Las Vegas hospital doesn’t contract with any payers

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Elite Medical Center, a Las Vegas-based acute care hospital that some experts say is operating similarly to a 24/7 freestanding emergency room, doesn’t contract with any payers, according to the Milbank News.

EMC is a state-licensed hospital. It is an unaccredited hospital that has no agreements with insurers, meaning patients have to pay out-of-network prices for care. Under state law, EMC isn’t required to be accredited by CMS or accept public or private insurance.

On EMC’s website, the medical center states, “This facility is not a participating provider in any health benefit plan provider network. However, under the [ACA], your health insurance company is required to process your emergency visit at in-network benefit levels. The physician providing medical care at this facility may bill separately from the facility for the medical care provided to you.”

While Nevada doesn’t provide licenses for freestanding ERs — though hospitals can open satellite ERs at other locations — EMC obtained a state license to operate as a hospital. As a result, it has to be able to admit patients for 48 hours.

Bill Welch, president and CEO of the Nevada Hospital Association, told Milbank News: “We think that Elite Medical Center, if they want to operate as a hospital in the state, that they should operate as a CMS-certified center and they should be accredited and Medicare participating. Without those things, we’re concerned.”

EMC CEO Butch Frazier defended the hospital in an emailed statement to the publication, saying it often has higher online patient ratings than University Medical Center in Las Vegas.

“EMC tries hard to make sure that the ultimate charges paid by the patients and by the insurers to EMC are in line with what they are paying for the same services at other hospitals in the area,” Mr. Frazier said. He added that EMC is seeking CMS accreditation.


Stand-alone ERs are crazy expensive

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Freestanding emergency departments, which provide emergency medical care but are physically separate from hospitals, charge many times more than other providers for the same care, according to a new analysis by UnitedHealth Group.

  • (Standard disclaimers apply: Yes, the nation’s biggest insurer has some skin in the game here on ER costs. But there’s also plenty of other evidence that ER costs are indeed very high.)

How it works: Freestanding ERs often don’t provide treatment for common emergencies like trauma, strokes and heart attacks, per my colleague Caitlin Owens.

  • Only 2.3% of visits to freestanding emergency departments are for actual emergency care.
  • The number of these facilities increased from 222 in 2008 to 566 in 2016.
  • In Texas, the average cost of treating common conditions at a freestanding emergency department is 22 times greater than treatment at a doctor’s office, and 19 times more than at an urgent care center.
  • If the location of care was changed to one of these cheaper alternatives, it’d save more than $3,000 per visit.
  • Freestanding emergency departments are disproportionately located in affluent areas that have access to other providers, and in Texas, less than one in four receive ambulances.

The bottom line: It is much, much cheaper to go see your family doctor if you have a fever — the most common diagnosis at Texas freestanding emergency departments.



Pipeline Health buys 22 freestanding ERs

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Pipeline Health, a privately held hospital ownership and management company based in Los Angeles, has acquired Arlington-based Texas Health Resources’ majority stake in 22 freestanding emergency rooms, according to The Dallas Morning News.

Pipeline Health will jointly own the freestanding ERs, which are in the Dallas-Forth Worth area, with Lewisville, Texas-based Adeptus Health. Adeptus was acquired by a hedge fund in 2017 after filing for Chapter 11 bankruptcy.

The group of freestanding ERs will be renamed City Hospital Emergency Care, and they will become outpatient ERs of City Hospital at White Rock in Dallas, which Pipeline owns.



Operator of 22 freestanding ERs files for bankruptcy

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Houston-based Neighbors Emergency Center, which operates 22 freestanding emergency rooms, has filed for Chapter 11 bankruptcy, according to the Texarkana Gazette.

Neighbors’ freestanding ERs are operating as normal throughout the debt restructuring process, a company spokesperson told the Texarkana Gazette.

“All of our 22 centers are remaining open,” the spokesperson said. “The bankruptcy was filed to prepare for sale.”

The spokesperson did not give details on the sale of the freestanding ERs, according to the report.




Congress Urged To Cut Medicare Payments To Many Stand-Alone ERs

Congress Urged To Cut Medicare Payments To Many Stand-Alone ERs

The woman arrived at the emergency department gasping for air, her severe emphysema causing such shortness of breath that the physician who examined her put her on a ventilator immediately to help her breathe.

