Sault Ste. Marie, Michigan, had only two confirmed COVID-19 cases by early May, but the pandemic was still hitting its healthcare system hard. With the small city’s War Memorial Hospital mostly shut down and elective procedures postponed, the hospital was on shaky financial ground.
“My biggest concern is how all of this will impact the overall financial viability of our hospital,” said David Jahn, War Memorial president and CEO. In early May, the hospital was projecting revenues would be down for the year by 40%, or $35 million, if the coronavirus shutdown continued. The loss is not sustainable, Jahn said.
Eighty percent of the hospital’s revenue is from outpatient services, which declined by 53% in April. That tracks with the national average—79% of rural hospital revenue is from outpatient care, according to the Chartis Center for Rural Health. The center is part of the Chartis Group, a healthcare advisory and analytics services firm.
As states shut down across the country, elective procedures and surgeries stopped. And while War Memorial’s emergency room was open, “people are just not coming in at this time—maybe because they are afraid or maybe they are delaying much-needed care, which will exacerbate itself in the coming weeks and months,” Jahn said.
Rural hospitals are essential for people with kidney diseases. While small hospitals do not often do transplants, they provide a nearby lifeline for transplant and dialysis patients experiencing complications or needing routine follow-up care. In addition, some hospitals provide outpatient dialysis.
War Memorial Hospital’s outpatient dialysis center remained open this spring, implementing physical distancing rules and requiring everyone to wear masks. If finances forced the hospital to close permanently, it would be disastrous for the facility’s 47 dialysis patients, said nephrologist Mohammed Haider, MD, director of the dialysis center. “You cannot close this unit, whatever happens to the hospital,” he said. “The community has to run this center; otherwise, people will die.”
Sault Ste. Marie sits on Michigan’s Upper Peninsula, nearly 350 miles from Detroit. If the hospital closed, patients would have to travel much farther for care. The next nearest dialysis center is about a three-hour roundtrip, according to Haider. “This is a rural place. Driving three times a week will be very difficult,” he said. “It’s not sustainable.”
Haider said he worries that patients would stop going to dialysis regularly because of the distance. Older, sicker, and/or poorer patients often rely on other people to drive them to appointments, he explained. “Dialysis not only affects the patient,” he said. “It affects the whole family. It becomes a big burden on the family, too.”
Struggling hospitals
There are 2200 rural hospitals in the US. A little over half of them are critical access hospitals, a federal designation that requires hospitals to maintain a certain number of inpatient beds. That can be a challenge. Various federal programs over the years have buoyed the system to keep these hospitals open, but federal support continues to shrink, said Michael Topchik, MA, director of the Chartis Center for Rural Health.
These hospitals have little to no operating margin. One small hit—or one giant hit like a pandemic—can shut them down. Five years ago, 1 in 3 rural hospitals were operating at a loss. In 2020—before the pandemic—nearly half were.
In the past decade, more than 120 rural hospitals closed, Topchik said. Twenty of those closed within the past year. Chartis research from February 2020 named 453 rural hospitals vulnerable to closure.
“Rural hospitals disproportionately rely on outpatient procedures,” Topchik said. “The government has mandated a shutdown of virtually 80% of a hospital’s business, so these rural hospitals are suddenly out of the frying pan and into the fire.”
Chartis research showed that the average “days of cash on hand” for rural hospitals is 30 days. Some hospitals only have 10 or 20 days of cash on hand, Topchik said. “The vulnerability of rural hospitals cannot be overstated, and the outpatient dimension is essential. It’s really essential to what they do.”
Although it is not yet apparent how many rural hospitals will close because of the coronavirus shutdown, the pandemic will be “the final nail in the coffin” for hospitals barely hanging on, Topchik predicted. In March 2020, a physician group’s planned purchase of Haskell County Community Hospital in Stigler, Oklahoma, was halted because of the pandemic. The hospital medical staff was down to eight nurses.
Decline of rural healthcare
Nephrologist Mohamed Sekkarie, MD, MPH, of Bluefield, West Virginia, has been a witness to the decline of rural healthcare since he arrived in coal mining country in 1990. He now works in private practice with another nephrologist and a nurse practitioner and sees patients at Bluefield Regional Hospital. The hospital does not provide outpatient dialysis. Instead, three Fresenius freestanding clinics in the area cover about 200 dialysis patients, Sekkarie said.
In the 1990s, Bluefield’s hospital was “almost tertiary care,” he said, with 265 beds and multiple specialists. In 2010, the hospital was acquired by subsidiaries of Community Health Systems Inc. Last year, nearby Princeton Community Hospital Association bought Bluefield. In April 2020, Princeton closed Bluefield’s ob-gyn and surgical services departments, affecting 68 employees.
Many healthcare specialists have also fled. The Bluefield area used to have three urologists, according to Sekkarie. Now there are none. “That is an essential specialty, especially when you talk about the geriatric population, Sekkarie said.
