National Leader Talks Hospital Issues

By DARRELL SMITH | dsmith@newsexaminer.com

Financial issues Fayette Regional Health System is going through are the same as what most rural hospitals across the country are seeing, according to a leader of the National Rural Health Association.

Brock Slabach, National Rural Health Association – Vice President for Patient Services, addresses a crowd of Fayette Regional employees and area leaders. Mr. Slabach visited Connersville to present a review of trends from a national/state perspective — taking a close look at what is harming rural hospitals, and what can be done to help them. Also pictured in this panel discussion are (L-R) Andrew Van Zee, Indiana Hospital Association – Vice President; Don Kelso, Executive Director – Indiana Rural Health Association; Randy White, Fayette Regional Health System – President & CEO.

In the past year, the number of rural hospitals operating at a loss grew by 4 percent to 44 percent, Brock Slabach, NRHA senior vice president, said.

Fayette Regional recently asked for protection from creditors while it reorganizes its finances under the U.S. Bankruptcy Code.

Slabach and Don Kelso, Indiana Rural Health Association director, met with community leaders and hospital board members Tuesday for an update on rural hospital issues. There is some ignorance around those issues, he said, because people in Washington think only of larger hospitals like IU Health or St. Vincent that are making money rather than small hospitals like Fayette Regional, he said.

State and federal programs need to change the amount of Medicaid and Medicare reimbursements to rural hospitals, he said. Over the years, the federal government has reduced the ability of FRHS to receive reimbursement.

A University of North Carolina study showed that urban hospitals are making much more money than rural hospitals, some of which are losing money, Slabach said. Rural hospitals the size of FRHS are at the lower end of the chart because it is not eligible for some reimbursements.

“I could talk all night as to why, none of it is OK, it’s arbitrary,” he said. “Someone made up rules in 1983 that if you are going to be a Sole Community Hospital you have to meet certain criteria and you’re either in or out.”

The hospital lost 29 percent reimbursement on a drug discount payment because it participates in a 340B drug discount program. Bad debt reimbursements for Medicare patients have been cut by $3.8 billion nationally over the past 10 years. Sequestration in 2013 caused a reduction of 2 percent off the top of every Medicare payment.

Everything together has resulted in an increasing number of hospitals closing. The makeup of those hospitals closely fits Fayette Regional’s profile: small with declining populations, high unemployment, high percent of uninsured patients, high proportion of Medicare and Medicaid patients and increasing competition.

The NRHA is advocating in Washington for the proposed Save Rural Hospitals Act, for regulatory relief and creating a new model of health care, he said. The Center for Medicare and Medicaid Services has implemented a “Rural Lens” to look at policy more closely.

“The last year and half, the tenor at CMS has changed considerably,” he said. “I have about four contacts that are well-placed in the agency that I work with closely. In things they have the ability to correct, they do. I think here (Fayette Regional), the problems are a combination of regulatory and legislative.”

Fayette Regional CEO Randy White said the hospital is as rural as it gets and is in as poor an area as can found yet the hospital will lose $2.5 to $3.6 million because it does not fit some of the definitions in the 340B program.

The designation as a “Critical Access Hospital” would benefit the hospital but Fayette Regional is within 35 miles of another hospital, making it ineligible. The hospital also does not qualify as a “Medicare Dependent Hospital” that would make it eligible for a higher payment, Slabach said.

White said, “What do definitions have to do with how poor we are and what our people need? … what does it have to do with anything? Why does it have to be that way, because all it does is penalize us.”

The 42 beds at the  hospital’s Care Pavilion for youth and the 46 beds at North Star Recovery – providing services like no one else in the state – penalize the hospital when it comes to bed counts for some programs. Many of the people in the beds do not live in Fayette County, but the hospital does not get credit in some programs since they are not local.

Many grants have requirements that disqualify Fayette Regional, he added.

Kelso, the Indiana Rural Health Association director, said outside larger hospitals will not come into a community and save the local hospital unless there is something in it for them.

“You’ve heard all too well, this hospital doesn’t fit Critical Access, Sole Community, Medicare Dependent, Intergovernmental Transfers, this hospital can take advantage of none of those,” he said. “In my opinion, it’s unlikely someone will come in riding a white horse, because it’s not going to help them.

County Council member Dale Strong said many people have asked if the city or county could take ownership and make the hospital eligible for payments it cannot receive now.

That may come up in the bankruptcy hearings, White said. But, he said, the hospital lost less than 1 percent in the past year. The issue is finding a new bank willing to finance the hospital.

Slabach encouraged local officials to contact newly elected U.S. Rep. Greg Pence and Senator-elect Mike Braun to educate them about the plight of the hospital and ask them to work for changes in Washington.