The patient lived across the street from the emergency department in suburban Denver, said Dr. David Friedenson, who cared for her that day a few years ago. The facility wasn’t physically located at a hospital but was affiliated with North Suburban Medical Center several miles away.

Free-standing emergency departments have been cropping up in recent years and now number more than 500, according to the Medicare Payment Advisory Commission (MedPAC), which reports to Congress. Often touted as more convenient, less crowded alternatives to hospitals, they often attract suburban walk-in patients with good insurance whose medical problems are less acute than those who visit an emergency room located in a hospital.

If a recent MedPAC proposal is adopted, however, some providers predict that these free-standing facilities could become scarcer. Propelling the effort are concerns that MedPAC’s payment for services at these facilities is higher than it should be since the patients who visit them are sometimes not as severely injured or ill as those at on-campus facilities.

The proposal would reduce Medicare payment rates by 30 percent for some services at hospital-affiliated free-standing emergency departments that are located within 6 miles of an on-campus hospital emergency department.

“There has been a growth in free-standing emergency departments in urban areas that does not seem to be addressing any particular access need for emergency care,” said James Mathews, executive director of MedPAC. The convenience of a neighborhood emergency department may even induce demand, he said, calling it an “if you build it, they will come” effect.

Emergency care is more expensive than a visit to a primary care doctor or urgent care center, in part because emergency departments have to be on standby 24/7, with expensive equipment and personnel ready to handle serious car accidents, gunshot wounds and other trauma cases. Even though free-standing emergency departments have lower standby costs than hospital-based facilities, they typically receive the same Medicare rate for emergency services. The Medicare “facility fee” payments, which include some ancillary lab and imaging services but not reimbursement to physicians, are designed to help defray hospitals’ overhead costs.

The proposal would affect only payments for Medicare beneficiaries. But private insurers often consider Medicare payment policies when setting their rules.

According to a MedPAC analysis of five markets — Charlotte, N.C.; Cincinnati; Dallas; Denver; and Jacksonville, Fla. — 75 percent of the free-standing facilities were located within 6 miles of a hospital with an emergency department. The average drive time to the nearest hospital was 10 minutes.

Overall, the number of outpatient emergency department visits by Medicare beneficiaries increased 13.6 percent per capita from 2010 to 2015, compared with a 3.5 percent growth in physician visits, according to MedPAC. (The reported data doesn’t distinguish between conventional and free-standing emergency facility visits.)

“I think [the MedPAC proposal] is a move in the right direction,” said Dr. Renee Hsia, a professor of emergency medicine and health policy at the University of California-San Francisco who has written about free-standing emergency departments. “We have to understand there are limited resources, and the fixed costs for stand-alone EDs are lower.”

Hospital representatives say the proposal could cause some free-standing emergency departments to close their doors.

“We are deeply concerned that MedPAC’s recommendation has the potential to reduce patient access to care, particularly in vulnerable communities, following a year in which hospital EDs responded to record-setting natural disasters and flu infections,” Joanna Hiatt Kim, vice president for payment policy at the American Hospital Association, said in a statement.

Independent free-standing emergency departments that are not affiliated with a hospital would not be affected by the MedPAC proposal. These facilities,which make up about a third of all free-standing emergency facilities, aren’t clinically integrated with a hospital and can’t participate in the Medicare program.

The MedPAC proposal will be included in the group’s report to Congress in June.

Even though stand-alone emergency facilities might not routinely treat patients with serious trauma, they can provide lifesaving care, proponents say.

Friedenson said that for his emphysema patient, avoiding the 15- to 20-minute drive to the main hospital made a critical difference.

“By stopping at our emergency department, I truly think her life was saved,” he said.



The hospital divestiture trend is heating up, and not going away anytime soon

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Not long ago, health systems gobbled up hospitals with the overriding goal of growth, expanded footprints and market share. Some major health systems are now regretting those buys as they have become saddled with community hospitals that are losing money and struggling with large debt and capital needs.

Two major health systems facing this issue are Community Health Systems (CHS) and Tenet Healthcare, who are both looking to shed facilities.

