How One Rural Healthcare Facility Is Handling Financial Strain

January 16, 2024 - Rural health facilities across America are closures and financial instability. In the midst of these struggles, one rural hospital tested out a creative solution to stay open. 

Bucktail Medical Center had been losing at least $100,000 each month that they remained open since the coronavirus pandemic broke out. In an effort to gain momentum against these mounting costs, a former administrator started the hospital's GoFundMe page with the goal of raising $1.5 million.

What is at risk for rural hospitals and what other strategies are they employing to stabilize financially? Jacqueline LaPointe, executive editor at Xtelligent Healthcare Media, addresses these questions and more in today's episode.

Kelsey Waddill: Hello and welcome to Healthcare Strategies. I'm Kelsey Waddill, managing editor and multimedia manager at Xtelligent Healthcare Media. And I have with us today Jacqueline LaPointe. She is our executive editor at Xtelligent Healthcare Media.

Today, we'll be discussing what is behind the growing number of rural hospital closures and what providers are doing to prevent services from leaving their communities. And in particular, we're going to be talking about one facility called Bucktail Medical Center that has gained media attention in the last few months for the way it has navigated these challenges.

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So, Jacqueline, welcome to the show!

Jacqueline LaPointe: Thank you for having me.

Kelsey Waddill: Of course. So Jacqueline, tell me a little bit about Bucktail Medical Center and why it's been in the news lately. What caught your attention about this situation?

Jacqueline LaPointe: So I think Bucktail Medical Center has a unique story, but at the same time, it's actually reminiscent of what a lot of rural hospitals are going through. So it's a critical access hospital in rural Pennsylvania, and they're experiencing a lot of the same financial challenges that a lot of rural hospitals are experiencing. We spoke to an administrator over there and he has since resigned, but some of the efforts he's put in have continued.

Bucktail Medical Center has been losing at least $100,000 a month since the COVID-19 pandemic.

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Kelsey Waddill: Wow.

Jacqueline LaPointe: Yeah. Operating expenses continue to add up, and that's exacerbating some of the unique challenges that rural hospitals already face. We're talking falling reimbursement rates, extreme challenges, recruiting and retaining talent, aging infrastructure in a lot of places. All of these combined have really painted a dire picture for rural healthcare in America and just the idea that providing healthcare in rural America is much more expensive than providing healthcare in urban areas. The sentiment came from Tim Reeves. He was a rural hospital administrator. He recently shared that with me, and he's actually the one who set up a GoFundMe page for Bucktail Medical Center.

Through that GoFundMe page, he was hoping to raise awareness as well as support for the hospital. As I mentioned earlier, Reeves resigned as a CEO shortly after our conversation, and that was after nearly a decade in that role. But the GoFundMe page is still up, still collecting donations, and it's getting a lot of attention. A lot of people are commenting just how we need to save rural healthcare. People are talking about how their local hospitals have closed and how much of a challenge it's been for them to access healthcare. And I think it's just--this page while unique in terms of crowdfunding, because we see a lot of individuals asking for donations to pay for their expensive medical bills for help bridging the gap between their bills as well as these expensive treatments to get healthy. But we're talking about an actual hospital.

Kelsey Waddill: Yeah, an entire hospital doing a crowdfunding effort isn't typically what we see day-to-day in the healthcare world, but that's what it's come to.

As you've mentioned a couple of times, Jacqueline, this is one hospital's story, but the scary thing is that it's a repeating kind of theme in hospitals in rural areas around the nation. Can you talk about what is at risk here with all of these potential and real rural hospital closures?

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Jacqueline LaPointe: Absolutely, Kelsey. Yeah. Bucktail Medical Center is like many rural hospitals and the fact that it's on the brink of closure, and yes, there's a GoFundMe page and it's raising money, but a message from December 5th, an update on the page actually said they're still drafting closure letters because it's still up in the air what's going to happen. And I think, nationally, this is a huge problem. So there have been 148 rural hospital closures and conversions since 2010, and that statistic is from UNCs, Cecil G. Sheps Center for Health Services Research. And the crazy thing about that is they're always counting. That's just a number I pulled today that could change tomorrow, the day after. And it has been. Rural hospital closures have actually accelerated over the last decade as these providers face falling reimbursement rates, staffing shortages, low patient volumes, and other financial troubles. And these challenges are just forcing hospitals to close their doors, even though they may be one of the only places that their local communities can get healthcare.

