By Mike Cason
al.com
The struggles of Alabama’s rural hospitals are not a new problem but there are new factors - some that could hurt their efforts to survive and some that could help.
AL.com recently talked with Danne Howard, president and CEO of the Alabama Hospital Association about those developments.
The association’s board of trustees selected Howard to lead the organization when Dr. Don Williamson retired last summer. Howard is the first woman to serve as president and CEO.
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Howard has worked for the association for almost three decades, including as deputy director and chief operating officer.
Alabama has 52 rural hospitals.
Williamson told AL.com in March that 27 of the state’s rural hospitals were at risk of closing, and that 19 of those 27 were at immediate risk of shutting down- in no more than two or three years.
Here are five things to know about the state’s rural health care crisis.
These are the two biggest challenges:
“Certainly things are not any better right now,” Howard said.
“As a matter of fact, they’re continuing to be even more fragile as time goes by, just as we have been talking about for many years.”
Howard identified the two biggest, long-term problems.
One is the low rates of reimbursement the hospitals receive from Medicare, Medicaid, and private insurers for the services they provide.
Howard said Alabama hospitals receive the lowest reimbursement rates in the country from Medicare and from private insurers.
“You can’t make a viable system or any business plan that works moving forward in a sustainable fashion if you’re not getting paid for what you do,” Howard said.
“We have to pay salaries, we have to pay light bills, we have to pay supplies, we have costs. And our reimbursement is just not keeping up with the rising costs of the supplies and labor.”
The low Medicare reimbursement rate has been a problem for decades. It has persisted partly because the system is designed so that increasing Alabama’s rate would necessitate lowering rates in other states, Howard said.
The second major problem is the large number of uninsured patients in Alabama. Alabama is one of 10 states that did not expand Medicaid under the Affordable Care Act.
Because many patients show up at emergency rooms without insurance, hospitals in Alabama deliver hundreds of millions annually in care that is uncompensated, Howard said.
The federal government provides funds called disproportionate share payments to offset that, but Howard said it is falls well short of closing the gap.
“Now don’t get me wrong, we’re grateful for what we get,” Howard said. “It helps offset some of the uncompensated care costs, but it does not touch the amount that we deliver.”
The uninsured problem could get worse
A main issue in the federal government shutdown is the fate of enhancements to tax credits that help people buy health insurance on the marketplace set up by the Affordable Care Act.
Congress approved the enhancements during the pandemic but they will expire at the end of the year unless they are renewed.
Democrats want the enhancements extended, but Republicans have not committed to that.
Many Alabamians who have benefitted from the enhanced tax credits stand to return to the ranks of the uninsured without the enhanced subsidies.
KFF, a health policy research nonprofit, estimates about 130,000 people in Alabama are expected to lose their coverage if the credits aren’t renewed.
Premiums for individuals enrolled in the ACA marketplace could rise by an average of 93% in Alabama.
“Those are individuals who for the last almost five years they’ve had health insurance, they have primary care access, they have doctors that they go visit,” Howard said.
“Some may have previously undiagnosed conditions like diabetes or cardiac issues that now have been diagnosed, and hopefully they’re controlled more because they have access to primary care, to specialists and to medications to keep them well.”
That will change for many if the subsidies go away, Howard said.
“They fall into the uninsured category,” she said. “They likely don’t have those resources anymore. So the default for that are hospital emergency rooms, which goes back to the uncompensated care.”
Is converting to emergency care only a path to survival?
Congress created the Rural Emergency Hospital designation in 2020 in response to the loss of health care services and hospital closures in rural areas across the nation.
Three Alabama hospitals - Bullock County Hospital in Union Springs , EAMC-Lanier Hospital in Valley, and J. Paul Jones Hospital in Camden - have made the switch to be designated as rural emergency hospitals.
The REH designation is intended to preserve access to emergency outpatient services in communities that may not be able to sustain a hospital with inpatient care. Nationally, 42 hospitals have adopted the designation.
Rural emergency hospitals are required to provide 24-hour emergency and observation services but cannot have inpatient hospital beds.
In return for adopting the REH designation, the hospitals receive additional funding from Medicare in an effort to make them more sustainable.
Howard said the REH designation is a good option for some hospitals but cannot be a large-scale solution.
She said urban hospitals could not absorb the extra demand if, for example, half of the state’s rural hospitals switched to the REH model.
“Our urban hospitals don’t have the capacity or staff to absorb the volume,” Howard said.
“That creates an effect on everybody, the wait times and not having a bed and not having access.”
That said, Howard said it is necessary to evaluate how rural hospitals can adjust their operations and make the changes needed to survive.
“Our goal is to look at the overall picture,” Howard said. “Where are the services, what is missing, what’s not there? And try to look at a way to better coordinate the care that’s given.”
$500 million in new federal money should help
HR 1, known as the One Big Beautiful Bill Act, included a $50 billion program called the Rural Health Transformation Grant.
Gov. Kay Ivey and the State Health Planning and Development Agency are leading the effort to prepare Alabama’s application to receive the state’s share of the money. The application is due in November.
Ivey appointed a 20-member advisory board, including the heads of several rural hospitals, to help prepare for the initiative.
State Health Officer Dr. Scott Harris said the state is expected to receive $100 million a year over five years, and could possibly receive up to $200 million a year.
The money is intended to be used for innovative ways to improve care and to help recruit and retain health care professionals in rural areas, among other broad goals.
Howard said rural hospitals will not directly receive grant funds but stand to benefit from the program.
“A lot of people think that this money that Congress authorized is going to go to the rural hospitals,” Howard said. “It is not.”
“But there are opportunities for programs that can be put into place.”
She said those could include new ways of delivering care that are sustainable.
“It sounds like an awful lot of money,” Howard said. “It’s $500 million over five years. So at $100 million a year, that’s really not that much if you really step back and look at the entire situation.
“But it is such an opportunity to invest wisely into some transformative programs. And our association had already started having some very serious conversations about looking at things.“
The governor said she had high hopes for the program.
“Alabama is a very rural state, and my goal is to ensure rural Alabamians have long-term and sustainable access to quality healthcare services,” Ivey said.
A new way taxpayers can support rural hospitals
In May, the Legislature passed a bill to create the Rural Hospital Investment Program.
Corporations, businesses, and individuals can receive a tax credit in exchange for donations paid directly to a rural hospital or to the new grant program.
Individual rural hospitals could receive up to $750,000 next year, up to $1 million in 2027, and up to $1.25 million in 2028.
The total tax credits are capped at $20 million the first year, $25 million the next year, and $30 million thereafter.
Howard said she hopes the program will have such a positive impact that lawmakers will raise the cap. She said the bill, sponsored by Rep. Terri Collins, R- Decatur and Sen. April Weaver, R- Brierfield, was patterned after a larger program in Georgia.
“It’s just a tool in the toolbox of all things to try to help bolster and strengthen and stabilize our rural healthcare,” Howard said.
“I think it’s a fabulous program.”
Rural hospitals will be able to use the money for any purposes except executive compensation, Howard said.
Howard said Alabama businesses have shown strong interest in the program and she expects the $20 million cap the first year to be reached quickly.
“It’s amazing the number of people who have stepped up and said, hey, I want to help,” Howard said.
“And we are thrilled. And I think it just proves our point again, you know, the rural hospitals are cornerstone of their communities.
“It’s not just about what happens in the four walls of the hospital. They’ve got the ambulance on the sideline of high school football games and wellness fairs.
“I think that the message of how important our rural hospitals are to rural communities is resonating. It’s more so than it has in my whole career.”
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