“The strategy that CHS, Tenet and many others had was to really build around scale without really thinking about the regional economics of how these hospitals work together,” Gregory Hagood, senior managing director at SOLIC Capital Advisors, which works with hospitals on mergers and acquisitions, told Healthcare Dive.

Health systems like CHS and Tenet grew their systems with large purchases, but they’ve learned from their experiences and are now looking at divestiture options as a way to shed unprofitable hospitals and billions of debt. No longer are major systems and investors interested in buying struggling hospitals, which CHS did when it purchased the struggling Florida system Health Management Associates for $7.5 billion in 2014.

CHS and Tenet look to cut facilities, debt

CHS, a for-profit system with 137 hospitals in 21 states, is looking to divest at least 30 hospitals this year. They have already announced more than 20 hospital sales this year. CHS’ divestitures come after the health system lost $1.7 billion last year and accumulated about $15 billion in debt. Given their financial situation, Moody’s Investors Service recently downgraded CHS’ corporate family rating, probability of default rating and senior unsecured notes.

Meanwhile, Tenet Healthcare, the third largest investor-owned U.S. health system, is looking into strategic business options that may include a sale. The Wall Street Journal estimated Tenet has a market value of $1.6 billion, which is a far cry from what it owes. Fitch Ratings reported that Tenet had about $15.4 billion of debt at the end of June.

Tenet recently announced it’s selling eight U.S. hospitals and all of its nine U.K. facilities, which CEO Trevor Fetter said will yield between $900 million and $1 billion.

In addition to the sales, the company is dealing with executive and board shake-ups. Fetter recently announced his impending departure and two board members left the board because of “irreconcilable differences regarding significant matters impacting Tenet and its stakeholders.”

CHS and Tenet might be the most high-profile systems looking to shed debt and facilities, but they’re far from the only ones. A recent report by Kaufman Hall found that hospital and health systems mergers and acquisitions increased 15% in Q2. Big players are especially active. There were six transactions of health systems with nearly $1 billion or more in revenues announced in the first half of 2017. There were only four such deals in all of 2016.

Though hospital M&A activity remains high, healthcare financial experts say the days of health systems swallowing small, unprofitable hospitals as part of larger deals to solely build a system’s footprint are gone. Those days have been replaced by more strategic decisions as to what is right for the organizations, Richard Gundling, senior vice president of healthcare financial practices at the Healthcare Financial Management Association, told Healthcare Dive.

Health systems are now taking a strategic view of hospitals to see if they fit into their culture. They are also ignoring small, community hospitals with debt or buying them for much less than they may be worth.

The systems that are selling unprofitable hospitals are also faced with a market in which investors aren’t interested in paying top dollar for struggling hospitals with heavy debt. Instead, Hagood said, investors are more interested in post-acute care services like rehab and long-term care and ambulatory care initiatives. They don’t typically see hospitals as a wise investment.

“Smaller systems that have huge debt loads or pent-up capital demands have received a lukewarm reception at best,” Patrick Allen, managing director with Kaufman Hall’s mergers and acquisitions practice, told Healthcare Dive.

Why are health systems divesting?

Health systems, especially ones that have built up debt, are having trouble making up lost revenues. Hospitals could once cover a struggling type of care through a different, more profitable service. That’s no longer the case as payers and the CMS have squeezed hospital margins.

Sagging reimbursements and payer policies that move patients from hospitals to outpatient care and freestanding facilities are hurting hospital finances. There’s also a CMS proposal to allow hip and knee replacement surgeries for Medicare patients on an outpatient basis. Those kinds of surgeries are often the most profitable for hospitals, which means they may soon lose another revenue driver.

Beyond those direct payer impacts, health systems are looking to protect themselves against a changing industry in which market share isn’t as important as flexibility and efficiency.  “As all of these changes are occurring, the systems are strategically moving and gathering their assets to be able to deal with expected changes,” Gundling said.

Gundling said another issue facing large systems that may lead to divestiture is cultural mismatch. A large system may have swooped in and bought a 100- or 150-bed community hospital as part of a larger purchase. The hospital’s community may have bristled at the idea of a large out-of-state corporate entity buying a mainstay of their community. Plus, physicians may dislike a new system’s clinical protocols.

“There might be times when you say it might not be the right fit for us after all … That can lead to a divestiture decision,” Gundling said.

