How an $8.5 billion federal COVID-19 relief package could help rural hospitals in the South
COVID-19 has forced Dr. Gary Wiltz, the Teche Action Clinics CEO in southern Louisiana, to make some difficult decisions.
When classes went online last Spring, they shut down their school-based clinics.
Dental services and other outpatient services were closed so that the clinics could focus resources on COVID-19 patients. The closures resulted in layoffs and temporary furloughs.
To limit in-person visits, the network of community health clinics expanded the use of telehealth. It was an added cost that came as the organization faced a steep decline in revenue, Wiltz said. Smaller rural hospitals and clinics have access to fewer resources than larger hospital systems that, even in a difficult year, have been better able to financially weather the storm.
But after a year of fighting the deadly pandemic, relief is on the horizon for the Teche Action Clinic and dozens of other medical providers serving communities in underserved and rural areas.
The $1.9 trillion COVID-19 relief package signed by President Biden on March 11 includes $8.5 billion in funding set aside for rural health providers. The money, which will be distributed through the Health Care Heroes Sustainability Fund, secures additional funding for workforce development in rural areas, contact tracing, testing and vaccine distribution. The package also provides a substantial boost in funding ($800 million) to the National Service Corp and the Nurse Corps Loan repayment program, which will help recruit and retain healthcare workers in medically underserved areas.
Healthcare providers must apply for funding but the timeline for when they’d receive that funding is unclear.
Still, Wiltz anticipates it will help account for a year of lost revenue and put their dental and school-based clinics back in service.
“This has been a difficult and traumatic experience getting through this,” he said. “I hope this will help make us whole again.”
The National Rural Health Association estimates that about 80% of rural health providers had to shut down outpatient services, including surgical care and dentistry, for up to four months last year. The bulk of their revenue comes from these services, explains Carrie Cochran-McClain, the vice-president of government affairs and policy at NRHA.
An analysis of financial data from 2,100 rural and community hospitals by healthcare analytics firm The Chartis Group found that outpatient services made up 77% of the total revenue on average.
“It’s important to remember the context in which these providers were working under coming into the pandemic. A number of rural hospitals have had to close in the last ten years,” she said. “The pressure was already there going into the pandemic.”
Twenty rural hospitals closed last year, according to the Cecil G. Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill. A total of 136 rural hospitals have shuttered since 2010. According to their research, Texas has seen the most significant number of closures (21), followed by Tennessee (16). It’s by far the highest number of closures in the southeast. Georgia has had eight closures, followed by North Carolina (seven closures) and Alabama (six closures).
George Pink, a senior researcher with the Cecil G. Sheps Center for Health Services Research, is optimistic that the funding from the COVID-19 relief package will provide vital short-term relief for cash-strapped hospitals. However, long-term challenges need to be addressed. Hospitals in rural areas have historically faced lower patient volumes and more difficulty recruiting and retaining a workforce. Now they're facing the financial burden brought on by the pandemic.
“Rural hospitals, in general, are probably going to be worse off than urban hospitals coming out of COVID. They don’t have the cash reserves large health systems have to fall back on,” he said.
According to the Chartis Group, by January 2021, 46% of all rural hospitals in the U.S. had a negative operating margin. Alabama and Mississippi were among five states with the highest percentage of rural hospitals operating in the red.
Jacy Warrell, the executive director of the Rural Health Association of Tennessee, is hopeful that the funding will help financially-strapped hospitals previously unable to receive funds through the Paycheck Protection Program.
The previous version of the PPP excluded hospitals affiliated with large health systems employing more than 500 people. Now local hospitals with smaller staff will be able to participate despite affiliation with a larger healthcare network.
“It was problematic in Tennessee where many hospitals in rural communities turned to larger systems to keep medical care locally,” Warrell said.
The latest funding round also includes community health centers and rural health clinics, which are increasingly serving people in rural areas where hospitals have closed.
These communities rely heavily on those providers, Warrell said.
“The inclusion of these rural safety net providers will be especially helpful in Tennessee where more than 10% of the population is uninsured and have seen increased volumes of people in need,” she said.
There still isn’t a timeline for when providers will begin receiving funds, and it’s unclear if funds can be used to help struggling clinics and hospitals beyond the pandemic.
It’s a concern that Lee McCall, the CEO of Neshoba General Hospital in Philadelphia, Mississippi, is weighing as he looks at the year ahead. The hospital is part of a small network that includes community clinics, an urgent care and a nursing home.
Patients are still forgoing treatment, and overall, McCall estimates revenue has declined by 20 to 30 % across the network.
The hospital’s emergency room has seen a historic decline in admission during the pandemic. They had to close outpatient services and furlough 10% of their staff for 40 days across their network last spring. Their nursing home is down about 40 patients, which amounts to a revenue loss of $10,000 a day, McCall said.
The loss could take years to overcome, he said.
“Lost revenue is a great concern for us beyond the pandemic. We are going to need longer-term relief and not just address the short-term hit we’ve taken,” McCall said.
Maria Clark is a general assignment reporter with The American South. Story ideas, tips, questions? Email her at firstname.lastname@example.org or follow her on Twitter @MariaPClark1. Sign up for The American South newsletter. Follow us on Instagram, Facebook and Twitter.