Rural hospitals at risk, pose real challenges for Mississippi leaders

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CLARKSDALE –  As a bankruptcy court in Tennessee weighs options for a health system operator wanting to cut ties with the local county hospital, about 23,000 people here anxiously await word on whether one of the anchors of the community –  Northwest Mississippi Regional Medical Center – will close its doors or hand the keys over to another operator.

The uncertain future of rural hospitals is a drama that’s playing out in other communities around the country and across the state. Other rural hospitals in Mississippi – most notably in Amory and Batesville – are also in danger of closure if no new operator picks them up.

Aallyah Wright, Mississippi Today

Clarksdale’s only hospital is located at 1970 Hospital Dr.

Although Clarksdale leaders are apprehensive, they also remain certain that its medical centers will remain open and say they are taking the necessary steps to bring someone in to take over for current company holding the lease, Curae Health Inc.

Curae Health, a Tenn.-based not-for-profit health system, began operating hospitals in Clarksdale, Amory, and Batesville in 2017, acquiring the leases from Community Health Systems, Inc. On August 24, Curae Health filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Middle District of Tennessee.

Then on October 12, Coahoma County officials received notice that the company planned to shut the hospital doors on December 10 due to mounting expenses.

“Running a rural hospital these days is very difficult. When looking at demographics, it’s older, poorer, and sicker. … (The hospitals) have a lot of difficulty in trying to finance the much needed services that a community has to have in order to stay healthy,” said Brock Slabach, senior vice president for member services at the National Rural Health Association.

“I know in Mississippi, in its demographics certainly in terms of those older patients with chronic conditions, patients that have a harder time paying bills, present a real problem for providers because it’s a high need and low reimbursement proposition and hospitals get caught in the middle.”

Rural hospitals, rural challenges

Since 2010, 87 rural hospitals across the country closed with most located in the South, data from the North Carolina Rural Health Research program show. And of that number, Mississippi has had five hospital closures.

There are multiple factors why rural hospitals are at risk of shutting down – small, declining populations with high unemployment rates and uninsured patients, run-down facilities, issues recruiting doctors, and financial burdens, according to Healthline Media.

One of the most contentious debates over shoring up rural hospitals in Mississippi involves Medicaid expansion, Slobach said.

Mississippi is one of 14 states that has not opted for Medicaid expansion. The Affordable Care Act allows states to expand the eligibility of Medicaid – the state and federal government program that provides health care to low income individuals – to all people with household incomes below a certain level.

Between 2016 and 2017, those states that expanded Medicaid eligibility saw a decrease in the uninsured rate for people living below 100 percent of poverty and increased for people living at or above 400 of poverty, according to Census data. For those who didn’t expand, they saw an increase for both.

About 19.8 percent of Mississippians live below poverty, according to 2017 Census data. Although that’s a one percent decrease from 2016, it is still above the nation’s rate of 13.4 percent.

Advocates have argued that Medicaid expansion would extend coverage to more than 300,000 of the poorest Mississippians, or 10 percent of the state’s population. But opponents have argued that the long-term costs outweigh any benefits of insuring such a large part of the population, Mississippi Today reports show.

Uninsured Rate by State

“In a state like Mississippi you have the population that would otherwise be qualified to get services under Medicaid expansion but don’t have access now. What I don’t think people know is that Medicaid doesn’t pay the patient, it pays the provider for the services,” said Slobach.

“Medicaid is a rural provider program because it’s using those dollars to basically keep the hospital going for patients needing the services who can’t pay.”

A new study found that Medicaid expansion increased the financial stability of hospitals in rural areas that had a high number of uninsured patients, stating that 32 states and the District of Columbia that expanded Medicaid were more than 6 times less likely to close its hospitals than the states that opted out.

When the Affordable Care Act was passed in 2010, Mississippi’s Republican leadership said they would not expand Medicaid because the state could not afford to pay for the expansion, reported in the Daily Journal.

“Even a cursory glance at the state’s budget will reveal that Mississippi simply does not have the resources for such expenditures. So, which government functions are you willing to cut and what taxes are you willing to levy upon your district to pay for a new entitlement?” Gov. Phil Bryant wrote in a letter to lawmakers in 2013.

Meg Annison, director of communications for Speaker of the House Philip Gunn, said in an email on Friday that Gunn met with the Hospital Association last week and heard from the directors about the problems of hospitals closures.

“He is aware of the issues, and we are exploring the best options,” the email stated.

The governor and lieutenant governor’s office did not respond to requests for comment on this article.

Despite opposition by state leaders, a 2018 Millsaps College-Chism Strategies State of the State Survey showed that 52 percent of Mississippians favored expanding Medicaid to cover those who are uninsured under the Affordable Care Act.

“Politics of division and failed leadership is what led to the purely political decision to refuse Medicaid expansion in Mississippi,” State Rep. David Baria, D-Bay St. Louis and U.S. Senate candidate, said in a statement released on October 18.

“Ever since, we have seen the harmful effects of that boneheaded decision. Now, another rural hospital is at risk and our current leadership is to blame.”

Slobach emphasized how a similar debate was playing out in Kansas.

“Elections matter. We’ve had in the state of Kansas where we’re trying to elect a governor that will commit to signing a bill to expand Medicaid in our state. We had a bill passed by both houses and the governor refused to sign it. This whole issue of Medicaid expansion came up in politics. It’s not a policy decision or issue – it’s a matter of what side you’re on,” he added.

Aallyah Wright, Mississippi Today

Rep. Orlando Paden, D-Clarksdale

State Rep. Orlando Paden, D-Clarksdale, echoed Baria and Slobach’s statements, adding that he’s concerned with two things – the well-being of the people in these communities and the economic impact from this hardship.

