Community hospitals are on life support. Starkville voters could pull the plug

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Larrison Campbell, Mississippi Today

Opinions often clash over the future of OCH Regional Medical Center. Clockwise from top left, Victor Collins, Laurie Stockman, Jennifer Young and Sharon Hathcock

STARKVILLE — On Wednesday, Sharon Hathcock set her alarm for 4:45 a.m. As she and her husband drove the hour from their home in Amory to OCH Regional Medical Center, where her husband was scheduled for outpatient surgery, they passed four hospitals.

But Hathcock said she never considered going to one of them, or to Tupelo’s much larger North Mississippi Medical Center, just half an hour north of their house. And she said she is pretty sure she will feel the same way tomorrow, even when they drive back to Starkville for his post-op checkup.

“The care here, it’s just outstanding,” Hathcock said. “It’s a hometown feeling that you can’t get anywhere else. It’s a real community hospital.”

Larrison Campbell

OCH Regional Medical Center

When people talk about independent, community-owned hospitals in Mississippi, OCH Regional Medical Center often is held up as an example of how the system can work.

“It’s a very well thought of health care system,” said Ryan Kelly, executive director of the Mississippi Rural Health Association.

But if the leadership of Oktibbeha County has its way, OCH will not be locally owned much longer. On Nov. 7, residents will vote to either deny or allow the board of supervisors to sell the hospital.

Hospital supporters argue the sale is a cash grab for Oktibbeha County, while those in favor of the sale argue the hospital is losing millions and selling is the best way to keep it safe in today’s unstable health care landscape.

In the months leading up to the referendum, the debate has grown increasingly contentious, pitting the county supervisors, who approved the sale in March, against the hospital administration and trustees. It also is forcing the residents to decide, as health care changes, whether it is safe for their government stay in the hospital business.

Mystery money, Facebook rumors and the campaign to sell Oktibbeha hospital

Many communities soon may be forced to wrestle with the same question. Of Mississippi’s 102 hospitals, 25 are stand-alone, public hospitals, meaning they are county-owned and not part of a system.

In the past decade, changes to health care on the national and state levels have made the hospital business an increasingly risky one, especially for small, public hospitals. Since 2010, five Mississippi hospitals have closed. Four of these were county-owned. Other county hospitals, such as Jackson County’s Singing River, have weathered well-publicized losses totaling tens of millions of dollars.

Larrison Campbell, Mississippi Today

Bricklee Miller, Oktibbeha County supervisor for District 4

“If you wait till it’s bankrupt to sell it, the county’s not going to get back what it’s invested into the facility,” said Oktibbeha County Supervisor Bricklee Miller, who voted for the sale and has emerged this year as its most vocal proponent.

OCH Regional Medical Center, however, is not Singing River. It operates with a positive cash flow, it consistently ranks high in national quality metrics and it is recruiting more staff. Healthcare professionals across the state said the push to sell OCH caught them off guard. And it left many of them asking, if OCH can’t stay independent, can anyone?

“People are going to look at this as an example of what could happen, good or bad, with a sale. I think this will end up being your case-in-point of why we should or should not sell a county-owned hospital, just because of how high profit (OCH has) been,” Kelly said. “So this puts (OCH) in a unique position.”

But whether it gets to that point depends on how Oktibbeha County’s residents vote Tuesday. Several already have made up their minds; others are still deciding. But everyone has questions — about selling, about the bidders and about the future of health care in their county.

Isn’t OCH “unique”?

Larrison Campbell

“Vote Against” signs dot Greensboro Street, a busy road in Starkville

On Wednesday evening, Nina Peele pulled her Honda, with its “Vote Against” signs plastered on both sides, into the parking lot of Starkville’s Greensboro Center. After a three decade career in management at OCH, Peele retired a few years ago. And this push to sell the hospital feels like a personal attack on something she loved.

In her opinion, the board of supervisors have it wrong. County hospitals may be in trouble. But OCH wasn’t a typical county hospital.

“We’re in a unique market,” Peele said. “Aren’t we better off?”

