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How Rural ME Hospitals Are Tackling Financial Challenges

 |  By Rene Letourneau  
   February 10, 2014

Reimbursement cuts aren't the only challenge rural hospitals face. Recruitment and retention of clinical staff is a perennial issue. But creative leadership and telemedicine are making things better at two small Maine hospitals.

Like most hospital and health system chief financial officers, Randy Clark, CFO at Sebasticook Valley Health in Pittsfield, ME, is concerned about cuts to government reimbursements. SVH has a 25-bed critical access hospital and three primary care offices and is a member of the Eastern Maine Healthcare System.

"I think what we generally struggle with is the proposed or actual cuts we receive from Medicare or MaineCare [formerly Medicaid]," Clark says. "It seems every year we are in some debate about why our reimbursements shouldn't be cut. We are also dealing with the 2% cut from sequestration, which for us has an annual impact of about $225,000. We've had to scurry to figure out what to do to deal with that… There are always either threats or actual cuts to our reimbursements, which complicates things, because we still have to pay our staff, give raises, remain competitive, and employ physicians."

Maine's decision not to expand Medicaid adds to an already difficult reimbursement environment, says Jennifer Goodrich, CFO at Charles A. Dean Memorial Hospital, a 25-bed critical access hospital in Greenville, ME, which is also part of Eastern Maine Healthcare System.

Tight Reimbursements a Major Concern
"Now we are seeing our free care go up and our bad debts go up, and if we had some reimbursements on these patients, it would be helpful," Goodrich says. "The people in our community have a high rate of chronic disease, and we have a high volume of uninsured and underinsured patients. We rely on government payers, and when they threaten to cut rates or make changes to payments, it impacts us greatly."

Although most healthcare providers are feeling the financial pinch of dwindling reimbursements, small institutions in rural settings have additional challenges to contend with, including recruiting physicians and consistently balancing patient volume with staffing levels.

Goodrich says these are two of her organization's biggest ongoing obstacles.

"Recruiting is a big challenge," she says. "I find we have better luck when someone has ties to Maine and knows this is an excellent place to raise a family and to retire."

"We sometimes have trouble recruiting because finding work for the spouse can be a challenge," she adds.

Facing Unique Staffing Challenges
Because C.A. Dean is located in an area where the population changes dramatically with the seasons, it is difficult to always have the proper staff-to-patient ratios, Goodrich says. Having to employ more staff than necessary during the slow seasons creates a financial burden that is tough to avoid.

"We are not like other businesses, like an ice cream shop, that can lay off employees and then rehire them. These are people who sought out an education and are certified, so you can't do that. It's very difficult to go through the seasons where our patient population drops off and productivity suffers… We are lean, but at some points during the year, there is not a lot of patient volume to support the need for staff," she says.

Clark says that because SVH isn't as remote as some rural hospitals, it has the advantage of being able to consider a job sharing situation for specialists that the system needs but not on a full-time basis.

"Sometimes we don't need a specialist full time, and we'll try working with one of our sister hospitals within Eastern Maine Healthcare System to try to think outside of the box by having the physician work two days a week in one hospital and three days a week at another," he says. "These are specialist that are needed in our communities, and we think joint recruitment can benefit both hospitals."

Typically in this arrangement, the specialist is employed by one of the hospitals, which is then reimbursed by the other for the hours the physician spends providing care to its patients, Clark notes.

Making Do, Building Alliances
Low operating margins can make it difficult for a rural hospital to keep pace with needed building upgrades—something C. A. Dean struggles with regularly, according to Goodrich. The hospital's roots are tied to a logging operation that became a large paper company and expansion over the past 100 years has been modest. A second hospital building was erected in the 1960s, and hospital leaders have worked hard over the years to forge regional affiliations.

"We operate on a tight budget, and we've been doing that for a long time, so it is difficult sometimes to keep up on maintaining and improving the buildings," Goodrich says, noting that her organization will celebrate its centennial anniversary in 2017.

"The original building is still here, and I'm sitting in it right now," she said.

The hospital has been part of the Eastern Maine Healthcare System since 1998.

Telemedicine Offers a Solution
Both C.A. Dean and SVH have found telemedicine to be an important tool to connect them with larger facilities so they can improve patient care without adding a lot of expense.

"We use telemedicine, and we find that it is very helpful," Goodrich says. "We use it frequently in the ER. We contact Eastern Maine Medical Center, and they can assist us while we are going through a trauma. It's like having another doctor right there in the room with us. We can have providers giving advice to providers on how to best take care of patients."


See Also: Telemedicine Emerging as Rural ICU Solution


"Also, if we decide we need to transfer the patient to Eastern Maine Medical Center, it helps EMMC because they have already seen the patient. When they see the patient again, it's easier for them to tell if the patient's condition has changed," she adds.

Clark says SVH has been using telemedicine for many years and has found it to be tremendously helpful in expanding services while keeping costs down.

"One area where we've used it for about five years is the ICU, and that helps us with nursing. Our nurses can contact folks at EMMC who deal with these issues all the time. The clinicians at EMMC can actually see the patient and help determine the care for that patient or whether they should be transferred," he says.

SVH also uses telepsychiatry in its emergency department. "Sometimes in our ED, we have patients who need psychiatric care, and we're trying to figure out if they need to be transferred to another facility or if we can treat them here," Clark says.

"The doctors can speak to each other and see the patient and assess whether or not care can be continued here. That's one thing telemedicine has done for us is to allow us to expedite psychiatric care for the community."

Rene Letourneau is a contributing writer at HealthLeaders Media.

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