Less than two years after opening a $26 million hospital in Leadville, Colorado, St. Vincent Health almost ran out of money.
Hospital officials said in early December that without an injection of money, they would not be able to pay their expenses or pay salaries until the end of the week.
The eight-bed rural hospital had made a profit of $2. 2 million in 2021, but the providence was largely a mirage. Pandemic relief bills masked disruptions in the way the hospital billed and collected bills.
In 2022, St. Vincent lost nearly $2. 3 million. He took a chance in the end and left Lake County’s 7400 citizens without immediate hospital or emergency care. .
Since 2010, rural hospitals in the United States have closed, according to the Cecil G Center. Sheps for Health Services Research at the University of North Carolina. But covid-19 relief measures have slowed this trend. Only 10 rural hospitals closed in 2021 and 2022 combined, after a record 19 in 2020. Two rural hospitals have already closed this year.
Now that those covid budgets are gone, many of the demanding situations that threatened rural hospitals before the pandemic have resurfaced. Industry analysts warn that rural settlements, such as St. Vincent Health, they are on fragile ground.
Jeffrey Johnson, spouse of consultancy Wipfli, said he warned hospital forum audits not to overestimate their financial scenario after the pandemic.
He said the influx of money grants has given rural hospital operators a “false sense of reality. “
No rural hospitals have closed in Colorado in the past decade, yet 16 are operating in the red, according to Michelle Mills, executive director of the nonprofit Colorado Rural Health Center, the State Office of Rural Health. Last year, Delta County voters stockpiled a hospital owned by Delta Health by passing a sales tax ballot measure to help the facility. And state lawmakers are accelerating a $5 million payment to stabilize Denver Health, an urban hospital with a safety net.
John Gardner took over as St. Vincent’s interim CEO after the former chief executive’s resignation last year. He said the hospital’s financial crisis was due to the resolution to spend the covid budget on gadgets rather than operating costs.
St. Vincent is classified through Medicare as a critical access hospital, so the federal program reimburses it based on its costs. Vincent had to pay $1. 2 million at the same time the hospital faced higher expenses, expanded accounts payable obligations and decreased revenue. The hospital, Gardner said, had mishandled its billing process, hadn’t updated its costs since 2018 and had no new doctors accredited with insurance plans.
Meanwhile, the hospital began adding behavioral fitness, home fitness and palliative care, as well as genetic testing, resulting in higher initial prices and more staff.
“Some of the corporations the hospital contemplated entering went beyond the general menu of critical access hospitals,” Gardner said. “I think they lost focus. Only bad decisions have been made. “
Once the hospital’s upside-down finances became clear, they were discontinued and the hospital reduced its workforce from 145 workers to 98.
In addition, St. Vincent had bought an accounting formula designed for hospitals, but struggled to make it work.
Accounting issues meant the hospital fell behind in completing its 2021 audit and failed to provide its board with monthly monetary updates. Gardner said the hospital believes it may not have reported its prices to Medicare, so it’s updating its reports in hopes of getting more revenue.
The hospital also had problems with the device it bought to perform colonoscopies. St. Se believes Vincent is America’s hospital, at more than 10,150 feet, and the device used to check that the glasses didn’t leak didn’t work at that altitude.
“We peel the onion, check what things went wrong and then repair them, so it’s a container that works pretty well,” Gardner said.
Soon, Gardner will hand over operations to a watchdog company tasked with getting the hospital back on track and hiring new executives. But officials expect it will take two to three years to put the hospital back on solid footing.
Some of those demanding situations are for St. Vincent, but many are not. According to Chartis Center for Rural Health, a consulting and research firm, the average rural hospital operates on a very narrow margin of 1. 8%, leaving little room for error. .
Rural hospitals operating in states that have expanded Medicaid under the Affordable Care Act, such as Colorado, have an average margin of 2. 6 percent, yet rural hospitals in the 12-state expansion have a margin of minus 0. 5 percent.
Chartis estimated that 43% of rural hospitals are operating in the red, down from 45% last year. Michael Topchik, who directs the Chartis Center for Rural Health, said the rate was just 33% 10 years ago.
A hospital can maintain its operations with profits from patient care, he said. Additional bills, such as the provider’s relief budget, proceeds from tax levies, or other state or federal budget, are set aside for capital expenditures needed to keep hospitals current.
“That’s what we’re seeing,” Topchik said, adding that hospitals use this extra profit to pay salaries and keep the lights on.
Bob Morasko, executive director of Heart of the Rockies Regional Medical Center in Departure, said a change in how Colorado’s Medicaid program will pay hospitals has damaged rural facilities.
Several years ago, the program shifted from a cost-based approach, similar to Medicare’s, to one that will pay based on the patient’s visit. He said a rural hospital will need to have at least one doctor, one nurse, X-ray specialist and lab technicians in its emergency branch each and every night.
“If you get paid for an appointment and have very low volumes, you can’t cover your costs,” he said. “Some nights I may only have one or two patients. “
Hospitals also struggle to hire staff from rural spaces and have to pay higher wages than they can afford. When they can’t hire, they have to pay even higher salaries for transitional nurses or roving doctors. And the move to a meeting-based system, Morasko said, also has confusing coding for billing, making it difficult to hire expert billing staff.
Most sensibly, inflation has meant hospitals are paying more for goods and services, said Mills of the state’s rural gym.
“Critical hospitals and rural fitness clinics were created to provide care, not to make money in the community,” he said.
Even if rural hospitals manage to stay open, their monetary weakness can help patients in other ways. Chartis found that the number of rural hospitals that got rid of obstetrics increased from 198 in 2019 to 217 last year, and the number that no longer provides chemotherapy increased from 311 to 353.
“These are two that we’ve been tracking with giant knowledge sets, but it’s widespread,” Topchik said. “You don’t want to close to be weak. “
Back in Leadville, Gardner said the monetary lifelines thrown at the hospital have stabilized his monetary scenario for now, and he doesn’t anticipate the need to ask the county or state for more money.
“It provides us with the cushion we want to fix all the other things,” he said. “It’s perfect, but I see the softness at the end of the tunnel. “
Credits: Main image: Snehitdesign/Dreamstime
Kaiser © Health News 2023
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