It's not that these places want to close their doors, but it's something that they have to do. They can just no longer physically stay open. For hospitals like Bucktail Medical Center closing isn't really an option. It's something that they want to avoid at all costs. But the leaders of this medical center, as well as other rural hospitals--they're thinking about their communities.

So, at the time of the conversation with Reeves back in October 2023, he said that the closest hospital is nearly 29 miles away from Bucktail Medical Center. That means people who are experiencing an emergency would have to travel 29 miles away...and we're talking rural Pennsylvania. Weather could impact that, the severity of someone's condition is going to impact that, traffic, road conditions.... This is actually a really significant issue, and that facility itself has undergone a conversion. So when we talk about conversion, they no longer offer inpatient services, so they actually transition to an outpatient emergency department, and that's also something we're seeing a lot of rural hospitals do.

Kelsey Waddill: That's really interesting, Jacqueline, that these hospitals are able to transition from one type of care to another. Although it's not ideal, it seems like it does help to kind of keep them open potentially. Can you talk a bit more about how a new designation like that helps rural hospitals? What are the drawbacks potentially of that kind of approach?

Jacqueline LaPointe: So this year, CMS established a new provider type. It's called the Rural Emergency Hospital, and the whole point of this is actually to address those rural hospital closures and to maintain access to care in rural communities. A key part of this is that hospitals give up some of the services that they do, and they only provide emergency services, observation care in some medical and health outpatient services. But in exchange for this, they get an additional 5 percent over the hospital outpatient prospective payment system rate for those selected services. So there's a little bit of boost in payment, which should help cushion some of those financial pressures that are on rural hospitals as well as their communities. However, there are a lot of pros and cons, as we saw with that statistic "148 rural hospital closures and conversions." This clearly does work for some places. They're able to keep their doors open, they're able to provide key services for their communities, but for other rural hospitals, it doesn't always make a lot of sense.

Bucktail Medical Center, for example--Reeves was telling us that during their preliminary financial analysis, they found that they would only really break even despite that payment boost. So it really didn't make financial sense.

But in addition to that, their conversion would've left their community with no inpatient beds for miles. As we mentioned earlier, one of their local hospitals actually made this conversion already. So if they were to take away their inpatient beds, these communities in rural Pennsylvania wouldn't have any inpatient beds or even further stretches. So it was really a balance of that financial analysis, but also how important is it to keep those additional services local rather than convert and shut down service lines?

I think there's another issue at play here, too, is that rural hospitals tend to be one of the largest employers within communities. So if you're talking about closing a rural hospital, you have to consider the loss of industry to that community. Shutting a hospital down means people are going to move to other communities to find jobs. Funding is going to move with them as people move. It can really impact not only the access to healthcare within a community but just the community culture as well. So there's a lot to consider and there's a lot at risk. So when hospitals are trying to make this decision whether they want to convert, it's an extremely difficult decision.

Kelsey Waddill: I imagine at the end of the day, whether they choose to convert or not. The ultimate question here that everybody's kind of asking is: what can these hospitals do to prevent closure? Clearly, Blacktail Medical Center has aimed for this crowdfunding strategy with maybe mixed success. What are other hospitals like Bucktail Medical Center trying in order to stay afloat?

Jacqueline LaPointe: So yeah, Bucktail Medical Center has set up the GoFundMe page, but they also have a lot of concrete initiatives in place to boost page and volumes and intern revenue.

Some of the things they've put in place included their first CT scanner as well as an ambulance service. So yes, these are investments that the hospital had to make. However, the goal of these two investments is to bring in more patients and to bring in more revenue. I think this shows you that there are other options for rural hospitals. Again, extremely difficult decisions, and it's really going to depend on the community. So rural hospitals--these leaders need to think about what services are most important for their populations and how can they use these services to bring in people, which in turn will bring in revenue. For example, having a CT scanner when you didn't have one before, people are going to be able to now go to this hospital and get diagnosed. If they're having a problem, they don't have to bypass your hospital in order to access a CT scanner. Similar vein with an ambulance: when there's a 911 call and someone gets picked up in an ambulance, that ambulance no longer has to bypass your hospital because you don't have the right services in place to treat those patients. But again, these aren't necessarily a magic pill and they take a while for hospitals to see revenue come in.

