Rural hospitals face new uncertainties after health care reforms start

By DARCIE MORAN

Capital News Service

LANSING — With health care reform falling into place, rural Michigan hospitals can now breath a sigh of relief, and then start a new waiting game.

The slow recovery from the recession and the struggle for healthcare reform hit rural hospitals in Michigan, and across the country, hard, said Ethan Lipkind, CEO and president of Michigan Rural Healthcare Preservation and the Michigan Clinic.

The first week of April marked the close of open enrollment under the Affordable Care Act and the effective date of Medicaid expansion in Michigan. And with the economy starting to rise out of recession, Michigan rural hospitals are waiting to see just what the changes will mean.

“Overall, I would say it’s a declining industry,” Lipkind said. “There are a lot of rural healthcare providers that are closing their doors.”

“The smaller rural hospitals have a lot less room for a margin for error,” Lipkind said.

Lipkind said many other rural hospitals are operating in the red or facing large financial concerns.

About 470 rural hospitals across the U.S. have closed in the past 25 years, according to the National Rural Health Association.

Michigan has about 155 rural health clinics, 35 critical access hospitals and 187 community health centers, according to the Michigan Center for Rural Health. While these hospitals are spread across the state, many of the rural health clinics are in the upper half of the Lower Peninsula and the southwestern corner of the state.

A notable Michigan hospital shutdown in recent years was the closing of Cheboygan Memorial Hospital after filing for bankruptcy and a failed sale to McLaren Health Care. The hospital later opened as McLaren-Northern Michigan, Cheboygan Campus, after issues with the sale were resolved.

The hospital did not return calls for comment.

John Barnas, executive director of the Michigan Center for Rural Health, said he has not seen other closures in Michigan, although many are struggling financially.

Rural hospitals would be particularly vulnerable to any issues in the system, said Bill Jackson, Michigan Health and Hospital Association vice president.

Jackson said the issue lies in high deductibles in public exchanges under the Affordable Care Act, and how much hospitals will be left to pay if patients can’t pay their deductibles.

“It is a significant concern,” Jackson said. “Small hospitals don’t have the reserves that weather the storm.”

Other concerns include the struggle to keep up with the changing healthcare field and technology, said Alan Morgan, CEO of the National Rural Health Association.

“We’re going to see more rural hospitals closing in next two years than the last 20 combined,” he said.

While Michigan is likely in a better place for changes thanks to factors including Medicaid expansion, Morgan said each rural hospital’s durability will differ based on other community factors.

Barnas said he does not think many Michigan rural hospitals will close. However many will likely consolidate with larger health systems, he said.

Becoming a part of the Sparrow health system has been key to financial survival, Sparrow Ionia Hospital, CEO and President William Roeser said.

“Independence is overrated,” he said. “The main thing is that you need to be there for your community.”

While Kalkaska Memorial Health Center has remained independent and fairly financially stable, CEO Kevin Rogols said there is uncertainty in the future, especially with discussions to limit or cut funding to critical access hospitals.

“That would be catastrophic, quite frankly,” he said.

The uncertainty of the future may also lie in potentially changing payment structures, said Edward Bruun, CEO and president of the Sparrow Clinton Hospital in St. Johns.

Bruun said he believes healthcare is moving from a payment-for-service system to a fixed payment system. He said while this might positively impact preventive measures, it could mean care providers are forced to work with less resources. He said the change in payment structure could be especially difficult because of the lack of primary care physicians in the nation.

More healthcare changes are needed other than those simply focused on insurance, Jackson said.

Still, recent health care changes are reasons to be optimistic, Lipkind said.

Issues with deductibles and costs have been around for years and the changes should make healthcare more accessible, he said.

Jackson said community support for these hospitals goes a long way.

“These hospitals are providing such a vital service,” Lipkind said. “That needs to be sustained and maintained.”

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