“With us having a high rate of diabetes, heart conditions, people with strokes… wound victims…  the hospital is needed for their continued care,” said Paden. “Clarksdale, we’re unique in that we’re a regional area serving people in Quitman, Coahoma, Tallahatchie counties and all surrounding areas, and we have to continue to keep that in mind.”

Paden also mentioned the 484 jobs at risk: “I’m concerned about that. We have to keep these individuals employed and keep an educated and skilled human resources here to stay afloat.”

Declining revenues, potential operators

Curae released a statement saying that financial challenges and declining revenues factored into the decision to file for bankruptcy, HealthLeaders Media reported.

According to the bankruptcy case filings, Curae Health says keeping the Clarksdale hospital open would place significant risks to the Batesville and Amory hospitals. It added that the Clarksdale hospital significantly under-performed, and over a three month time period, operated at a cumulative negative cash flow of approximately $2.5 million.

Medical officials counter that this was not the case, alleging Curae Health forced them to implement an electronic medical record system, MEDHOST, which caused a delay in the billing. The cost of updating electronic medical records data can be challenging for medical hospitals. Curae owes MEDHOST $3.4 million, according to case filings.

“…One of the things that is being used against the hospital is insufficient receipts on a monthly basis to continue operations. However, when (Curae Health) started counting this, they had instituted a new electronic medical record called MEDHOST … where there would be a delay in billing and collecting,” said Dr. Richard Brownstein, a doctor at the Clarksdale hospital, to Coahoma County supervisors on October 17.

On behalf of Coahoma County, attorney Erika R. Barnes of Stites & Harbison PLLC in Nashville, filed an emergency motion on Oct. 22, arguing that it’s unclear how much money the debtors are actually losing on a post-petition basis or if the cash flow issue is a timing issue because of the new billing system.

Exhibits provided by Barnes showed between Aug. 24 and Sept. 30 the hospital had $35,048 earnings before interest, taxes, depreciation, and amortization with $4.6 million in total operating revenues and $4.5 million in operating expenses.

Barnes also argued that the debtors decision of closing the hospital down should be questioned, noting that Tim Brown, CFO of Curae Health, Inc., testified at a creditors meeting on Oct. 1 that it was the debtors’ goal to keep the hospitals “thriving and surviving whether that be under our (Curae’s) leadership or someone else.”

Just twelve days later, Clarksdale employees were issued a WARN notice – employers with 100 or more employees are required to notify them 60 calendar days in advance of plant closings or mass layoffs.

An expedited hearing was set for Oct. 23 at 2 p.m. in Nashville to determine one of two things – shut down the Clarksdale hospital, reject all unexpired leases and contracts and receive relief – or, transfer operations of the hospital to a new operator, assume and assign the Coahoma County leases and contracts requested by the new operator and receive related relief.

According to the objection filed by Barnes, there is interest from three potential buyers: a group that includes a Mississippi doctor, a Mississippi lawyer and an out-of-state investor, and another health care facility in the Mississippi Delta.

On Wednesday, Paul Pearson, board president of the Coahoma County supervisors, didn’t share any details of the hearing, but said “it was positive.” On Friday, Pearson noted that the Ridgeland-based Trilogy Healthcare Solutions, that the board approved to hire on an hourly fee for consulting services, will manage the hospital while the county will operate it until they go through the process of finding an interested party who will take over the hospital.

In Batesville, there are two potential buyers and a stalking horse bid – usually a bidder who sets the floor price – interested in assuming ownership of Panola Medical Center, said Batesville Mayor Jerry Autrey.

He was unsure of the cash flow of the Panola Medical Center, but said he was told the Batesville hospital kept the other two – Clarksdale and Amory – afloat.

“I was told the revenues were being used to shore up the other hospitals, but I’m not sure if that’s true or not. It’s hearsay. (Panola Medical operations) were doing well but some of the profits were going towards the other hospitals,” he said.

Unlike Clarksdale and Batesville, in Amory’s case, though, the issue is not if someone will take over their hospital, but more who that someone will be.

The Gilmore Memorial Hospital in Amory is set to be auctioned Nov. 15 with North Mississippi Health Services being approved as the stalking horse bidder with an opening bid of $10.5 million in cash and the assumption of Gilmore’s liabilities and financial commitments, according to the Monroe Journal, the sister publication to the Daily Journal. Potential bidders have to qualify and file with the bankruptcy court by Nov. 12, and if there aren’t any bidders, North Mississippi Health Services win the bid by default.

However, Sen. Hob Bryan, D-Amory, was not pleased with this decision. In an opt-ed published by the Monroe Journal on Oct. 10, he said the hospital won’t thrive under the leadership of North Mississippi Health Services, and services will eventually drift to Tupelo, which is about 30 miles north of Amory.

Monroe County Supervisor Joseph Richardson said in a phone call that the county doesn’t own any of the facilities, so they aren’t directly involved in the process or have any say so in what operator comes to the hospital, but he mentioned they are concerned and are following developments.

Looking ahead

Whether Clarksdale’s revenue declined more drastically than the others or not, all three towns are faced with the same dilemma – find someone to take over their hospitals or face the consequences that arise from the latter.

Having been a doctor in Columbus, Slobach is familiar with the three hospitals and says he can’t believe they’re having such financial problems.

But local government officials are hopeful that despite current developments, their towns will move forward with a hospital.

“It would be devastating (to lose the hospital) and would put you on the low end of the stick,” said Mayor Autrey. “It’s like schools if you don’t have good schools, it would hurt, you would lose jobs … You won’t have that edge on recruiting industry.”

“I’m doing my best, and it’s hard for a small town, but we’re moving forward.”

Pearson, the County’s supervisor, emphasized the hospital isn’t going anywhere.

“We’re not closing the hospital. I can assure you that.”