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VOL. 132 | NO. 115 | Friday, June 9, 2017

Forum Shines Light on Rural Hospital Woes

By Michael Waddell

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President Donald Trump’s proposal to cut billions from Medicaid’s budget would have “serious implications” on rural Tennessee hospitals.

Scott Phillips of Healthcare Management Partners, left, and Andy Schneider of Georgetown University, right, with moderator Trenee Truex of the Jackson Sun. (Michael Waddell)

That was the assessment of researchers from the Georgetown University Center for Children and Families, the University of Tennessee Health Science Center’s Department of Family Medicine, Healthcare Management Partners and local stakeholders who gathered in Jackson, Tenn., Wednesday for a public forum on the impact of federal health policy on the health of rural Tennessee.

The forum examined the role that Medicaid plays in covering rural families and sustaining the nation’s rural hospitals.

Panelists presented findings from a new report that was compiled by the Georgetown Center on Children and Families and the University of North Carolina’s NC Rural Health Research Program.

“Medicaid is an essential part of the health care fabric in rural communities. It supports the health care infrastructure, and that’s even more true in Tennessee than it is in other parts of the country,” said Georgetown research professor Andy Schneider.

A key finding was that 50 percent of Tennessee children living in rural areas get health care through TennCare, compared with about 39 percent of children in the state’s urban areas. Nationwide, 45 percent of children in rural areas receive subsidized care.

Trump’s budget unveiled in late May called for cutting federal funding for Medicaid by more than $800 billion over 10 years.

“So if you have a program like in Tennessee where 65 percent of Medicaid spending is coming from the federal government and the federal government reduces its payments by 25 percent, that’s going to have serious implications for kids and families, the elderly and people with disabilities in rural areas – as well as the doctors who serve them, and so on,” said Schneider.

Scott Phillips, managing director of Healthcare Management Partners, discussed how the nation’s 1,200 rural hospitals are at risk without special attention from lawmakers.

“The vast majority of the hospitals in rural communities today are functionally obsolete. They need to be replaced,” said Phillips. “Most of these hospitals were built in the ’50s, ’60s and ’70s using federal money, and there were literally about 2,000 hospitals constructed in America during that 30-year period. Those hospitals are just about worn out today.”

Roughly two-thirds of all revenues for rural hospitals comes from Medicare or Medicaid, compared to less than half in urban areas.

Phillips pointed out that hospitals must turn a profit of 4 percent to 5 percent in order to be able to pay for the latest technologies, and many rural hospitals are not able to do that.

Many rural residents are forced to drive great distances to get the care they need.

“The reason is rural hospitals are having increasingly accelerated difficulty in attracting particularly qualified medical professionals,” said Phillips, who cited the fact that many people coming out of medical school do not want to go work in a 50-year-old rural hospital with outdated technology.

He classified the current bill before Congress as “cruel” and called legislators “tone-deaf” to the realities facing many Tennessee families.

“The bill that is proposed cuts funding and it provides no safety net for facility replacement. They can’t even make the profits to maintain the facilities, let alone replace them,” said Phillips. “To build a hospital in an urban community costs $2 million to $3 million per bed, so to build a 300-bed hospital, it could cost upwards to $1 billion. But to build a hospital in a rural community is only $500,000 to $600,000 per bed.”

Also working against rural hospitals is the fact that most are not attractive to large hospital systems, so many are operated by local government and are cut off from benefits like economies-of-scale purchasing or available capital to build new facilities.

“Over the past 18 years, I’ve worked in all of the hospital systems that have closed around here, and I’ve seen the effects that the closings have had on the hospital system here in Jackson,” said Dr. Gregg Mitchell, co-chair of UTHSC’s Department of Family Medicine. Of his patients, 65 percent use Medicaid and 15 percent use Medicare.

He cited the fact that many patients from Brownsville must now drive 30 minutes to Jackson when they need immediate emergency room care due to the fact that Haywood Park Community Hospital in Brownsville closed down in 2014.

“That extra time that it takes to get here could mean life or death for those patients, so access to care is becoming a problem with the rural closures,” said Mitchell. “At our facility, we have seen an increase in the number of patients that Jackson-Madison County General Hospital now serves.”

In the past couple of years, hospital visits have risen 20 percent at Jackson-Madison County General, from 85,000 visits annually to more than 105,000.

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