NOTE TO READERS: This is one of those articles that needs to be read all the way to the end. Quitting halfway will leave people with only half the story, and, well, we sure wouldn’t want that to happen. We promise to keep it brief—at least, as brief as we can. You all know that the staff at the Kiowa County Independent can occasionally be a little…long winded.
When it comes to financial situations, times are not exactly easy for rural hospitals, and that statement applies to hospitals in rural communities across the nation.
A number of factors are involved, but, simply put, it all comes down to numbers.
Running a hospital is very expensive. There is extensive overhead; 24/7 staffing is required using qualified, experienced and licensed professionals who also have the capacity to treat both emergency conditions as well as more chronic, long term illnesses; health care facilities have to be maintained to the high levels required by federal regulations while also being housed in buildings that are decades old.
Also, a smaller population translates into a smaller number of patients being hospitalized. If a small hospital has, for example, ten beds yet only one patient, the costs quickly add up. Unlike the sheer volume of patients seen in urban hospitals that offset costs, rural hospitals feel each loss more deeply.
Funding is a very complicated issue, but, boiled down to its essence, reimbursement to rural hospitals from government insurance programs like Medicaid or Medicare is based on the cost of treating patients while using a formula that is not always designed to reimburse 100% of the costs involved.
To make matters worse, in an effort to contain costs, federal regulations have changed that favor larger hospitals. For example, a patient may have had surgery at a hospital in Denver but insurance companies will not pay for treatment at another hospital—like one closer to home—until the patient has stayed in that Denver hospital for three days. And patients are being released earlier and earlier after surgery, so that 3 day stay is rarely achieved.
Again, the numbers tell the story of just how challenging the situation has become in the last two and a half years.
There are currently 1200 critical access hospitals in rural communities across the country. A critical access hospital, one of which is KCHD’s Weisbrod Memorial, has fewer than 25 beds, is 35 miles from the closest hospital and provides 24 hour emergency services.
Of those 1200 critical access hospitals, the National Rural Health Association recently reported that 673 rural hospitals are at risk of closing, and 210 of those are at "extreme risk". That is a tenfold increase in closures compared with a total of 60 rural hospitals that closed between 2010 and February 2016.
Other non-related studies also reveal that organizations related to two core functions—schools and hospitals—are typically the cornerstones of a small town’s viability. Those same studies also cite sobering statistics that suggest a staggering number of small towns that “fail” when schools and hospitals close their doors.
Suffice it to say, it’s a sobering picture being painted.
However, here is the good news, and it really is good news.
KCHD recently had their yearly financial audit, and—again, keeping it simple—the hospital and clinic are in good shape, financially strong and managing assets and liabilities in a well-structured and fiscally responsible way.
Of course, that statement is made with a caveat from hospital administration. Paraphrasing the administration’s stand, things can always change. The hospital could go through an extended period of time where there were few, if any, hospital admissions, as happened in a recent year. Circumstances might demand—literally—that the hospital make “capital improvements”, such as needing to invest a significant amount of money in working on a sewer line in the basement desperately in need of repair. Turnover can also be expensive, especially in cases involving health care providers like physicians, physician assistants and family nurse practitioners—positions that must be filled with highly qualified personnel on a “locum” basis until permanent staff can be recruited and hired. The use of locums is both absolutely necessary and, frequently, expensive.
But, even with all those qualifiers included, it’s a fair statement to make that the administration and staff at KCHD are operating at a level that has resulted in the facility standing on very solid ground with no large expenditures being made without careful consideration and consultation.
And…sometimes there are things that simply must be done. Some of those things are essential to operations. And, sometimes, those things are expensive.
Weisbrod Hospital is in significant and pressing need of a major upgrade to its infrastructure, most especially related to the HVAC system.
As most longtime residents know, the building itself is almost 80 years old with the newest part of the building—the wing additions—having been built roughly 60 years ago. The last mechanical upgrade of any size was completed more than 15 years ago.
An extensive review of the current system revealed that a major upgrade was required. Among the findings, it was confirmed that vital equipment is obsolete, is now starting to malfunction and must be replaced before temperatures drop. It should be noted that the equipment has lasted much longer than it was originally guaranteed to last at the time of installation.
Delaying replacement is not an option. These essential systems must be replaced to meet core operating regulations for a hospital. Equally important, the systems must function to assure the health and basic comfort level of patients, many of whom are already vulnerable given that they’re in the hospital.
Another example of the infrastructure upgrade involves the installation of two negative pressure rooms--one in the Emergency Room and one patient room—which would prevent, for example, air contaminated by a seriously infectious patient from being circulated throughout the hospital.
There’s also a component that involves burying some of the electrical lines. Fluctuating power, which is an ongoing problem, can have a damaging impact on some of the sensitive equipment used in the facility, often leading to expensive repairs or replacements that could, otherwise, be prevented. Burying the lines will help in reducing that fluctuation while also reducing some of the hazards presented by having multiple electrical lines in such close proximity to the hospital.
The entire project, which includes other components, is estimated to cost $1,456,750. KCHD is in the process of applying for a grant with DOLA and stands a good chance of the grant being approved. However, that grant will only pay for 50% of the project and requires a 50% match from the grant applicant.
In most grant processes, the grant applicant is encouraged to obtain funds from local community members and organizations to show support of the project. After much deliberation and discussion between facility administration and KCHD’s Board of Directors, it was decided to reach out to the community for support.
As a result, over the next few weeks, residents, non-resident landowners and businesses located in Kiowa County are going to be receiving a letter from KCHD requesting contributions for the infrastructure upgrade. In addition to summarizing the project and related costs, the letter reminds potential contributors that all donations are tax deductible.
This is the first time in anyone’s memory that KCHD has sent out such a letter, and it’s difficult to predict community reaction. However, as stated, not going forward with the project is not an option. Consequently, should there be little to no contributor response, facility administration is developing alternative plans to fund the project, the most likely of which would include a long term loan at the lowest interest rate possible. Nonetheless, the preference is to fund the project with contributions as much as possible, if for no other reason than continuing to take steps that keep the facility in as strong of a position as possible.
In a final note, it should be added that KCHD is instituting other plans. Some of those plans involve developing new revenue streams; others involve new programs that address, as much as possible, some of the more expensive factors involved in operation of the hospital.
Against that backdrop, administrators, providers and staff continue to hold completing their mission as of primary importance: “providing our communities with a lifetime of exceptional, personalized and compassionate care.”
Full disclosure: Waggoner currently serves as the Chairperson for the Board of Directors of KCHD.