Lessons learned in real time at rural hospitals during pandemic

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Danielle Gehr/IowaWatch

Shari King became the interim vice president of operations at UnityPoint Health – Marshalltown in 2018 after working at UnityPoint Health – Waterloo for 23 years. During her tenure, the hospital has endured a tornado, a financial turnaround and now the COVID-19 pandemic.

Quicker planning. Working together as networks. Focused staff deployment. The COVID-19 pandemic is giving hospital administrators and their healthcare providers ample opportunity in real time to learn new best practices to delivering medical care. 

The quick fixes they’ve tried since the pandemic broke have included more reliance on telemedicine, communicating frequently with the public and an old standard: getting government money.

This story is part of a nationwide collaboration of Institute for Nonprofit News members examining the effect COVID-19 is having on rural health care. IowaWatch reporting in this project was made possible by support from the Solutions Journalism Network, a nonprofit organization dedicated to rigorous and compelling reporting about responses to social problems.

Finding ways to fund the hospitals for stability still is a challenge, though.

“Where to start? That could be a laundry list,” Shari King, administrator at UnityPoint Health – Marshalltown, a central Iowa hospital, said about shifting norms for hospitals already working with tight budgets going into this year.

“I’ve been in health care for about 25 years, and I don’t remember ever experiencing anything where we knew so little going in,” King said. This is from a hospital saved from bankruptcy in 2017 when the large network, UnityPoint, purchased it through its Waterloo, Iowa, hospital. 

The list of COVID-19 era lessons learned, gleaned from interviews by an Institute for Nonprofit News collaboration of journalists examining how small hospitals have coped with COVID-19, reads like a cram course in health care management:

  • Planning and implementing as early and quickly as possible, without waiting for federal guidance. Then, adapting quickly to shifting government plans that affect operations.
  • Having a clear communication chain internally and for the public to handle information that can change quickly. 
  • Considering the benefits of global budgeting, which establishes what Medicare will pay a hospital at the beginning of the year in a bid to keep Medicare costs down but also give hospitals some stability when normal revenue-producing surgeries and procedures aren’t done. This kind of budgeting is done in states like Maryland and Pennsylvania.
  • Reliance on virtual doctor appointments via the internet, especially for visits from a rural district that otherwise would be a significant distance from specialists. Concerns about this telemedicine explosion include accessible high-speed internet in rural areas and computers for people with low incomes. But, Medicare changed regulations on what it will or will not pay for, bringing telemedicine deeper into its list of covered expenses.
  • Paying closer attention to hospitals’ and their staff’s capacity and combining efforts with other hospitals regionally, if not broader geographically, to deliver health care during a surging outbreak.
  • Willingness to tackle an extraordinary problem in extraordinary ways.

“Seeing our providers in parking lots at 3 a.m. in the morning, working out of a tent when it was 25 degrees, was bone chilling in a couple of ways because if not only from the temperatures,” Phil Ellis, network director for the Indiana Rural Health Association, said. 

“But it was just hard to imagine. It was very surreal. It was hard to imagine that this was really happening, and that these people are out there putting their life at risk by treating patients.”

Large, consolidated hospital networks often take criticism because of their size and remoteness, especially when removing healthcare services from local hospitals. But they also have plenty of brain power for planning and using resources, hospital administrators said in interviews. 

“We have a public health infrastructure that is not going to be able to do that without collaboration of hospitals,” Brian Tabor, president of the Indiana Hospital Association, said. “So you’re going to see, you know, rural hospitals out there … on the front line side by side with the local health department or the state Department of Health, helping to execute a plan for vaccine distribution.”

The daily case management huddle takes place at the Door County Medical Center in Sturgeon Bay, Wis., on August 5, 2020. During the meeting, the chief of hospital medicine, doctors, nurses, and medical students discuss patients’ care needs for the day. The meeting takes place in a former waiting room, which is no longer accessible to visitors due to the COVID-19 pandemic. Door County Medical Center is a small, 25-bed critical access hospital serving 30,000 people across Door and northern Kewaunee counties. (Coburn Dukehart/Wisconsin Watch)

Local businesses, civic groups, residents and foundations that raise money for hospital emergencies have responded in many places to deal with the COVID-19 outbreak. For example, a local foundation raised $300,000 for the Door County Medical Center, at the tip of the Green Bay-Lake Michigan peninsula in east Wisconsin, to fill some of the gaps left by revenue losses because of COVID-19. 

