Lower than two years after opening a state-of-the-art $26 million hospital in Leadville, Colorado, St. Vincent Health practically ran out of cash.
Hospital officers stated in early December that with out a money infusion they might be unable to pay their payments or meet payroll by the top of the week.
The eight-bed rural hospital had turned a $2.2 million revenue in 2021, however the windfall was largely a mirage. Pandemic reduction funds masked issues in the best way the hospital billed for providers and picked up funds.
In 2022, St. Vincent misplaced practically $2.3 million. It was liable to closing and leaving the 7,400 residents of Lake County with out a hospital or fast emergency care. A $480,000 bailout from the county and an advance of greater than $1 million from the state saved the doorways open and the lights on.
Since 2010, 145 rural hospitals throughout the U.S. have closed, in line with the Cecil G. Sheps Heart for Well being Providers Analysis on the College of North Carolina. However covid-19 reduction measures slowed that pattern. Solely 10 rural hospitals shut down in 2021 and 2022 mixed, after a file 19 in 2020. Two rural hospitals have closed already this yr.
Now that these covid funds are gone, many challenges that threatened rural hospitals earlier than the pandemic have resurfaced. Business analysts warn that rural services, like St. Vincent Well being, are as soon as once more on shaky floor.
Jeffrey Johnson, a companion with the consulting agency Wipfli, stated he has been warning hospital boards throughout audits to not overestimate their monetary place popping out of the pandemic.
He stated the inflow of money assist gave rural hospital operators a “false sense of actuality.”
No rural hospitals have closed in Colorado up to now decade, however 16 are working within the purple, in line with Michelle Mills, CEO of the nonprofit Colorado Rural Health Center, the State Workplace of Rural Well being. Final yr, Delta County voters saved a rural hospital owned by Delta Well being by passing a sales tax ballot measure to assist help the power. And state legislators are fast-tracking a $5 million payment to stabilize Denver Well being, an city safety-net hospital.
John Gardner took over as interim CEO of St. Vincent after the earlier CEO resigned final yr. He stated the hospital’s money crunch stemmed from selections to spend covid funds on tools as an alternative of working prices.
St. Vincent is assessed by Medicare as a critical access hospital, so the federal program reimburses it based mostly on its prices. Medicare superior funds to hospitals in 2020, however then recouped the cash by lowering funds in 2022. St. Vincent needed to repay $1.2 million on the identical time the hospital confronted greater spending, a rising accounts-payable obligation, and falling income. The hospital, Gardner stated, had mismanaged its billing course of, hadn’t up to date its costs since 2018, and did not credential new clinicians with insurance policy.
In the meantime, the hospital started including providers, together with behavioral well being, dwelling well being and hospice, and genetic testing, which got here with excessive startup prices and extra workers.
“Some companies the hospital was taking a look at moving into had been past the traditional menu of important entry hospitals,” Gardner stated. “I feel they misplaced their focus. There have been just a few dangerous selections made.”
As soon as the hospital’s upside-down funds turned clear, these providers had been dropped, and the hospital diminished staffing from 145 workers to 98.
Moreover, St. Vincent had bought an accounting system designed for hospitals however had bother getting it to work.
The accounting issues meant the hospital was late finishing its 2021 audit and hadn’t offered its board with month-to-month monetary updates. Gardner stated the hospital believes it might have underreported its prices to Medicare, and so it’s updating its reviews in hopes of securing extra income.
The hospital additionally bumped into issue with tools it bought to carry out colonoscopies. St. Vincent is believed to be the highest-elevation hospital within the U.S., at greater than 10,150 toes, and the tools used to confirm that the scopes weren’t leaking didn’t work at that altitude.
“We’re peeling the onion, looking for out what are the issues that went flawed after which fixing them, so it is hopefully a ship that is working pretty easily,” Gardner stated.
Quickly Gardner will hand off operations to a administration firm charged with getting the hospital again on monitor and hiring new management. However officers count on it may take two to a few years to get the hospital on stable floor.
A few of these challenges are distinctive to St. Vincent, however many usually are not. In response to the Chartis Center for Rural Health, a consulting and analysis agency, the typical rural hospital operates with a razor-thin 1.8% margin, leaving little room for error.
Rural hospitals working in states which have expanded Medicaid underneath the Reasonably priced Care Act, as Colorado did, common a 2.6% margin, however rural hospitals within the 12 non-expansion states have a margin of minus 0.5%.
Chartis calculated that 43% of rural hospitals are working within the purple, down barely from 45% final yr. Michael Topchik, who heads the Chartis Heart for Rural Well being, stated the speed was solely 33% 10 years in the past.
A hospital ought to have the ability to maintain operations with the revenue from affected person care, he stated. Further funds — akin to supplier reduction funds, revenues from tax levies, or different state or federal funds — needs to be put aside for the capital expenditures wanted to maintain hospitals updated.
“That is not what we see,” Topchik stated, including that hospitals use that supplemental revenue to pay salaries and hold the lights on.
Bob Morasko, CEO of Heart of the Rockies Regional Medical Center in Salida, stated a change in the best way Colorado’s Medicaid program pays hospitals has harm rural services.
A number of years in the past, this system shifted from a cost-based strategy, just like Medicare’s, to at least one that pays per affected person go to. He stated a rural hospital has to workers its ER each evening with not less than a physician, a nurse, and X-ray and laboratory technicians.
“In the event you’re paid on an encounter and you’ve got very low volumes, you’ll be able to’t cowl your prices,” he stated. “Some nights, you would possibly get just one or two sufferers.”
Hospitals additionally wrestle to recruit workers to rural areas and sometimes must pay greater salaries than they will afford. Once they cannot recruit, they have to pay even greater wages for short-term journey nurses or docs. And the shift to an encounter-based system, Morasko stated, additionally difficult coding for billing , resulting in difficulties in hiring competent billing workers.
On prime of that, inflation has meant hospitals pay extra for items and providers, stated Mills, from the state’s rural well being middle.
“Essential entry hospitals and rural well being clinics had been established to supply care, to not be a moneymaker in the neighborhood,” she stated.
Even when rural hospitals handle to remain open, their monetary weak spot can have an effect on sufferers in different methods. Chartis discovered the variety of rural hospitals eliminating obstetrics rose from 198 in 2019 to 217 final yr, and the quantity not providing chemotherapy grew from 311 to 353.
“These had been two we had been in a position to monitor with massive information units, but it surely’s throughout the board,” Topchik stated. “You do not have to shut to be weak.”
Again in Leadville, Gardner stated monetary lifelines thrown to the hospital have stabilized its monetary state of affairs for now, and he would not anticipate needing to ask the county or state for extra money.
“It provides us the cushion that we have to repair all the opposite issues,” he stated. “It is not excellent, however I see mild on the finish of the tunnel.”