How are health systems handling divestitures?

Health systems are taking different avenues to deal with possible divestitures. Some systems want to completely rid themselves of certain hospitals. Others look to repurpose small hospitals for outpatient, skilled nursing facilities, labs or imaging while maintaining a large regional hospital. Still others forge partnerships, so they don’t completely sell the properties.

Allen said many health systems see their small community hospitals aren’t bringing in enough revenue and can’t be competitive in every service line and business. So, instead, they are dropping unprofitable services and sticking with what works for them.

Gundling compared health systems’ decisions about divestiture to an individual creating the right investment balance. For health systems, divestitures are not about selling properties, but strategically managing risk. “They aren’t just selling off to sell off. All have different strategies,” said Gundling.

Allen said divestitures are a balancing act for systems. They can shed debt and assets, but that comes with revenue loss. “The balance is always what is the right sale price for the exchange of cash flow when it becomes less than profitable. Balancing those two are always tough,” said Allen.

When deciding on whether to divest, merge or partner with other facilities, Allen said systems need to figure out the community’s needs, the area’s business climate, what the facility wants to be and potential partnership opportunities. Allen, whose company works mostly with nonprofit systems, said many are repurposing underutilized facilities into other uses like rehab, skilled nursing facilities, labs and imaging.

“Once you have a handle on what the market needs and what the market provides, then you can make strategies to get you there,” he said.

Another issue facing health systems is infrastructure. Many smaller hospitals don’t meet today’s care delivery system. “A lot of hospitals don’t lend themselves very efficiently to quality care based on their 30- and 40-year old design,” said Hagood. “That factor can accelerate their repurposing.”

The results and future of the divestiture trend

Allen said divestitures have resulted in systems being able to reallocate capital and move forward with less debt. However, Hagood said one major reason health systems have for divestitures — shedding debt — hasn’t completely worked. Part of the problem is that the new investors aren’t paying top dollar for a struggling community hospital with debt.

“The biggest challenge so far is that they have struggled to get value for those assets to effectively repay that debt,” he said.

Gundling said health systems that have shed debt have followed the divestitures by focusing on cost efficiencies, supply chain management and revenue cycle management.

The hospital divestiture trend has led to sales, mergers and partnerships, with repurposed or downsized facilities, but it hasn’t closed many facilities. That may be coming soon, though.

Hagood said pending mergers, including the Mountain States Health Alliance and Wellmont Health System deal in Tennessee and Virginia, will likely lead to facility closures. There aren’t enough healthcare dollars to support the number of facilities in some of the Appalachian communities involved, he said.

Most of the large divestiture action has been centered around for-profit systems, but Hagood said to watch for more nonprofit action, including Catholic Health Initiatives (CHI), which recently reported a $585.2 million operating loss for fiscal year 2017 after losing $371.4 million in 2016.

Earlier this year, Moody’s Investor Service downgraded CHI’s rating on long-term debt and variable rate demand bonds because of poor operating performance since 2012 and a relatively low level of liquid assets. Moody’s warned that further downgrades could occur unless CHI improves its operating performance.

CHI divested its KentuckyOne facilities earlier this year, a move expected to bring in $534.9 million. Given the company’s finances and healthcare environment, Hagood said there could be more divestitures.

“Nonprofits are going to move slower, but I think you’re going to see them (divest) as economics continue to shift,” he said.

Experts agree the divestiture trend is just heating up as health systems deal with the greater emphasis on outpatient care and freestanding centers. Hagood predicted 24-7 inpatient facilities with full emergency rooms and surgical facilities will continue to dwindle in the coming years as systems repurpose facilities.

“There are 5,000-plus hospitals today. I think you’re going to see that consolidate down,” he said.


Analysis: Is healthcare spending growth past the ACA bump?

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A snapshot into why some providers are eliminating positions

Employment in the healthcare industry has risen since the ACA was passed, but many health systems have been trimming their workforce under financial pressure.

It’s clear there have been a fair amount of hospital and provider layoffs in 2017.

In the past few months, hospitals of all sizes, and in all parts of the country, have said they are cutting jobs or eliminating open positions. Major providers affected have included Memorial HermannBrigham and Women’s HospitalNYC Health + HospitalsSumma Health and Hallmark Health. In May, Becker’s Hospital Review listed 48 layoffs across the industry the publication had reported on in 2017.