In the central Iowa town of Osceola, a short drive from the Iowa-Missouri border, a team of hospital, municipal, school district, business and other civic leaders banded together to help the critical access Clarke County Hospital meet local health needs during the summer. The collaborators continue to meet.

“I think it makes a difference, being a small, rural community. It’s just what you do,” said Dawn Everding, president and chief financial officer at Community Memorial Hospital in Sumner, a northeast Iowa town of 2,000 people who donated about 800 homemade masks to their local hospital last spring.

Bad timing for Central Iowa hospital

COVID-19 became yet another hurdle at Iowa’s UnityPoint Health – Marshalltown, licensed for 49 beds but using only 24 this past summer because that’s all its staffing level would allow, Shari King said. It reported having 0.1 day of operating cash on hand as 2019 started, financial data the hospital filed and made available via the American Hospital Directory show. For perspective, that was enough to operate two hours and 14 minutes without more money.

It was an improvement over the previous year, when its cash on hand was one-and-a-half days behind and the hospital dipped into dwindling reserves, financial data the hospital filed shows.

Marshalltown, Iowa, is still recovering from a 2018 tornado that tore through Marshalltown’s downtown, damaging historic buildings and knocking down the clock tower of the 133-year-old clock tower. The hospital sustained some damage and had to evacuate about 40 patients to nearby hospitals. Photo taken July 9, 2020. (Danielle Gehr/IowaWatch)

UnityPoint made significant changes in services when it bought the then-independent Marshalltown hospital out of bankruptcy but changed how it deploys staff who provide care. It sent to Marshalltown new leadership, including King as administrator.

Prospects for small hospitals that don’t link into larger networks would not look good, King said. “I think they could be grave, to be candid,” she said. “If you don’t have the safety and security that comes with either buying power, or even recruitment for staff and physicians, it’s a real uphill battle.” 

Marshalltown’s hospital sustained steep losses in the five years from 2014 through 2018, including $19 million in 2016 and $9 million in 2017, the income statements posted by American Hospital Directory show. The loss had been $16.7 million at the end of April 2017, when miscellaneous nonpatient revenue kept it from going deeper, to its operating margin of almost $17.5 million in the hole, the records, examined by IowaWatch, show.

“We knew it was going to take three years to do a financial turnaround for this organization. I can tell you, we did it in two-and-a-half,” King said. But, the hospital closed its birthing center Oct. 1, 2019, during its moves to make budget. Mothers now have to travel 30 to 45 miles away to the nearest birthing centers in Grinnell, Newton or Ames.

King said the hospital met budget in 2019 and that its 2019 balance sheet could show the operation with $50.7 million in assets. That would be down from $51.7 million the previous year and $103.6 million in pre-bankruptcy 2015, hospital balance sheets show.

“That doesn’t come without pain and difficult decisions that were heartbreaking, sometimes, to make. But it does create a sustainable future because money doesn’t grow on trees in healthcare. We have to be prudent with the dollars that we have.”

Early planning

People who run hospitals have experienced outbreaks, such as H1N1 and Ebola, and plan for pandemics but hospital administrators interviewed in the Institute for Nonprofit News collaboration said COVID-19 has put them at a new level. 

“Every day is almost a new day because what we understand about the disease, its spread and how to combat it, and what best practices are to combat that almost changed daily,” Curt Coleman, critical access hospitals president in the Genesis Health System in eastern Iowa and western Illinois, said.

Genesis leaders started meeting in mid-March to plan for COVID-19, Coleman said. “It was an incredibly intense process for everybody. I think it underscored how much we need each other and need to work together – not just hospitals but our entire communities,” he said.

“One of the early questions was, in looking at how COVID was hitting other countries, especially in countries like Italy,” Coleman said. “Our concern was: are we going to see that kind of increase and become overwhelmed by COVID in our own community? We had no idea. And if that were to happen, are we prepared?”

To prepare, hospital officials conserved personal protective equipment so that they had enough if an outbreak were to happen, Coleman said. Around the first of April, they started to screen people at the door as those people entered Genesis’ facility, asking where people had been and taking temperatures.

Stimulus funds provided money for planned safety steps like installing flash disinfecting systems and air filtration and UV light that can help get rid of infectious, air-borne particles. While tied to COVID-19 now, these types of steps could be used to control other infectious diseases, Coleman said.

