $680,000.
Clearly, getting government constraints off these facilities and allowing them to conduct business as skilled nursing homes with unused beds, would produce revenue capable of sustaining some.