Kentucky State Auditor Adam Edelen recently found that 34 percent of rural hospitals — where an average of 72 percent of patients are covered by Medicaid or Medicare — were considered to be in poor financial health.
According to the Kentucky Hospital Association, 70 of the state's 109 hospitals have laid off more than 7,700 employees in the past two years.
What's happening to rural hospitals and the communities that depend on them?
Alison Davis, professor and director of Undergraduate Studies at the University of Kentucky's Department of Agricultural Economics and executive director of the Community and Economic Development Initiative of Kentucky and president of the National Association of Community Development Extension Professionals talked with Tom Martin about the numerous Kentucky agencies she partners with to research and assess community health needs and in that role has a finger on the pulse of the rural healthcare scene.
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Tom Martin: What is happening with rural hospitals in Kentucky?
Alison Davis: Rural hospitals in Kentucky, just like around the nation, are faced with just a litany of issues. Some are based on policy, some are based on populations that are leaving the rural areas, and some of these hospitals are underutilized. But the current legislation has provided opportunities and challenges for these rural hospitals, and some are doing well and some are not faring quite as well.
Martin: And you mean the Affordable Care Act?
Martin: It's extremely complex, isn't it? As you say, you can't peg this on one particular policy. There are economic forces in play. There are changes in demographics.
Davis: Yes. A lot of these rural hospitals rely on approximately three-quarters of the patients being covered by Medicare or Medicaid. So, we're relying on an older population and a lower income population to be served by these hospitals.
Martin: There was quite a hit to rural hospitals from the health law's cuts in special Medicaid payments to hospitals with large numbers of indigent and uninsured patients, and there was an assumption that most of the states would embrace the Medicaid expansion in the law and reduce their number of uninsured. But at least half the states have not done that.
Davis: Correct. Kentucky did expand Medicaid to provide health care to as many of our residents as possible. So, a lot of our lower income individuals who live in rural areas now have some form of government-sponsored insurance through Medicaid. And as a result, they are now accessing health care more than they did before.
Unfortunately, a lot of these patients are utilizing the emergency department for what are likely non-emergency issues. And as a result of the new health-care laws, the hospitals are not being reimbursed for the full cost of the care that they are providing.
Martin: Questions have been raised about how long Kentucky can continue to support or sustain that expansion.
Davis: That is a very big question. I think we're still trying to figure out the role for the Medicaid Care Organizations, because the idea behind having these organizations as we expand Medicaid is that they would really manage the care for these lower income populations and the individuals would seek the appropriate care at the appropriate place at the appropriate time. Hopefully over time those MCOs will become more efficient and the appropriate care will continue to increase. But at the current rate, we seem to be having quite a struggle.
Martin: What's going on with the demographics? Changing populations for example.
Davis: Well, we still see quite an exodus of individuals who are leaving the rural areas. They tend to go to the urban areas. Of those who are staying, we typically have more of the individuals that are over the age of 65 and those who don't have the mobility. Typically, those would be in the lower income population.
Martin: In many emergency cases, minutes count. We hear doctors talk about that "golden hour" and getting a patient to a facility where their condition can be determined and then quickly stabilized. Do these closures mean longer trips for treatment and uncertainty during these times of crisis?
Davis: Absolutely. Fifteen minutes doesn't seem like a long time, but it's a significant time period for life or death for long-term brain injuries, for instance and the additional cost associated with care when people are in dire need of emergency care.
Martin: Are these closures statewide?
Davis: They are relatively statewide.
Martin: And what do you see happening in a community that loses its hospital?
Davis: In some instances the hospital has to close its doors and there's nothing that can be done. In other instances, we've talked about some type of replacement facility still providing some level of emergency care; still having a doctor on call 24/7; trying to open a clinic of some sort. Each community will be unique in how they're going to respond, but we're trying to be proactive right now and have a game plan for those hospitals that we think are on the brink.
Martin: Does a closure reverberate through the economy of a community?
Davis: It tends to. Not only does it cause health impacts, but the hospitals are often the second largest employer in the community. So, you'll lose high-paying, high-quality jobs. They're a huge part of being able to attract new businesses to the area. Businesses don't want to move to a community where they don't feel like their families are safe because they don't have access to emergency care.
Martin: I was going ask you if you have thoughts on solutions, but it sounds as though this is very uncertain at the moment and kind of a moving target.
Davis: It is a moving target. Every year, we go to D.C. and we meet with legislators who are telling us what they think is going to happen and there are certain bills that are on the table for trying to protect some of our rural hospitals. Each year is fluid.
Martin: Everything we're talking about here implies tremendous change in terms of the way people live their lives, the security they feel about the availability of and access to health care.
Davis: I think it's profound. This is a new way of providing health care. It's a new way of collaboration amongst health-care providers and health-care agencies. What I've seen in a lot in rural communities are new partnerships between hospitals, clinics, providers and EMS. They are now recognizing that if they act in isolation, they're simply not going to make it.
And so, there are some really neat opportunities that have come out of this; some great communication that's occurred; some new innovative programs that have been implemented between these partnerships. It's a new way of doing business. When times are tough, we tend to have to rely on innovative practices and I see some of that going on. So, I think there is certainly some promise, but I think the next few years are certainly— they're tumultuous to say the least.
Martin: This must be having quite a discouraging impact on future generations of health-care providers.
Davis: It does. I believe that there are not nearly as many new health-care professionals that are going to graduate. Certainly, a very small share of them are going to go out to rural areas and practice. The living wages are nowhere near what you would get in an urban area and it's just not competitive. In addition, we have seen that the current providers in these rural communities, because of the new regulations, have decided to close up shop early. So, a lot of our primary care offices that have been around for the last 30 years that these families have been going to, they will cease to exist soon, I believe.