“Because the government made a specific decision, the decision to provide financial benefit to the rural facilities, it may have helped us invest in things that we wouldn’t have been able to afford to do.”

Turning to Congress

Congress reauthorized the Medicare Dependent Hospital program in 2018. That program, to run through 2022, has a formula for paying rural critical access hospitals with 25 or fewer beds rates to treat patients that take into account the hospitals’ low patient count. The thinking behind the program is that, even though the hospitals and their pool of potential patents are small, they are needed in the rural areas.

Other congressional attempts at long-term financing for rural hospitals have stalled in Congress. The Rural Community Hospital Demonstration Extension Act of 2020, introduced in May by Rep. Abby Finkenauer, D-Iowa, with cosponsor Rep. Don Young, R-Alaska, would add five years to the renewal of a program started in 2004 that guarantees prescription drug reimbursements to critical access hospitals for Medicare and Medicaid patients. The bill is in the House Ways and Means Committee, which has not acted on it.

Sens. Chuck Grassley, R-Iowa, Amy Klobuchar, D-Minnesota, and Cory Gardner, R-Colorado, introduced in 2017 the Rural Emergency Acute Care Hospital (REACH) Act, which would have created a new Rural Emergency Hospital classification for treating Medicare patients so that critical access hospitals did not have to meet requirements to maintain a certain number of inpatient beds.

That attempt died in committee but Grassley and Sen. Ron Wyden, D-Oregon, included some aspects of it, including making the Medicare Dependent Hospital program permanent, in a Prescription Drug Pricing Reduction Act. That act would redesign how Medicare and Medicaid pay for prescription drugs in a bid to reduce the costs of those drugs.

The bill is alive but no action has been taken since Grassley introduced it in the Senate Sept. 25, 2019, out of the Senate Finance Committee he chairs. 

“Everything’s frozen on the Hill,” Michael Topchik, national leader for the Chartis Center for Rural Health, said. “I don’t know if you’ve been watching them bicker but it’s really at a new tenor, I think. And, there’s no home for it,” he said about pending legislation to change how small hospitals are paid.

Basic, sound financial planning

Keith Mueller, a nationally recognized rural health researcher at the University of Iowa, suggested that hospitals prepare for the worst scenario by saving money or drawing credit more than they do now.

“It’s no different than, say, what the government has to do,” Mueller, a Gerhard Hartman professor and head of health management and policy at the university’s College of Public Health, said. “You dip into your reserves, use a line of credit and, sort of get through it.”

Small rural hospitals, though, might not have as much cash on hand as larger ones, nor a strong line of credit. Their leaders might not know when revenue will pick up again, Mueller said. Moreover, many hospitals are run by nonprofit organizations, operating under a notion that a nonprofit’s business is to spend money on its intended purpose, not hoard it. 

Mueller said researchers and hospital managers saw as the COVID-19 pandemic started that hospitals with secure, predictable income sources are in better shape to handle sudden declines in patients using the hospitals. He cited the global budgeting efforts in Maryland and Pennsylvania as an example of planning ahead.

Topchik said he expects innovations in how hospitals do business will emerge from the COVID-19 pandemic. But, he said, the key problem for small, rural hospitals continues to be low patient volumes with high, fixed costs. Rural hospitals have to have the necessary medical equipment for when it is needed, he said.

“The idea of market economics supporting rural hospitals is folly. It didn’t work,” Topchik said. “I think we’re kind of at the nexus of another point here, where we’ll have to basically decide how do we continue to support low-volume hospitals, understanding that a market-force, market-based economy is not going to, in and of itself, is not going to support this.”

This story was part of a multi-newsroom collaboration of IowaWatch, Wisconsin Watch, the Institute for Nonprofit News, Reveal from The Center for Investigative Reporting and Side Effects Media. Danielle Gehr of IowaWatch contributed from Marshalltown, Iowa. Suzanne Behnke of IowaWatch contributed from Osceola, Iowa. Carter Barrett of Side Effects Public Media contributed from Indiana. Parker Schorr contributed from Door County, Wisconsin.

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This IowaWatch story was republished by the Marshalltown Times Republican under IowaWatch’s mission of sharing stories with media partners.

IowaWatch reporting in this project was made possible by support from the Solutions Journalism Network, a nonprofit organization dedicated to rigorous and compelling reporting about responses to social problems.

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