Struggling Kansas Hospitals Ponder Potential Solution: Fewer Beds Kansas Considers New 'Rural Emergency Hospital' Designation

Here’s one possible solution for financially struggling rural hospitals — eliminate the beds.

The idea is gaining traction in the wake of new federal legislation approved in December that would allow for designation of “rural emergency hospitals.” Similar legislation is now making its way through the Kansas legislature.

The financial plight of rural hospitals was a major topic at a digital conversation hosted by the KU Public Management Center on Feb. 11. Speakers from the Kansas Hospital Association (KHA) and United Methodist Health Ministry Fund made one thing clear: the rural health care model in the state is struggling and in need of a boost.

According to a Center for Health Care Quality and Payment Reform study, 75 of Kansas’ 105 rural hospitals are operating at a financial loss, and are at risk of closing. A Chartis Center for Rural Health study, meanwhile, noted that five rural hospitals in Kansas have closed since 2010.

It’s not just a Kansas problem. Nearly half of rural hospitals nationally are currently operating at a financial loss. But the decline in the state of health care in Kansas has been precipitous.

Kansas has fallen from 8th in the country in 1991 to 29th in 2019, according to America’s Health Rankings, the largest decline in the country during that period. Kansas also ranks 40th in public health spending.

Jennifer Findley, vice president of education and special projects for the KHA, has been researching a new rural health model for nearly a decade. Recently approved federal legislation allowed that new model to become a reality.

The Consolidated Appropriations Act, passed in December 2020, created a new provider type that Findley and other health experts believe could be a good option for rural hospitals in the future. They are called rural emergency hospitals and they might just solve some looming problems for hospitals in rural Kansas.

“I think it does provide some financial stability for those hospitals that are struggling,” Findley said.

A bill that would approve this new hospital designation was recently passed through committee in the Kansas House of Representatives on Feb. 17. It now awaits approval in the Senate.

Rural Emergency Hospitals

The biggest difference between a rural emergency hospital and the current critical access hospital designation is the absence of overnight stays. Notably, 37 Kansas hospitals report they have two or fewer patients occupying overnight beds.

“Oftentimes, we see the ones that are struggling the most are the ones that kind of line up with the fact that they’re not using overnight stays as frequently,” Findley said. “Along with operating those comes some overhead and other kinds of expenses. That just adds to the overall financial strain that the hospital has.”

Many operations do not require overnight visits anymore. While the delivery of those operations has changed, the payment methods have not.

Take cataract surgery for example. In the 1970s, it was a one-hour operation that would require one or two days of hospitalization, and was only available to the worst case patients. Now, It’s a 10-minute procedure that does not require an overnight stay, and is available to most patients.

According to the KHA, the rural emergency hospital model would fully serve more than 75% of emergency room patients.

The goal is to combine the aspects of a hospital and a clinic. That means being open 24/7, providing emergency services, while also providing primary care and eliminating overnight stays.

County Health Outcomes

The rural emergency hospital model would also provide additional finances to help stabilize hospitals. Annual facility payments from the Centers for Medicaid and Medicare services would cover core operational costs for the hospital, which is not something that currently exists in the critical access hospital designation.

“Having some predictable steady annual or monthly payments coming in the door is gonna make it easier for you to ride them when those things kind of fluctuate,” Findley said. “If you think about COVID, it’s just throwing a whole other mix into it as far as new needs and services. And some days, you might be really busy. And some days, you might not have anybody.”

In addition to the annual facility payments, the rural emergency hospital designation will allow a new kind of diversity of care in one facility, which could help rural communities get all of the services they need in one place.

Currently, the critical access hospital model has mandates for the facility on what they are to do with space, including how many overnight beds they need to have. According to David Jordan, president of the United Methodist Health Ministry Fund, the rural emergency hospital model will bring much needed flexibility to rural communities.

“We see rural emergency hospitals as a way to give these rural hospitals and really, by extension, rural communities, much more flexibility in what can be done and what’s done in these hospitals and maybe provide services that address (the community’s) needs,” Jordan said.

This would make room to include services such as oral health or rehabilitation.

“I think there’s a lot of flexibility in thinking through what’s needed,” Jordan said. “Versus right now, where there’s a lot of constraints on how care is delivered, by how care is funded.”

Ninety-one Kansas hospitals are eligible for the new designation, including hospitals in Atchison, Ottawa, Paola and Garnett.

Education

Before the pandemic, Findley and the KHA had set out to visit communities and discuss what the rural emergency hospital model could look like for them, and if it would be beneficial.

They had their first meeting March 4, 2020 in Oberlin, Kansas. That conversation went well, and the community was very receptive to the model. But the KHA wasn’t able to hold any more conversations due to COVID-19. Findley says that education is going to be a huge part of their plan going forward.

“We’ve obviously alerted everybody, as this bill got passed at the federal level and let them know that this is now our reality,” Findley said. “But if you think about it, that was December, and now we’re in February. There hasn’t been a lot of time for folks to react to that.”

Officials at Miami County Medical Center, for example, said they are aware of their eligibility, but need more time to educate themselves on the designation to assess whether it would be a good fit for their community.

More “Future of Rural Health Care” webinars are planned for each region of the state at the end of February and the first week of March.

After hospitals decide whether they want to change designations or not, they must come up with a transformation plan, highlighting what services they will keep, add or change. According to Findley, the one thing that must change is the removal of overnight beds. Hospitals can begin changing to this designation as early as 2023.

Jordan hopes that this conversation will open eyes and lead to larger policy changes such as the expansion of Medicaid, a focus on preventative care and a declining rural health workforce.

“I don’t think that the rural emergency hospitals likely solve all these problems,” he said. “But I think hopefully, it also triggers the conversations on workforce, the conversations on coverage. And I think that there’s also  a need for Kansas, but frankly all states across the country to think about, you know, how we finance health care.”

Jacob Douglas covers rural affairs for Kansas City PBS in cooperation with Report for America.