The layoffs come in contrast with the sharp rise in hiring in the healthcare sector ever since the Affordable Care Act (ACA) was enacted. While the hiring growth is a long-term trend — though it’s yet to be determined at what rate in 2017 — these layoffs are due in part to the short-term trends of softening admissions and flattening reimbursements. Many providers cited similar problems: declining reimbursements, lower admissions and shrinking operating incomes. Layoffs aren’t the only play for struggling organizations, but hospital expenses are rising on multiple fronts, and executives have to make some hard choices.

Big drivers of the growth are the aging population and the pending retirement of many registered nurses. It’s unclear how or when the layoff and healthcare job growth trends will change, but the underlying themes are not going away. The Bureau of Labor Statistics (BLS) is scheduled to release 2016-2026 occupational projections in October, while layoffs will continue to be tracked throughout the year.

Then there’s the elephant in the room over the buzzword of 2017: Uncertainty. Whether it be in Congress or in the executive branch, uncertainty over U.S. healthcare policy is making providers nervous as the insurance open enrollment period nears with no clear ACA reform or repeal in sight.

Healthcare hiring still on the rise, but the pace may be slowing

To date, the healthcare employment bubble hasn’t burst. Healthcare jobs, including hospital jobs, still are on the rise. While job growth is a different metric than layoffs and require different considerations, both underscore the themes affecting the industry’s workforce.

Ani Turner, co-director of Altarum Institute’s Center for Sustainable Health Spending, told Healthcare Dive there have been some clear trends in hospital job growth in recent years. In 2013, there was little job growth but the expanded coverage affect — where more individuals gained health insurance for the first time under the ACA — helped spur hospital job growth in 2014.

This expanded coverage helped hospitals experience new revenue opportunities thanks to more people entering the care delivery space, especially in states that expanded Medicaid. In addition, since the implementation of the ACA, the level of uncompensated care nationwide has gone down from $46.4 billion in 2013 to $35.7 billion in 2015.

Since that time, hospitals experienced great growth from a jobs perspective. In a 2015 Forbes article, Politico’s Dan Diamond noted that healthcare job growth surged at its fastest pace since 1991 starting in July 2014 up through May of 2015. In fact, healthcare practitioners and healthcare support positions are expected to be among the fastest growing jobs from 2014 to 2024. BLS notes the aging population and expanded insurance coverage will help fuel this growth as demand for healthcare services increases.

The recent surge is “somewhat unexpected,” Turner says. “One would think hospitals would be conservative in their hiring. Everything I’m seeing is flat or slightly declining volumes, especially on inpatient side.”

“The data don’t always cooperate with the story that makes sense,” Turner added.

Brian Augustian, principal at Deloitte, believes the job growth is going to continue to slow this year in part because there will be a push for greater automation and productivity. “As organizations are able to use machine learning, artificial intelligence and better utilize technology to get tasks done, it will not only result in…needing fewer people but also different types of people,” he told Healthcare Dive.

The rate of job growth will be an issue to watch throughout the year. As shown above, just two months worth of data changes the story from a narrative of “slowing growth” to “continuing to soar.” The looming retirement of registered nurses and the aging population do point to hospitals and providers arming themselves to smooth the transition of both the workforce as well as the pending flood of baby boomers entering into the care space.

Job growth doesn’t stop financial troubles for providers

However, as seen in the job cut announcements and recent quarterly earnings for hospital operators, providers are facing challenges that are affecting their bottom lines.

One of the biggest challenges for providers is declining or flattening admissions. In 2010, all hospital admissions totaled 36.9 million admissions. By 2013, admissions had dropped by 1.5 million; 35 million patients were admitted in 2015.

In the latest rounds of quarterly earnings, most for-profit hospital operators took a lashing, all acknowledging softening markets and weaker-than-expected patient volumes. Community Health Systems (CHS) reported it underperformed in Q2 2017 and is exploring more divestitures while HCA Healthcare reported it missed Q2 estimates due in part to higher expenses and lower-than-expected patient admissions. On Monday, Tenet Health reported a 4.5% decline in total admissions for the first six months of 2017.