These hospitals have little to no operating margin. One small hit—or one giant hit like a pandemic—can shut them down.
“I think things are falling apart in general.…Many people have left the area,” Sekkarie said. “Gradually, the services provided at the hospital are going down because there is less need. And patients tend to be poorer with more disabilities.”
Because of the pandemic, Princeton halted dialysis access surgery and interventions, unless it was an emergency complication. Instead, patients must make a four-hour round trip to Roanoke, Virginia, to a vascular access facility. “That is not unique to rural areas, but in big cities there are vascular access centers everywhere,” Sekkarie said.
Even financially secure hospitals have taken a hit from the pandemic closures. Nephrologist Scott Bieber, DO, with Kootenai Clinics in Coeur d’Alene, Idaho, does rounds at Kootenai Health’s 330-bed community-owned hospital, as well as two of its rural clinics. As of early May, the hospital had lost an estimated $15 million in revenue, according to Bieber. Executives’ paychecks were cut 10% beginning in March, and by May, providers’ paychecks were also reduced by 10%.
“The whole thing just exposes how dependent hospitals are on elective procedures,” Bieber said. “It really highlights a serious problem with how healthcare is paid for in this country, and it’s not just our system that is struggling. Hospitals all over the country have been impacted.”
One of the things Bieber worries about most is if the hospital begins cutting support staff, such as nurses and medical assistants, or rural outreach programs to help manage costs. “Those ancillary services and rural outreach programs are really the front line services that we need to take care of our patients,” he said. But those programs are expensive and don’t reimburse particularly well. “When things get lean, I am worried those will be the first to get cut.”
Also essential are the smaller, even more rural hospitals, he said. While those facilities do not offer kidney care or dialysis, it’s where residents can go for their lab tests and imaging services, preventing them from traveling long distances. “These community hospitals make things a lot more convenient for my patients,” Bieber said.
Changes in kidney care
Like most aspects of society during the pandemic, there are a lot of unknowns in rural healthcare right now. Some hospitals started to open for elective procedures in May, but if a second wave of COVID-19 hits the country, everything might shut back down.
“Even as we start doing more elective cases, it’s going to be slower than usual because of all the [COVID-19] screening procedures we have to do,” Bieber said.
On the flip side, the pandemic has increased the implementation and use of telehealth. Telehealth is a concept that has existed for many years but has not always been widely available. Now it could be here to stay, increasing access to care for many patients. Video telehealth requires high-speed internet, which is not available in some rural areas. “Many of my patients live in rural mountain areas of Idaho that do not have reliable internet or cellphone service available,” Bieber said. “We have been able to reach those folks with good old-fashioned telephone calls, and, thankfully, [the Centers for Medicare & Medicaid Services] has recognized that effort in recent payment changes.”
A March survey by Sage Growth Partners showed that only 25% of the 500 respondents had used telehealth before the pandemic. Now, 59% said they were more likely to use telehealth, and 44% said telehealth services are available to them.
An ongoing pandemic and/or the closure of hospitals could also expand at-home dialysis. Patients with chronic kidney disease are a high-risk population, particularly vulnerable to COVID-19 complications. At-home dialysis would keep them away from dialysis clinics, reducing their potential exposure to the virus. And if a hospital dialysis clinic closed for good, home dialysis would be more convenient than half-day car rides three days a week.
“The option for home dialysis is something many rural patients choose because it minimizes the need for travel,” said Jeffrey Hymes, MD, chief medical officer for Fresenius Kidney Care and senior vice president of clinical and scientific affairs for Fresenius Medical Care North America.
“We have already seen record growth in home dialysis over the past year, which is increasing at nine times the rate of in-center treatments,” Hymes said. “As we expand telehealth and connected health options, we hope that more patients, including those in rural areas, will feel confident with choosing home dialysis in the future.”
Financial relief
The federal government has furnished some financial relief to hospitals, but more is needed, Topchik said. In May, the Trump administration announced rural hospitals will receive a $10 billion coronavirus package. Rural hospitals will receive no less than $1 million each.
There is broad bipartisan support in Congress to help rural hospitals survive, he added. Two pieces of legislation in recent years that could get more traction include the Senate’s Rural Emergency Acute Care Hospital Act, which would create a new Medicare classification to strengthen support for hospitals that have emergency rooms and outpatient services. But these hospitals would no longer be required to provide inpatient care.
The other bill, in the House, is the Save Rural Hospitals Act, which would eliminate the multitude of federal reimbursement cuts that have hurt rural hospitals. These include Medicare sequestration cuts and “bad debt” reimbursement cuts. Since 2013, Medicare “bad debt” is only reimbursed at 65%, requiring providers to absorb the other 35%.
“There’s a recognition that something needs to be done,” Topchik said. “It is a grave, grave crisis, and America is going to have to come to terms with it. I believe it’s going to come down to … a moral issue. We’re going to have to decide as a society if we’re going to make sure we provide healthcare to the roughly 60 million Americans who call rural America home.”
