Rural US hospitals struggle to keep doors open

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WASHINGTON (Gray DC) -- Medical centers across the country are seeing historic numbers of patients in 2020, but in rural areas, some hospitals are struggling to keep their doors open. Tennessee medical leaders say some of these facilities simply do not have the bottom line to survive.

Rural hospitals in some parts of Tennessee are lacking the resources to keep doors open. (Source: Hardin Medical Center)

"We live rural because we love rural," said Nick Lewis, CEO at the Hardin Medical Center in Savannah, TN, a town more than two hours from both Nashville and Memphis.

His facility is a true life-saver for those living in the surrounding rural area. Hours from the nearest urban hub, the medical services they provide are crucial. But Lewis says hospitals like his are not being paid like it.

"You increase our cost without increasing our income then you're putting us in a worse position," said Lewis.

Lewis says many rural hospitals are closing in Tennessee, in part because they're not being properly reimbursed by the federal government for providing Medicare or Medicaid services. He says they're getting cents on the dollar, meaning they cannot pay sufficient wages or keep up operations.

"When you don't have access to a hospital in a certain amount of time there is going to be mortality," said Lewis.

Lewis says a change to what is called the Area Wage Index could help stop closures. The index guides the Center for Medicare and Medicaid Services (CMS) to reimburse hospitals based on location, paying urban and rural areas based on average wages in the regions. More often than not the urban areas are reimbursed more because wages in the area are higher.

But Lewis says rural hospitals are paying employees the same amount of money as hospitals in the urban areas just hours away, while being reimbursed as lower wage areas because of other jobs in the region that submit their wage information to CMS.

Senator Marsha Blackburn (R-LA) is a cosponsor of the Save Rural Hospitals Act of 2020, bipartisan legislation in the U.S. Senate that would lead to a national minimum for reimbursement, in hopes of rural hospitals being able to balance their finances.

"The urban areas get more and the rural areas get less. So this wage index fix is to bring that into parity," said Blackburn.

She says it is not always true that costs for urban providers are higher, and she says in some cases the opposite is true.

"One of our primary goals has been to increase access to health care for all Americans. The way you do that is to find a way for these rural clinics and hospitals to be able to keep the doors open," said Blackburn.

John Besler is president and CEO of Besler, a company that works to maximize revenue for healthcare providers. He says if more money goes to rural hospitals under this legislation, funds will be diverted from urban areas.

"Unless you're changing the overall pool or increasing the overall pool, unfortunately the wage index does create winners and losers," said Besler.

He says the system creates adversaries because it is a single pot of money that they pull from. Besler believes unless there is a massive overhaul to the reimbursement system, some hospitals will be negatively impacted.

"Certainly for providers in the depressed economic areas it absolutely would not work for them," said Besler.

Besler thinks rethinking investments for rural hospitals could help ease their financial hardships, being proactive with spending rather than reactive.

Nick Lewis says his hospital's finances are fine. But he hopes, for the sake of other rural hospitals in Tennessee, the CMS reimbursement system starts bending in their favor.

"We're going to continue to see those hospitals drop," said Lewis.

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