OCH Regional Medical Center is not a typical community hospital. And this is largely because Starkville is not a typical small town.

Unlike many rural parts of the state, Starkville and Oktibbeha County are growing. Between 2010 and 2015, the county’s population increased from 45,000 to nearly 50,000 people. With 96 beds, OCH is also bigger than most of Mississippi’s rural hospitals and offers more services, which helps to stabilize it.

Mississippi State University in Starkville lets OCH draw from a young and well-insured population. An average of 30 percent of the hospital’s patients receive Medicaid and Medicare, compared with 60 percent of patients at community hospitals nationwide.

But OCH still faces challenges. The last decade has altered the national health care landscape more rapidly than almost any before it, and community hospitals have struggled to provide the same number of services while coming up with the cash to make changes.

Ryan Kelly, executive director of the Mississippi Rural Health Association

“Any hospital can probably do all the things they need to do, no mater how large or small they are. But it becomes more and more of a challenge the smaller you are because your margins just get thinner,” Kelly said.

Industry changes have shaken how much all hospitals are paid for care. Changes to insurance reimbursements have lowered some payments. And as medical technology improves, the shift from inpatient surgeries to outpatient procedures has reduced the volume of patients in a hospital, regardless of a community’s size.

Weathering changes in health care means getting ahead of them. And OCH has not always succeeded at that.

“Every community needs to assess the needs of the community and then look at the services the hospital is providing. And there may be a need to modify the services of the hospital to better meet the needs of the community,” said Therese Hanna of the nonprofit Center for Mississippi Health Policy.

Last year, the board of supervisors hired an independent consulting firm to assess OCH. It determined that the occupancy rate for beds was just 22 percent. The hospital countered with data showing average occupancy for 2017 at 37 percent. Still, 50 to 60 percent is a more appropriate level, according to David Mosley, a health care consultant with Navigant.

Richard Hilton, the chief executive officer of OCH, said the hospital has been examining  inpatient beds to nursing or geriatric-psych. They’re also trying to bring in specialists, which boosts population. But the uncertainty of the hospital’s future, looming since a lease was first broached in 2013, makes significant changes impossible.

“If we come up with a viable game plan, we will look at it. But we haven’t been able to make decisions for a long time now,” Hilton said.

So is OCH sinking?

Ashleigh Murdock spent much of last week at OCH with her three-year-old son, who was battling an infection.

Larrison Campbell

Ashleigh Murdock of Starkville

“The care was amazing. People I know who work there were texting friends with updates. People I knew were taking care of us,” Murdock said.

Murdock’s house, like nearly half the yards on Greensboro Street, has a “Vote Against the Sale of OCH” sign in its yard.

“I like having it under local control. And shouldn’t the fact that we’re financially stable be enough reason not to sell?” she said.

But on the question of the hospital’s stability, each side has strong — and conflicting —opinions. The year-end financials, released Thursday, show the hospital with a 2017 loss of $4.4 million, despite cash earnings of nearly a million dollars.

What’s controversial is that the deficit comes entirely from depreciation, a measure of how much value the hospital’s facilities and equipment have lost in a given year. So while Supervisor Bricklee Miller calls this loss “major,” hospital administration argues that it’s not technically real.

Mosley agreed, explaining that depreciation is simply a way to reduce the tax burden of assets already paid for.

“It’s like this. If you bought a classic car and depreciated it over five years, at the end of that five years your car is worth nothing,” Mosley said. “But you can still sell it for $30,000. All depreciation does is adjust the book value and book value has nothing to do with the sale price.”

This may be true, but last year’s assessment concluded that OCH needs to bring in more capital, approximately $3 million a year, to maintain and improve its facilities.

“Being part of a large system that can get access to capital far easier is a big advantage and one that every hospital needs,” said Ted Woodrell, an independent health care consultant hired to advise the board of supervisors on the sale.

How much is OCH worth?

Just as the state of OCH’s finances has created controversy, so has the hospital’s potential sale price.

