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Edwards County Medical Center CFO on Rural Health Challenges During Pandemic

Analysis  |  By Jack O'Brien  
   August 20, 2020

Throughout the COVID-19 pandemic, hospitals and health systems have had to find creative ways to address myriad challenges and, in some cases, embrace financial innovations never implemented before.

Editor's note: This conversation is a transcript from an episode of the HealthLeaders Finance Podcast. Audio of the interview can be found here.

Throughout the coronavirus disease 2019 (COVID-19) pandemic, hospitals and health systems have had to find creative ways to address myriad challenges and, in some cases, embrace financial innovations never implemented before.

This dynamic is especially true for independent and rural provider organizations, which have been burdened by shrinking margins and difficult payer mixes in recent years.

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In an interview with HealthLeaders, David Usher, CFO of Edwards County Medical Center in Kinsley, Kansas, talks about the challenges related to being a rural health provider during the COVID-19 pandemic.

This transcript has been lightly edited for brevity and clarity.

HealthLeaders: What have been the most significant operational and financial changes that you've implemented at your organization during the pandemic?

Usher: We focused on opportunities to generate cash and to preserve our existing cash resources. It's not rocket science, but there are a lot of moving parts in a critical access hospital that need to be worked on to get all that done. We've got cost reports and [those] are important to us in terms of future cash and opportunities. There was government money likely to be in the offing and we just made sure that we applied for everything that was out there to try to maximize the benefit, build that cash, and hold our expenses tight.

We saw a lot of places talking about furloughs and layoffs, which is not appropriate to a small rural hospital. Some can manage it, but ultimately, we have too many people who wear too many hats. That isn't an option. We felt that our employees were loyal to us and we should be loyal to them. We gave them an understanding that we wouldn't do anything crazy like that, and asked them for their cooperation in changing their hours as they saw fit, keeping expenses down, etc. As we started to see opportunities come out from the federal government and the state for us to do things differently, we looked at those and moved as quickly as we could.

HL: What financial trends and approaches that have emerged during the pandemic are most likely to continue post-COVID? Conversely, which trends are not likely to continue after the pandemic?

Usher: I think a lot of the CMS waivers that were put out to make it easier for us to do things, we would love to have stay in place. [The waivers] make money for the business, they take out a lot of the regulations, and make it much easier for us to operate. Things like the three-day [prior hospitalization] rule—the rule that we can't have a patient in our facility for more than 96 hours—those kinds of things were waived through this [pandemic]. [The waivers] help us, [but] I have a sneaking suspicion that they won't stay waived for long, so we're going to have to go back to what we did before.

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It's important that we try to work and figure out how to do better than we did. I don't want to go back to normal. We've got to figure out how to do things differently than how we used to do them. 

HL: As it relates to implementing certain financial innovations, what are the most significant challenges rural health systems face?

Usher: We're never going to be cash-rich. We're always struggling, and reimbursement is always on the down. As a small organization, you'd like to think that you are able to respond quickly to changes, but these are very conservative, with a small 'c,' rural communities. Change is not something that happens easily. Cash control is critical, expense control is critical, [as well as] the optimization of cost reports, which are what drives most small hospitals that are massively dependent on reimbursement from Medicare.

Using those cost reports, optimizing them to make sure that we're extracting the best we can get, is critical when you run into something like this [pandemic] where volume has dropped through the floor. The nature of the cost report is that we need to use it quickly. This year we've done an interim cost report; I don't believe I've done an interim cost report many times in my time at small hospitals. 

HL: What financial innovations have you not seen hospitals and health systems pursue during the outbreak and which ones would you like to see organizations embrace?

Usher: I feel like telehealth has become big all of a sudden. Telehealth is one of the good things to come out of this and it sounds like it's here to stay. I think it's important that it is here to stay because it changes our business model. 

Having government money in [our] pockets is fabulous; it gives us something to lean on. I don't have to worry about how we replace our CT scanner or how we replace major equipment, which are obviously significant costs. We can do these things, but it's hard. When you get government funding like we've seen recently, it's great, but it doesn't come with a clear set of rules.

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My problem now is that I've got money, I've got money to sustain me, but how much of the money am I going to be expected to pay back and how am I going to have to pay it back? I was able to go out and get an advance payment for Medicare, and now I have to figure out how to pay that back because Medicare's plan on that seemed to be, 'Well, we're just going to take it back 120 days after you got the money.' I don't believe that was the intent of Congress, but that's the way it's going to be. And that's the struggle.

As an organization, we know reimbursements are dropping. We've got to find a way to do business and replace that revenue so that we can sustain ourselves at the current level or improve. 

In urban areas, [there's] an emergence of what they're calling 'direct care,' where you almost take a subscription from a patient for their healthcare, rather than rely on insurance, and give them a guaranteed level of care and number of visits. I think that's something in a rural community, where we have low income and small businesses that are on a tight budget and can't afford health insurance, [where] we, as a hospital, should be doing some of that direct care. There's stuff we'll look at, but I don't think the pressure has been on us in the past to actually do that, like it is now.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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