Indiana University Health’s operating income suffered a 46% loss while seeing less individuals coming into the facilities, Modern Healthcare reported.

As seen in HCA Healthcare’s Q2 earnings call, lower acuity visits declined in the last quarter. At CHS, emergency department volume declined on the outpatient side, which Tim Hingtgen, president and COO of CHS, attributed to “industry dynamics, including urgent care growth, freestanding ED competition in select markets.” As Turner notes, the average person seeking a care setting visit is likely going to a physician’s office. This puts pressure on operators to rethink their lower acuity setting strategies and not rest on the strength of organic patient growth seen in previous years.

Another major issue for providers are expenses. More jobs equals more expenses, for example. Facility maintenance, equipment, electricity, telephone lines, internet, etc. all add up. According to the American Hospital Association, expenses for all U.S. registered hospitals are currently $936 billion, up from $859.4 billion in 2013. In addition to these changes, turning toward value-based care exposes providers more to risk-based contracts which can affect reimbursement formulas.

Hospitals know they need to lower cost structures, and personnel changes is one means

Ben Isgur, director of PricewaterhouseCoopers’ Health Research Institute, adds that squeezing costs isn’t a new concept for hospitals. There are many options for executives to manage out costs from its overhead. Supply chain, infrastructure and third party contracts are all go-to areas for such efforts. If two systems merge, departments can be streamlined or share services. In some cases, third-party contractors may be more beneficial to a provider than hiring for internal positions.

Igor Belokrinitsky, healthcare strategist at Strategy&, a member of the PwC network of firms, told Healthcare Dive in March many administrators faced with financial challenges tell their departments during the budgeting process to budget for zero cost increases or even for a reduction. “In the longer run, we are seeing and are working with health systems to take out pretty significant amounts of cost out of their operations, both clinical and nonclinical, and setting targets like 15-20%, which is a transformative change,” he said. “When talking about a 20% cost improvement, you’re questioning, ‘Do we need this facility? Do we need to provide this service at this location? Does this service need to be provided by a physician?'”

The current political landscape isn’t helping matters either

Isgur tells Healthcare Dive that healthcare industry layoffs should be watched closely and agrees with Turner that one of the biggest reasons is uncertainty in the industry.

As an example, he points to the Congressional Budget Office’s figure that 15 million individuals could have lost health coverage in 2018 if the Senate ACA repeal bill had become law. “Providers look at that and have to be ready for an environment where they have potentially fewer paying patients,” Isgur told Healthcare Dive.

During the heady time when ACA repeal-and/or-replace was on Congress’ plate this summer, many projections showed healthcare jobs would’ve been affected. One analysis of the House ACA bill estimated 725,000 jobs across the entire industry would be lost by 2026 if it had become law. The primary cause of the job disappearances and state economic downturns would have been attributable to cuts to healthcare funding, such as more than $800 billion to Medicaid, and lower premium subsidies.

Moody’s Investor Services projected the Senate ACA repeal bill would have caused uncompensated care costs to rise at hospitals.

The fight over healthcare policy is likely now headed to the executive branch, as Congress has failed to pass a bill that repeals or replaces the ACA. President Donald Trump has cost-sharing reduction payments to insurers hanging in the balance, and hasn’t publicly stated if the White House will continue to make these payments.

If these payments are discontinued, Fitch Ratings found in a new report that premiums could increase to the point where customers won’t be able to pay for coverage, thus increasing the chance for uncompensated payments to rise.

In addition, state Medicaid waivers will have to be looked at. Some applications, such as the Maine’s, could include work requirements, mandatory premiums and asset testing. It would be one of the most conservative state programs, and some health policy experts warn that the restrictions would push out many low-income adults who would otherwise qualify.

“When you add uncertainty to what’s already been going on in the reimbursement environment around how many more uninsured there may be going forward, that’s not the cause of [layoffs] but it’s certainly going to accelerate the thinking of executive teams to make sure [their organizations] are efficient and ready for anything,” Isgur said.

Isgur does think the industry will see more layoff announcements this year, but that it is an important trend to watch, especially as more decisions come out of Washington.


Texas rural communities endangered as spiral of hospital closures continues with two more

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A hospital in Trinity, Texas closed on August 1, and another in Crockett, Texas on July 1.

