Another Rural Hospital Closes its Doors

Pioneer Community Hospital is the third to close this year in Mississippi, a Medicaid non-expansion state. It's upsetting to learn about these closings because they don't just provide necessary care, but also vital jobs, and a sense of community in the rural areas they serve.

I hadn't planned on writing back-to-back columns on rural hospital closings, but these events are becoming far too common. Last week it was Bowie, TX. This week, it's Mississippi. The situations aren't quite the same, but the endings are all too familiar.

Pioneer Community Hospital of Newton, MS, said it has lost its critical access status and will close on Dec. 1. The Centers for Medicare & Medicaid Services last year rescinded Pioneer's critical-access status, effective Dec. 1, 2015, after determining that the hospital did not meet the 35-mile distance requirement from other hospitals.

Pioneer CEO Mark Norman did not return calls for comment, but he issued a statement explaining that the hospital could not survive without the cost-plus-1% enhanced payments that come with critical access status.

"[In] September of 2010, USDA allowed Pioneer Community Hospital of Newton to purchase the hospital from the previous owner, with the CAH designation being an essential requirement for the transfer to occur," Norman said. "The loss of the CAH designation makes the operation of the hospital no longer financially feasible. This revised interpretation of the mileage regulation, 1820(c)(2)(B)(i)(I) and (II), is a complete reversal of CMS's original interpretation that allowed the facility to remain financially operational for the past five years."

Pioneer's emergency department will close on Dec. 1, and the hospital will accept no more admissions after Dec. 1. "Patients already admitted to the facility will be discharged upon the completion of their care and treatment," Norman said.

Pioneer plans to maintain a clinic in Newton with extended operating hours, but Norman said "residents of Newton County in need of future emergency medical care will need to seek the attention at another hospital in Forest, Meridian or Union."

Red Ink
Even with critical access status, Pioneer was running in the red. American Hospital Directory data for 2014 shows that the hospital generated $32 million in total revenues, but lost $580,000.

It's upsetting to read about these rural hospital closings because most of us understand what critical roles they play, not just in providing care, but also for fostering a sense of community and generating and facilitating local economic development.

A study out this month by the Center for Mississippi Health Policy identified nine hospitals in the state that were in danger of closing and estimated that those hospitals represented more than 2,600 jobs, generated more than $8.6 million in state and local taxes, and close to $290 million in economic activity. Ironically, Pioneer was not on that endangered hospitals list because the Center used 2012 data for its analysis.

Pioneer's closure means the money generated by scores of relatively well-paying healthcare jobs will no longer circulate throughout the tiny community, located 64 miles due east of Jackson.

"We really don't know how this is going to play out, but there were about 130 jobs that were full-time and part-time," Newton Mayor David Carr told me. "We're a small town, about 3,400… most of [the 130 of] them full time and a lot of them paying pretty good for small town Mississippi."

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"Also, it was a part of the community as far as events and things like that," Carr says. "They sponsored health fairs, a lot of stuff like that that you usually don't think about. They had a nice cafeteria. I'm a member of the Lions Club and the Rotary Club. We had our meetings there every week. That's a minor thing, but it's all part of it when you add it all up."

Pioneer is the third hospital to close this year in Mississippi, a Medicaid non-expansion state. Kilmichael Hospital shuttered converted to a health clinic. Natchez Community Hospital closed this month as part of a consolidation with Merit Health Natchez.

In the Crosshairs
Whenever I hear about these rural hospitals closing I am reminded of a conversation I had in 2012 with James E. Orlikoff, then a senior consultant at the Center for Healthcare Governance. He warned that critical access hospitals were in the crosshairs as federal regulators looked to trim costs.

"Anytime you face an economic crunch when you have carve-out artificial protections, they can't last," Orlikoff told me three years ago. "Is it evitable? Yes. 'When' and 'how' are the questions… I tell my critical access hospitals to strategically plan on three years to be off the cost-plus model."

Orlikoff said then that the critical access funding cuts will come sequentially, rather than all at once. "Many critical access hospitals don't fit within the rules, so first they will be the first to lose their protected reimbursements. Then the cuts will migrate to all critical access hospitals, especially as other markets can show the efficiencies that can be taken."

Orlikoff warned in 2012 that many critical access hospital leaders were in denial.

"Many of the leaders here are so embedded in that protective philosophy, that they don't know what their finances are. They don't know how much inefficiency they have in the system. So when the time comes, they are going to be paralyzed," Orlikoff explains. "If they start thinking about it now, maybe they can get ahead of the curve."

I tried to contact Orlikoff this Thanksgiving Week to update his prescient comments. He didn't return my call. Then I thought why bother? It's clear that what he told me in 2012 applies now.