Small hospitals cope with rural health crisis

Ryan Neville, CEO of the Marshfield Medical Center-Neillsville, leads a daily morning safety huddle with the staff. Neville says the hospital is doing many things to improve health care in the rural area, including telemedicine for specialist visits and communicating regularly with Amish and Mennonite communities.

When Ryan Neville was brought on as CEO of Memorial Medical Center, the sole hospital serving Clark County, it could not get a bank loan.

At that time, in 2013, rural safety net hospitals — located more than 35 miles from another hospital — had a national average of 69 days of cash reserves. But the Neillsville hospital lost $3 million that year and had enough reserves to pay expenses for just four days.

The hospital needed new equipment to boost revenue. With few other options, it took the unusual step of seeking help from city hall, which helped the hospital get a $1.5 million loan.

“Without that loan that the city helped us get or backed us on, we potentially could’ve closed or been significantly downsized,” Neville said.

The hospital in central Wisconsin provides 24-hour trauma care in a county of 34,000 people spanning 1,200 square miles. Had it closed, residents of the farming community would have had to drive 40 minutes to Marshfield or an hour to Eau Claire, turning some medical emergencies into catastrophes.

Nationwide, 155 rural hospitals have closed in the past 15 years, according to the North Carolina Rural Health Research Program. Nearly half of the remaining rural hospitals lose more money than they make, said Michael Topchik, national leader of the Chartis Center for Rural Health, a Chicago-based consulting firm.

Wisconsin has fared better than many states: Just one rural hospital has closed in the past 10 years. Others have cut services or merged with larger systems to stay alive.

In the red

But as of 2017, 16 of Wisconsin’s 76 rural hospitals were operating in the red, according to a report from Chartis and iVantage Health Analytics. According to Navigant, another Chicago-based health care consultant, nine such hospitals were in danger of closing, including two — in Durand and Grantsburg — that are considered essential to the local community.

And a report from the Wisconsin Hospital Association found unpaid medical bills continue to climb as 150 Wisconsin hospitals reported $1.2 billion in “bad debt” and charity care in fiscal year 2018 — an increase of nearly $90 million from fiscal year 2017.

Rural hospital closures can be deadly: Mortality rates for time-sensitive conditions such as heart attacks and strokes increased by nearly 6% after a rural community lost its hospital, according to a new report on California’s hospitals by University of Washington researchers.

Trapped under antiquated policies and infrastructure in communities with dwindling populations, some rural hospitals cannot afford to adapt to a rapidly evolving health care system.

“There’s a lot of agreement that we need to do something,” Topchik said. “Because otherwise you’re going to see a dust bowl vision … with all these small towns just drying up and blowing away like tumbleweeds.”

Reimbursement short

The federal Critical Access Hospital designation is vital for many small rural hospitals. If hospitals meet requirements, including 25 or fewer inpatient beds, 24-hour emergency care and located more than 35 miles from another hospital, Medicare reimburses them at 101% of allowable cost, although the number is closer to 90% in reality because of cutbacks and what is deemed allowable, Topchik said.

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That higher reimbursement is the only thing keeping some rural hospitals open. But it also locks them into a model of inpatient-focused care that no longer makes sense, said Dave Mosley, managing director of Navigant Health Care.

Compared to urban hospitals, rural hospitals treat more patients with government insurance, which generally pays less than private insurance, or without any insurance.

In Wisconsin, a private insurer will pay the hospital nearly three times what Medicare would pay, according to a 2019 Rand Corporation study. Medicare pays hospitals 88 cents for every $1 spent, while Medicaid pays 90 cents on average. States set Medicaid reimbursement rates, and they can range from 81% to 130% of cost, according to a 2016 Medicaid and CHIP Payment and Access Commission report. And many uninsured cannot pay at all.

Rural hospitals could lose special Medicare payments

“So if you have Medicaid that pays less than cost, and you have Medicare that pays less than cost, in most cases, and then you have uninsured individuals, how exactly is the hospital supposed to make money? And the answer is: They very often cannot,” Mosley says.

