COVID has weakened rural hospitals – North Carolina Health News

By Liora Engel-Smith

The cancellation of elective surgeries in the early spring left rural hospitals across the state nearly empty and without a major source of revenue. The implications of this financial hit become clearer as health systems release financial disclosure documents from this period.

The state and federal government funneled hundreds and thousands of dollars to hospitals, earmarking specific funds for the roughly 50 rural hospitals in the state. This support may have avoided an immediate crisisbut rural hospitals are still not out of the woods, said Cody Hand, senior vice president of advocacy and policy at the North Carolina Healthcare Association.

“Before the pandemic hit, we weren’t convinced that rural hospitals would survive another decade,” he said. “And so this [financial hardship] did not help.

Signs of financial stress are all over North Carolina’s rural hospital ecosystem. New data from the state health department shows that 31 rural and small hospitals received a grant of $84,317 each from federal funds that were allocated to the state for COVID relief. And 17 applied for an advance payment from NC Medicaid in June under an initiative that allows the state to essentially use disbursements as short-term loans against future care. The loans are due in full in two years, but repayment begins in October, according to NCDHHS.

Hospitals and skilled nursing facilities across the state also received cash injections in the form of Medicare loansborrowing a collective $2.4 million, also against future care.

Yet rural hospitals continue to struggle, primarily because of their precarious financial situation even before the pandemic.

Loss on top of uncertainty

Nowhere is this financial distress clearer than in eastern North Carolina, a rural part of the state with pockets of persistent poverty.

The biggest system there, Vidant Health, for example, ended the nine-month period that ended on June 3055.3 million in the red, for a negative operating margin of 3.8%despite a round of layoffs in March. In May, Moody’s downgraded Vidant’s credit scoreciting the uncertainties of the coronavirus in his decision.

But there were signs of strain at Vidant long before that, including a negative operating margin in the quarter. before the pandemic began in North Carolina and the shutdown of mental health unit in a rural Vidant facility in Beaufort County.

When asked if the system would consider additional cuts to stay afloat, spokesman Jason Lowry wrote that Vidant was working to improve operational efficiency and reduce spending to support the system in the future. Patients began to come back into the system, he later wrote, bolstering the system’s financial prospects.

“Vidant continues to carefully assess all services, programs and operations across the system to ensure we are able to fulfill our mission,” he wrote.

Another system, Southeastern Health, which serves Robeson and surrounding counties, has been experiencing financial operating difficulties for the past Hurricane Matthew hit in 2017recording operating losses of approximately $50 million on of them years with a margin of -8.4% in 2018 and -7.7% in 2019.

The coronavirus pandemic has caused the system over $11 million losses in the nine-month period ending June 30, even after the system cut more than 200 postsclosed two primary care clinics and transferred the operations of a third clinic to a local federally licensed health center.

As of June, the system had received more than $20 million in federal and state aid, according to its financial disclosure forms, much of it in the form of short-term loans that will soon expire, according to the system’s leader. , Joann Anderson.

“We’re not going to fully recover to be where we need to be for about 12 months or so,” she said.

The exact timeline will depend on when patients return, she said. At the start of the pandemic, many people delayed their care for fear of catching COVID, and not all of them returned, she added.

North Carolina’s coronavirus curve has flattened since its peak in July, but some experts predict a second push during flu season. The response to this second wave could include a further suspension of elective surgeries, a move Anderson said would be “devastating” for the Southeast and could require additional painful cuts.

A crisis in slow motion

Although all of North Carolina’s rural hospitals handled the financial uncertainties of early spring without closing their doors, future closings aren’t out of the question, said Brock Slabach, senior vice president of member services for the National Rural Health Association, an advocacy and research association. organization.

It depends both on the uncertainties surrounding a possible second wave of coronavirus in the fall, but also on the amount of help that hospitals could receive from the federal government. Moreover, financial crises unfold slowly in the hospital world.

A February report from Chartis Group, a health services company, examined the financial health of systems that closed, finding signs of steady decline three years before the hospitals went bankrupt. Hospitals in states that, like North Carolina, have not extended Medicaidwere more financially vulnerable to begin with, the report notes.

“You can usually get things done a bit and get things done and keep going. [a hospital] operate and then suddenly one day it’s just impossible,” Slabach said.

Hand of the NC Healthcare Association said there are things that could potentially ease the burden on rural hospitals and avert a crisis down the road. On the one hand, he said, the Centers for Medicare and Medicaid Services could reverse the advance payments they made to rural hospitals during the height of the pandemic, or at least delay reimbursement for a few more months. On the other hand, he said, the state could disperse more of the CARES Act funds it received to support rural hospitals.

North Carolina State received $4.1 billion of the coronavirus fund, most of which went to the state, while about half a billion was issued for three counties and the city of Charlotte. So far, $3 billion has been allocated and $561 million remains in reserve until the General Assembly appropriates it, according to the State Bureau of Budget and Management. About half of the money that was earmarked for expenses has been disbursed, according to the office.

Amy Ellis, spokesperson for the state health department, said in an email that NCDHHS is “working with hospitals to operate in the new normal during and after COVID-19,” but the state has used all available CARES Act fund allocations to support rural hospitals in North Carolina. She said the state will continue to support rural hospitals through some of its existing programs.

This story has been updated to add information from NCDHHS on CARES Act funds for rural hospitals and Medicaid loan repayment requirements.

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Aurora J. William