The plight of rural hospitals: Keeping them open in a post-pandemic world


TRI-CITIES, Tenn. (WJHL) — Amid the coronavirus pandemic, problems that were already plaguing rural hospitals nationwide have been made worse.

“I think that rural hospitals were left in the dust long ago,” said Ballad Health CEO and President Alan Levine.

The problem

Of Ballad’s 20 hospitals, all are classified as “rural,” even the more profitable locations in the larger cities like Johnson City, Kingsport, Bristol, Elizabethon and Abingdon.

“Urban areas up in New York, Massachusetts, California, as those hospitals get paid more money, by definition our hospitals get paid less,” said Levine.

He argues they are working against existing policy that is designed for rural hospitals like theirs to fail.

“The more efficient we are, the more we get penalized,” said Levine.

Currently, the way hospitals are reimbursed by Medicare for their patients is much lower in rural communities.

Take Nashville’s TriStar Centennial Medical Center and Johnson City Medical Center as an example.

According to data reported by the American Hospitals Directory, both hospitals have a comparable number of patients discharged at 30 and 24 thousand. But, Nashville’s hospital has 862 million dollars in patient revenue compared to JCMC’s 454 million. Nashville’s operating income is 200 million to Johnson City’s 23 million.

“If they have roughly the same volume and one has twice the revenue, you have to ask yourself, what is the policy behind that? Why is that happening?” said Levine.

As Ballad prepares to open the country’s newest rural hospital this summer in Lee County, focusing on the problems helps every hospital across the country stay open.

“The story of Ballad as a rural health system is a national story,” said Levine. “85 percent of our geography is rural. And it is really too bad that it has been forgotten.”

Ballad leaders say the goal is not just keeping the hospitals open, it is bringing in better health care to the region, more doctors, competitive pay for nurses and new technology; something they say the merger that created Ballad Health has already kickstarted in the region

What is being done?

It is a complex issue that now has Virginia and Tennessee U.S. senators reaching across party lines to find a solution and change the current system.

A group of bipartisan senators says the formula used by Medicare to reimburse hospitals is much lower for health care providers in rural and lower-wage communities, like the Tri-Cities region.

It doesn’t help that in our region, only around 20 percent of patients in Ballad hospitals have commercial health insurance, around 70 percent either have Medicare, Medicaid or are uninsured.

Tennessee Republican Sen. Marsha Blackburn and Virginia Democrat Sen. Time Kaine and Mark Warner are among the group of senators who introduced this bill to Congress.

It is called the “Save Rural Hospitals Act of 2021.”

Levine admits the biggest problem facing rural hospitals is financial instability, which is driven by the way they are reimbursed by Medicare in comparison to big city hospitals.

“The system is designed to advantage them. This was done on purpose,” said Levine.

The CEO played a role in crafting legislation that would be picked up by three of the region’s U.S. senators. His goal is to bring about policy change to level the playig field and get rural hospitals more money.

For Blackburn, the focus is needed now more than ever.

“We know that for the health and safety, for the economic development, for the continued growth of these areas, you have to have access to affordable healthcare,” said Blackburn.

The senators agree, the current system is unfair and disproportionately penalizes hundreds of communities and hospitals across the United States.

“Instead of a normal reimbursement rate, you would get some fraction of the reimbursement rate. And that makes it hard in rural communities,” Kaine said.

The goal for this legislation is to create a national minimum for the Medicare wage index to make sure rural hospitals get fair payment for their service.

“By raising that reimbursement rate up to .85 it would put more dollars into the hospital’s bottom line,” said Kaine.

Senator Warner says the pandemic has made these existing problems worse.

“We’ve seen that with the 130 closures across rural America in the last decade, we’ve seen it with 20 rural hospitals close just last year alone,” said Warner.

The bill, if passed, is meant to be a lifeline.

“When the local hospital closes, the ability to keep other businesses, to attract new businesses, goes down dramatically,” said Warner. “I know that if we can make this happen we will be able to reopen some of these rural hospitals.”

The legislation was introduced to the Senate in March, and was referred to the finance committee.

“This is something that is important. So we have made this a priority,” said Blackburn.

For Levine, relief can be found in the work of this group of senators.

“The fact that they are talking about it, they are coming down here and taking to us about it, gives us hope that maybe there is a light at the end of the tunnel,” said Levine.

Senator Warner added he hopes the bill could possibly be attached to the Biden infrastructure plan and passed under that sweeping legislation.

You can read a summary of the bill here.

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