Larrison Campbell

Chantez Campbell and Keith Ware

For residents unsure how they would vote, getting more money to the county could make a sale worthwhile. On Wednesday evening, Keith Ware sat on the porch drinking a Budweiser with his friend Chantez Campbell. Both Ware and Campbell had heard local buzz about selling the hospital, but neither had made up their minds about how they planned to vote.

When told that county supervisors had ballparked a price of $60 million, Ware  shrugged.

“It’s a lot of money. But is it a lot for something like that?”

According to Nina Peele and other supporters of the hospital, it’s not. “They’re selling for pennies on the dollar,” she said, citing the hospital’s assessed value of more than $130 million.

That assessed value, however, does not take into account depreciation. When that’s factored in, the hospital’s value drops to $57 million.

Allen McBroom, a member of anti-sale group, Friends of OCH, said he can’t understand why the county would literally adhere to the depreciated value. He knows OCH is unlikely to sell for $130 million, but he believes the supervisors are low balling the hospital. And he can’t understand why.

“Someone’s going to get a windfall,” McBroom said.

How much does the hospital cost the county?

Larrison Campbell

Orlando Trainer, president of the Oktibbeha County board of supervisors

One of the biggest issues driving the sale has been the county’s outstanding hospital-related bonds, which total $35 million. The hospital pays $11 million of this, or $1.2 million a year, back to the county. County residents are responsible for paying the remaining $24 million, the remainder of a bond measure the county approved in 2009 to fund a hospital addition.

Miller and board president Orlando Trainer, who also is in favor of the sale, have argued that selling the hospital will let the county pay off the bonds in one lump sum, relieving the residents of this monthly tax burden.

According to Mike Highfield, an economics professor at Mississippi State, that monthly tax burden equals $2.70 per resident per month.

Larrison Campbell

Melissa Fulgham and Dorothy West, both of Starkville

Melissa Fulgham said the number surprised her. She and her friend, Starkville Realtor Dorothy Watson, haven’t made up their minds about the sale. But tax dollars are not a factor.

“I’d pay more, I’d pay twice that,” Fulgham said. “I want the best services.”

The bond payments, however, don’t actually fund the hospital’s operations, although some pro-sale campaign materials have suggested they do.

“That’s purposely misleading the public,” Highfield said.

Where’s the money going?

Working in the Chevron Station on Highway 12 exposes Laurie Stockman to a huge cross section of Oktibbeha County. The other day, someone came in and gave her a “Vote Against” button. If people are in favor of the sale, she said, they’ve been quiet.

Miller insists plenty of Oktibbeha County residents are in favor of the sale, but they’re keeping their opinions to themselves as the issue has grown more contentious.

“I call them the ‘silent majority,'” Miller said. “And I don’t blame them. The emotions are high. I think it’s fear of the unknown.”

Larrison Campbell

Laurie Stockman of Sturgis

Stockman, who drives to work from nearby Sturgis, said she’s opposed to the sale. But if it goes through, she wants to make sure the money is being used well.

“I’d like to see it go to the roads,” Stockman said. “The roads here are a mess.”

Miller and Trainer have been very public about their plans for the money from the sale. Assuming the hospital sells for $60 million, Board President Trainer said the county would pay off the remaining $35 million in bond debt, leaving the county with $25 million to invest in infrastructure.

Miller has proposed setting up a trust fund, as Lowndes County did after selling its hospital to Baptist Memorial Healthcare in 2006. The fund, which contains $30 million, has generated nearly $4 million in interest over the last four years.

The Mississippi Rural Health Association’s Ryan Kelly, however, cautions that selling a hospital just to get an influx of cash is short-sighted.

“If they’re looking to get out of the hospital business, that’s one thing. But if they want to get a few extra million dollars to invest in roads and bridges, I cannot see that working out well for them in the long run,” Kelly said.

Still, Oktibbeha County’s annual budget is $58 million. Even a $1 million yearly investment makes a big difference in operations, according to Miller.

“I believe it’s an opportunity for positive change,” Miller said.

Will services improve?

Larrison Campbell

Victor Collins of Starkville

Victor Collins is voting to sell on Tuesday because he wants to see hospital services improve. After a series of misdiagnoses at OCH, he said, he even would tell an ambulance driver to bring him to Columbus.