4 patients a night

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The Neillsville hospital, for example, serves a county where 18% of residents are uninsured — the highest rate in the state. The county has high rates of poverty, too: 22% of Clark County’s children live in poverty — significantly higher than the statewide average of 16%.

Small hospitals cope with rural health crisis

Cassie Symons, a physical therapist assistant, works with patient Peter Langreck, who recently had a bilateral knee replacement, at Marshfield Medical Center-Neillsville.

Hospitals spend money day-in, day-out on maintaining inpatient beds, running air conditioning and keeping the lights on regardless of whether they have any patients. Neillsville has 17 hospital beds that remain mostly empty; it has an average of just four patients a night, although the beds are used for other services during the day.

Topchik says hospitals with good management can face tough situations and still survive, but “you can only get so lean and so mean.”

Expanding Medicaid under the Affordable Care Act also could help rural hospitals. States that did not expand Medicaid saw more hospital closures, Topchik said. Rural hospital profits improved in states that did expand, according to researchers at the North Carolina Rural Health Research Program. Wisconsin was unique in that it partially expanded Medicaid under the ACA, but Republicans have opposed Democratic Gov. Tony Evers’ call for broader expansion.

Congress is considering several bipartisan bills to change models of care to help rural hospitals, but they stand little chance of passing a divided Congress, Mosley said. One proposal, stalled in Congress, would allow rural safety-net hospitals to operate as standalone emergency departments, without maintaining beds. They would be reimbursed by Medicare at 110% of cost.

Loss of care

In 2018, Neillsville’s hospital board faced a hard decision.

The multibillion-dollar Marshfield Clinic Health System and its state-of-the-art hospital were drawing away patients. Many businesses were choosing Security Health Plans, Marshfield’s own insurer, which did not cover services rendered at Neillsville.

The hospital board decided the Neillsville hospital should be absorbed by Marshfield.

Neville calls it the “best move we’ve made,” allowing the hospital to utilize the larger system’s services including IT and human resources, increase the volume of patients and bring a rotating cast of specialists into the hospital, now named Marshfield Medical Center-Neillsville. In fact, Neillsville will soon get a new $46.8 million medical campus funded by the health system.

The deal Neillsville made is increasingly common. Mergers, acquisitions and affiliations of small, rural hospitals with large health systems have reduced the number of independent rural hospitals in Wisconsin to fewer than a dozen.

On average, rural hospitals that are affiliated with health systems have significantly improved operating margins, higher quality and outcomes and better patient satisfaction, Topchik said.

But for some hospitals, the loss of independence has meant the loss of care. A total of 152 communities in the U.S. have lost access to obstetrics services since 2011. Eleven of Wisconsin’s rural obstetric units have closed in the past decade, including Neillsville’s.

11 rural hospitals in Wisconsin stopped delivering babies in past decade, report says

Closing hits Arcadia

In Wisconsin, one rural hospital has closed in the past 10 years: Franciscan Skemp Medical Center in Arcadia, located between La Crosse and Eau Claire, in 2011.

The area’s nursing home closed soon after the hospital was shuttered, and the town’s pharmacy recently closed when Shopko went out of business.

Family physician Dr. Bert Hodous used to work at the Arcadia hospital. He now works at the Mayo Clinic Health Systems’ clinic in Arcadia. He acknowledged that the hospital was old and required upgrades.

It is not uncommon for people to drive an hour to La Crosse to get their prescriptions, which Hodous said is not good for the community.

“The confidence that you feel in your heart is affected by your sense of the community having resources in place that you can access,” Hodous said. “And the loss of the hospital kind of gutted that confidence and that sense of safety.”

Trapped under antiquated policies and infrastructure in communities with dwindling populations, some rural hospitals cannot afford to adapt to a rapidly evolving health care system.

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