I think there's also a larger issue at play that rural hospital leaders are going to have to talk to insurance companies. I think one of the major issues with rural healthcare right now is that private insurers are reducing reimbursement rates. That's the general sentiment we hear from a lot of people we talk to in the industry, and those reimbursement rates rarely cover the cost of providing care, especially in rural areas. The other issue is that rural hospitals aren't necessarily in a position to negotiate higher rates. Yes, they may be one of the only providers within the community, but they don't necessarily have a lot of bargaining power. So it really comes down to a question of: do they stay at that table and negotiate? Is it really worth it? Or do they continue to hemorrhage money from these reimbursement rates that just aren't covering their costs? It's an extremely difficult question that rural hospital providers are facing. If they become an out-of-network provider within their communities, the onus is on the patients to then pay for the care, and that's not necessarily what they want either. So there really is going to be some work to do with private insurance companies in rural hospitals to help support rural healthcare and maintain access to care.

Kelsey Waddill: Yeah, that makes sense. I imagine if they go out-of-network like that, too, they might see an increase in uncompensated care.

Jacqueline LaPointe: Yes, and that's a huge concern.

And there's also that idea that a lot of people in rural areas may be leveraging public healthcare coverage options--say Medicaid, Medicare--and a lot of hospitals kind of rely on their commercial patients to kind of bridge any cost differences between reimbursement rates. So it can be really difficult when you're talking a very small population. There may not be a lot of variety in the types of payers you're working with. It can be a little more challenging than, say, a rural hospital who is seeing a lot of different types of insurance coverage, [since] they get to negotiate with a lot of different people and kind of use those rates to negotiate the best rate for their costs.

Kelsey Waddill: So the answer there is that there is no one answer is what I'm hearing. There's a lot of different strategies that hospitals can pursue, but not just one that is going to make everything better, which is probably a little stressful to hear for these understaffed hospitals, but unfortunately a reality.

Jacqueline LaPointe: Yeah, we're not necessarily in the best of economic times. I think just four years ago we experienced a global pandemic that threw a huge wrench in everything. And we're talking about a healthcare system that was already strained. Rural healthcare is still really picking themselves back up from before the pandemic. They're facing these economic headwinds just as much as everyone else, and it's going to be an extreme challenge, and it's going to take some unique solutions, I think, to really maintain access to care in rural America.

Kelsey Waddill: Yeah, I actually haven't looked at their GoFundMe page. Sorry, I'm looking at it now. Yeah, they're at $106,000 of $1.5 million.

Jacqueline LaPointe: So I think the thing with the GoFundMe page is they're trying to raise money.... I think it's a lofty goal.... So it's going to be difficult to raise all of that, but I think they're gaining a lot more national attention. So you're seeing people from all over donate. Now, this was really more of a community effort at first and letting the community know, "Hey, we're struggling. We want to be here for you. We are your community hospital."

If you look at the stories that are coming out now, they're like, "we heard about your struggles. I'm a nurse who works for a hospital. I understand some of the stuff you're going through. Here's some support from us." Another person's just saying, "here's some money, because public health is important," and a lot of people are pointing out the issues just of the healthcare system in the US in general. So perhaps they're not raising as much as the goal right now, but I think it's raising a lot of awareness across the country of just what's going on and how these providers are really struggling to find the right solution.

Kelsey Waddill: And hopefully awareness creates innovation, creates solutions. We'll see where this story is at in a few months or in a year from now, and hopefully in a much better place. But fingers crossed.

So Jacqueline, thank you so much for coming out of the podcast today. Any thoughts before we wrap up?

Jacqueline LaPointe: I just wanted to thank you, Kelsey, for letting me share the story. It's been kind of a unique situation that we've been following. I just think it's important that people understand what rural hospitals are going through. And it sounds very financial, but it's actually a very human issue. When you look at a section of this in rural America, it's actually a much larger issue. It's literally life or death for some of these people.

Kelsey Waddill: Yeah, definitely. Glad to have you on as always, Jacqueline. And thank you to all of our listeners for joining. If you have any thoughts or questions or ideas for stories that we should cover, please email us and follow us on all of the platforms where you listen to podcasts.