“The people who work there, they hate to lose their jobs. So they say if the county controls it, they’ll be better off,” Collins said. “But I feel it would be better served under better management.”

In September, two hospital systems bid on OCH: Tupelo’s North Mississippi Medical Center and Memphis-based Baptist Memorial, which is the largest health care system in Mississippi.

Both hospitals are non-profit, like OCH. And while it’s difficult to gauge whether services will improve, both hospitals have strong track records in the state of keeping open the hospitals that they have acquired.

In 2015, Mississippi Baptist Health Systems stepped in and bought Koscuisko’s struggling Montfort Jones Memorial Hospital, a move that not only allowed the local hospital to expand services, many of which had been cut in an effort to stay open.

This spring, Mississippi Baptist merged with the larger Baptist Memorial in Memphis, which allowed the smaller hospital system to bear the multi-million dollar cost of upgrading its electronic medical records system.

“If it’s a Baptist or North Mississippi that comes in, I think (OCH is) going to be fine. Both are very good, and they’re going to run it well, I really believe so,” Kelly said.

But Kelly also cautioned that despite some complaints, OCH is already well-run.

“What’s the benefit of selling it, honestly? Do you want to run the risk of a really well run hospital in Starkville going downhill? What’s it going to do to the city if it goes downhill?”

Larrison Campbell

Janet Downey of Starkville

Starkville resident Janet Downey opposes the sale after watching what happened in her hometown of Slidell, La., when the local hospital sold. She was there with her father recently and the experience was entirely different.

“After the merger we noticed the care providing, the logistics and the personnel were very different,” Downey said. “We saw patient care go down.”

 

What will OCH look like after a sale?

Talking to Oktibbeha County residents, it seems like everyone has either worked at the hospital or can name a family member who does.

“It’s a true community hospital,” Peele said.

And this has many residents concerned about what, exactly, the hospital will be if it’s owned by a system outside the county — or, in the case of Baptist, the state.

Larrison Campbell

Carl Jacks of Starkville

“I like it because I feel like it’s county people there, not people from goodness knows where making decisions about my health care,” said Carl Jacks of Starkville.

When Oktibbeha County residents say they oppose the sale, the first reason many give is fear of jobs being cut. A national 2015 study from Emory University found that in the first five years after a merger or acquisition, nursing staff was reduced by 12%.

Downey said this happened in Slidell. After the merger, she said, the hospital closed the labor and delivery department where her sister had been a nurse. Administrative staff, such as executives, payroll, human resources, and IT, often are cut after mergers further because they are more easily combined, according to Mosley, the consultant with Navigant.

“These big hospitals buy these smaller hospitals and then what they do is they jettison the services that they provide and the small community hospital becomes a feeder, sending patients back to the mothership for profits,” Mosley said.

But Mosley also cautioned that this level of efficiency isn’t always a bad thing.

“The hospitals have to change to become hospitals that the community can support,” Mosley said. “And as long as the hospital is willing to make the change, that’s great.”

Larrison Campbell, Mississippi Today

Richard Hilton, the chief executive officer of OCH

Hospital CEO Richard Hilton said the hospital is willing to make that change. At a forum in October, he announced that the hospital was considering an “affiliation” with a system of hospitals, a move that would give OCH access to the resources and cost reductions of a system while allowing the county to retain ownership.

Hilton also said OCH had plans to bring on more specialists, in an effort to avoid losing local patients to larger hospitals outside of the county.

“We’re going to look at ourselves going forward, and we’re going to continue to make proper adjustments,” Hilton said. “The only thing left that we have is our patients, and we have to make some better decisions for them.”

Miller said this willingness to change is coming too late.

“You didn’t hear them saying any of this until the sale came up,” Miller said.

In the meantime, Jennifer Young, who lives in nearby Louisville, said she’ll remain cautiously optimistic that the hospital doesn’t sell.

“If they continue with what they have now, we’ll come back,” Young said. “But if they change — less politeness, less cleanliness, less care — we’d leave.”