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Rural Hospitals Struggle to Keep Their Doors Open

Policymakers must decide whether to spend more money on small hospitals serving a limited number of patients that, in most cases, cannot keep their doors open without government assistance. But without them people, inevitably, will die.

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*This story has been updated with a comment from the King County emergency medical service

It could have happened anywhere, but it was on the high plains of Guthrie, Texas — 90 miles east of Lubbock — where Dannie Tiffin suddenly collapsed of a heart attack last spring.

No one knows for certain, but doctors and hospital staff in this rural area say they’re pretty sure the 62-year-old electrician could have made it, had he gotten care in time.

“The ‘what-ifs’ — that has haunted me and our children day and night,” said Keitha Tiffin, Dannie’s wife, who works at a hospital in Childress. “The thought that if he had been here, would he still be with us today?” 

Since the hospital closed in Paducah, a town 30 miles to the north, patients in Guthrie have 60 long miles to travel to Childress for care. It’s a feeling of isolation that has crept up on other rural corners of the state following a spate of 10 hospital closures in the past two years. And financial data collected by the state and federal government shows revenue is falling for other rural hospitals, suggesting more may be on the brink.

Policymakers, operating on tight budgets, must decide whether they are willing to spend more money on small hospitals serving a limited number of patients, hospitals that in most cases could not keep their doors open without government assistance. But without them, people, inevitably, will die.

“We’ve all seen the crash that’s coming in the next five years,” said Lynn Butler, an Austin-based lawyer who has worked on hospital bankruptcy cases. “The Legislature’s more interested in cutting revenue and cutting services than providing the basic services for these rural communities. This is a perfect storm of events that’s going to hit the state, hard.”

Texas' rural hospitals have long struggled to stay afloat, but new threats to their survival have mounted in recent years. Undelivered promises of federal health reform, payment cuts by both government programs and private insurers, falling patient volumes and a declining rural population overall have been tough on business — a phenomenon one health care executive called "death by a thousand paper cuts." Add to that Texas’ distinction as the state with the highest percentage of people without health insurance and you get a financially hostile landscape for rural hospital operators.

“Hospital operating margins, and this is probably true of the big guys and the small guys, too, are very small, if not negative,” said John Henderson, chief executive of the Childress Regional Medical Center. “In a way, Texas rural hospitals are kind of in a worst-case scenario situation, because we lead the nation in uninsured, and we took Medicare cuts hoping that we could cover more people.” 

That was part of an agreement negotiated by the American Hospital Association when Congress passed the Affordable Care Act, President Obama’s signature health care law. The idea was that hospitals would take cuts to their Medicare payments, but in return they would have to spend less on “charity care” because most patients would have health insurance.

But because Texas' Republican leadership has vehemently opposed expanding Medicaid to low-income adults, hospitals say they are paying the price for cost savings they didn't receive.

Federal health reform mandated penalties for hospitals, rural and urban, that have too many patients re-admitted for follow-up care. Another program cracks the whip on hospitals where too many patients get sick during their stay. Federal sequestration, meanwhile, has meant a 2 percent across-the-board cut to Medicare payments.

Rural hospitals took a further hit from the federal health law’s reductions in “disproportionate share hospital” payments to hospitals with large numbers of indigent and uninsured patients. And then there was the Texas Legislature’s 10 percent cut for Medicaid outpatient care in 2011. 

The sum of all these changes has people like Don McBeath, who lobbies for rural hospitals, warning of a repeat of the widespread hospital closures Texas experienced three decades ago. In 1983, the federal government restructured the way Medicare made payments to hospitals, meant to reward efficient care. Those changes proved untenable for small hospitals with low patient volume, heralding decades of closures that claimed more than 200 small Texas hospitals as casualties, McBeath said.

Some counties can afford to raise taxes to keep their hospitals open; others cannot, or find that raising taxes is politically impossible.

And when a small county hospital closes, often the hospital in the next county over must shoulder a bigger burden of uninsured patients. Even patients with insurance face higher deductibles and often can’t pay their bills. 

“When it closes, you’re forced to make other decisions, other plans,” said Becky Wilbanks, a judge in East Texas’ Cass County, which saw a hospital closure last year. “That’s an economic hit that we took.”

Rural hospitals are often one of the biggest and highest-paying employers in a community, Wilbanks said.

And when they close, it can have a domino effect on other local businesses, said Hall County Judge Ray Powell. When his county’s hospital closed in 2002, it prompted the local farm equipment dealership to close its doors and move to Childress.

“It was a big loss,” he said. “It was devastating.”

Across Texas, rural counties are seeing their populations dwindle. King County, home to Guthrie, is one of Texas’ 46 rural counties that are projected to lose population over the next four decades — at a time when the rest of the state’s population is expected to double.

It’s a trend of urbanization that is only hastened when a small hospital shuts down, Henderson said, because the hospital’s closure can be the death knell for an entire community.

“Who would choose to live in or retire to a community that doesn’t have a local hospital or local ER?” said Henderson. “How can a rural community hope to be there if you can’t provide health care?”

King County is one of 24 counties that lacked even a single physician, according to a 2010 analysis by the state demographer.

Jeannie Sweeney, the King County emergency medical service director, said the county is required to have at least one certified care attendant present on its ambulance. There are only two certified people in the county, she said.

Keitha Tiffin said she hoped other rural communities would be spared tragedies like her husband’s.

“It’s too late for my husband,” she said, “but dear God, this should not happen to anyone else.”

This story was produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

*Correction: An earlier version of this story misidentified a lawyer who worked on hospital bankruptcy cases. His name is Lynn Butler.

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