In the High Country near the Virginia border, two critical access hospitals hope they are beating the odds in a rapidly changing health care environment made worse by the current COVID-19 pandemic.
Faced with static population growth and lower patient volumes, charity care debt and increasing costs for medical technologies such as MRIs, North Carolina’s small, rural hospitals have fought hard to avoid closing.
“Unless they can have somebody who can bring them expertise, bring them technology, bring them access to economies of scale, it’s pretty much impossible for them to survive,” said James Hoekstra, a senior vice president for clinical and academic development at Wake Forest Baptist Health in Winston-Salem.
But, unlike 11 other rural facilities in the state that have perished over the past 15 years, Ashe Memorial Hospital and Alleghany Memorial Hospital were able to remain open for their neighbors, in part through partnerships with major regional providers.
Experts such as Hoekstra at Wake Forest Baptist and Brian Yates at Novant Health have been key to stabilizing troubled hospitals’ operations and offering a wider range of services to the community.
Ashe Memorial Hospital
In 2013, Ashe Memorial, based in Jefferson in Ashe County, embarked on a consulting and services relationship with Novant Health through Novant’s Managed Hospitals unit.
“Some independent hospitals feel like they’re on an island, and we were able to help them sort of shed that feeling,” said Yates, who at the time was vice president for managed hospitals at Novant and who consulted with Ashe Memorial before being named its permanent CEO in January.
“Saving a good amount of money but also providing some thought leadership” is how Yates describes his initial consulting role with the 79-year-old hospital.
With a population of 28,150 and as one of 20 counties with the highest percentage of population in the 65-and-older age group, Ashe County has counted on Ashe Memorial for health care, jobs and economic stability.
Strategically, Novant’s guidance to the hospital’s leadership has evolved, first focusing on cost efficiencies and service delivery and more recently on a desire to garner a larger percentage of insurance payments as Medicare, Medicaid and commercial insurers shift away from a “fee-for-service” model to a preventive one that rewards patient wellness.
“We’ve really responded to the health care shifts to increase access to primary care and preventive care,” Yates said. “The majority of our revenue has come from outpatient services.”
In addition, by offering a deep list of specialties such as orthopedic surgery and oncology alongside long-standing services such as obstetrics and a 60-bed nursing home, Yates believes Ashe Memorial is poised to maintain “consumer confidence” throughout an uncertain pandemic.
Going forward, he sees increased acceptance of telemedicine, even among the county’s large elderly population, and not just for routine checkups.
“We have teleneurology with Novant Health,” Yates said. “So, where we don’t have a neurologist in the market or in the hospital, our physicians still have access to that specialty service. I think that’s invaluable for our neurological patients … but also for any of our stroke patients that come in.”
While Ashe Memorial recently reinstituted elective procedures put on hold during the COVID-19 lockdown, he acknowledged that revenues from such outpatient services have been “severely affected.”
Before the pandemic, Ashe Memorial’s net income for 2019 was a loss of $464,596, according to Yates, underscoring the fragility of rural hospitals, even those that have shored up their operations with outside help.
Novant’s managed health arrangement saved the hospital about $2.6 million in operational expenses early on in its engagement, helped along by shared purchasing of supplies and equipment, Yates said, a “significant” figure as the hospital now faces a national health emergency with no end in sight.
“I think we’re cautiously optimistic about our ability to support our lost revenues with some of the financial lifelines that have been provided” at the state and federal levels, Yates said.
As of this past weekend there were 67 positive cases of COVID-19 and one death attributed to the disease in Ashe County, with no reported outbreaks at any congregate living facility in the county.
Alleghany Memorial Hospital
About 40 minutes away in the Alleghany County town of Sparta, Alleghany Memorial has entered its third year under a 50-50 ownership arrangement involving Hugh Chatham Memorial Hospital, an independent hospital in Elkin, and Wake Forest Baptist Medical Center, a large academic medical center in Winston-Salem.
Announced in 2018, the goal of the continuing joint venture is to “ensure fiscal stability” for Alleghany, established in 1951, and to enhance coordination of patient care and access to clinical services within the three-party arrangement.
“We can save money, we can avoid redundancy,” Hugh Chatham’s CEO, Paul Hammes, said in an interview with Carolina Public Press.
Under the agreement, Alleghany Memorial pledged to work with the community to raise $6 million toward future capital needs. The campaign exceeded that goal, gathering $6.6 million in pledges to renovate the hospital and build a medical office housing primary care, some outpatient services and specialty clinics.
To date, 65% of all pledged dollars have been collected from residents, businesses, the town of Sparta and Alleghany County.
The millions raised will help keep Alleghany Memorial on sound footing.
The latest public data available through the American Hospital Directory shows the hospital with a loss of net income of $675,542.
While 70% of Alleghany’s revenues come from outpatient care — a percentage that Hammes said is appropriate given changing reimbursement models — the recent moratorium on nonurgent procedures has further weakened Alleghany’s balance sheet.
As of this past weekend there were 50 confirmed cases of COVID-19 in Alleghany County.
Rural hospitals and Medicaid expansion
Hoekstra, at Wake Forest Baptist, believes telemedicine is emerging as a valuable tool in recouping lost revenues.
“We have gotten some relief from telemedicine in terms of some of the insurance companies and Medicare allowing us to be reimbursed for telemedicine when they haven’t been able to do that before,” Hoekstra said.
“There is no doubt that is going to be huge for a rural hospital because there’s so much distance-related care that we can provide above and beyond what we’re doing now if we have telemedicine in place and stable long term.”
Beyond that, the partners believe that Medicaid expansion, so far rejected by the General Assembly, is a “must” for rural hospitals.
Hammes said his own hospital is projected to write off about $2 million in bad debt and charity care for the fiscal year ending Sept. 30, 2020, with 60% of that burden originating in the emergency room.
“We have to cross-subsidize certain services like an emergency department, where one out of four patients show up with no insurance,” he said.
Expanding Medicaid in the state would have made more than $11 billion in new federal funding available through 2022 and would have made more than 600,000 North Carolinians eligible for coverage, according to a 2019 analysis by The George Washington University.
“We certainly have not been quiet in our support for Medicaid expansion,” Hoekstra noted.
Carolina Public Press is an independent, in-depth and investigative nonprofit news service for North Carolina.