In what advocates say is a continued downward death spiral for their state, two more Texas rural hospitals closed for good earlier this week, bringing the total count of rural hospital closures in the Lonestar State to 18 in the last four and a half years alone, according to the Texas Organization of Rural and Community Hospitals or TORCH.

A hospital in Trinity, Texas closed on August 1, and another in Crockett, Texas on July 1. The closures leave those communities without immediate access to emergency and other hospital care services.

“This closure crisis, which has left many rural communities without emergency and other care, has clearly reached epidemic proportions and unless the Texas Legislature and Congress take immediate steps, it will only worsen,” said Dave Pearson, CEO of TORCH.

TORCH represents the 163 rural hospitals in the state of Texas. Of the 18 closures, they noted that four were temporary closures and three were replaced with free-standing ERs. Still, the organization said the care is those towns is now very limited, and 11 communities have no hospital or emergency care.

Many more are teetering on the edge of closure, Pearson said, with a third of the remaining rurals operating on “shoestring budgets” and struggling to keep their doors open. The worst part is these situations could be avoided he said, and are largely due to Medicare cuts in recent years totaling more than $50 million and Medicaid underpayments to rurals that total close to $60 million each year.

Torch Director of Government Relations Don McBeath said these closures and the resulting lack of access to emergency care has resulted in “documented deaths” because the local hospital was not there to service those patients.

Additionally, the closures have a devastating impact on both the local and state economies.  Rural hospitals cover 85% of the state’s geography and serve 15% of the population. That population, kept healthy by the presence of their rural hospitals, drives the state economy, from food production to fuel. David Byrom, CEO of Coryell Hospital in Gatesville, said each Texas rural hospital employs an average 173 people and has $23 million in yearly payroll. That equals more than 22,000 jobs and expenditures of $3.7 billion a year, for a combined economic impact of more than $18 billion a year.

“The citizens of our rural communities fortunate enough to still have a rural hospital need to know this is happening around them and call their elected state and federal representatives and tell them to take action now to stem the tide of Texas’ rural hospital closures. The two closures in the last month, bringing the total to eighteen in the last four and a half years, could be the tip of the iceberg.”

Pearson said the closures have the potential to crush their local community economically and send residents moving out of town looking for jobs.  Local businesses and schools will suffer as well, and the chances of bringing future economic development are hurt.

The Texas state legislature has recently instructed the state Department of Health and Human Services to look into the ongoing situation but that could move too slowly to stem more closures. “With a two-year study window, followed by who knows how much time to react to the findings, we could see dozens more of Texas’ rural hospitals vanish.”

Study: Texans paid approximately 10 times more at EDs than urgent care centers for same diagnosis

OR Efficiencies

Texans are likely to pay more at freestanding emergency departments than at hospital-based EDs or urgent care centers, according to a study published in Annals of Emergency Medicine.

For the study, researchers examined more than 16 million Blue Cross Blue Shield of Texas insurance claims from 2012 to 2015. During that time period, Texans’ utilization of freestanding EDs rose 236 percent. That compares with a 10 percent jump for hospital-based emergency departments and a 24 percent jump for urgent care clinics, according to a news release.

Researchers also found the average price per visit at freestanding EDs was $1,431 in 2012 compared with $1,842 at hospital-based EDs. In 2015, the average price per visit was $2,199 at freestanding EDs and $2,259 at hospital-based EDs. However, the average price per visit at urgent care centers was $164 in 2012 and $168 in 2015, according to the study.

The study also looked at out-of-pocket liability. At freestanding EDs, patients’ out-of-pocket liability increased from 32 percent in 2012 to 35 percent in 2015, researchers said. At hospital-based EDs, the increase was 29 percent to 33 percent. And at urgent care centers, patients saw out-of-pocket liability go from 36 percent in 2012 to 38 percent in 2015.

“There was 75 percent overlap in the 20 most common diagnoses at freestanding EDs versus urgent care centers and 60 percent overlap for hospital-based EDs and urgent care centers. However, prices for patients with the same diagnosis were on average almost 10 times higher at freestanding and hospital-based EDs relative to urgent care centers,” researchers said.

The study’s authors concluded the higher prices at freestanding and hospital-based EDs “imply potential inefficient use of emergency facilities.”

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