MHA CEO Report — The Challenges for Rural Hospitals

MHA Rounds Report - Brian Peters, MHA CEO

“The country is lyric, the town dramatic. When mingled, they make the perfect musical drama” Henry Wadsworth Longfellow

MHA Rounds Report - Brian Peters, MHA CEOHaving just returned from the annual American Hospital Association (AHA) Rural Health Care Leadership Conference, where I was joined by a strong contingent of MHA members and staff, the future of our rural hospitals has been top of mind.

When I was in graduate school at the University of Michigan many years ago, I recall clearly our discussions related to rural health. In short, we were taught that rural America was statistically older, poorer and sicker than the rest of the country – and this demographic and socioeconomic reality led to all kinds of challenges for those responsible for the health of rural populations and the viability of rural hospitals.

Fast forward to the most recent (2020) census and this dynamic remains true. In addition, we discovered that between 2010 and 2020, rural America actually lost population for the first time in history. Here in Michigan, the latest projections indicate that while the total state population will grow moderately over the next 20 years, the population in rural Michigan will remain flat or even decrease.

The operating environment has never been more difficult for healthcare organizations, for reasons we have documented at length in prior CEO Reports. This statement is particularly true for rural hospitals – 100 of which from across the country have actually closed since 2005. Many more have had to make the difficult decision to terminate service lines or otherwise scale back their operations to keep their doors open. What is driving these challenges?  A few items come immediately to mind:

  • An older and poorer population translates into a higher percentage of government payors (Medicare and Medicaid), which traditionally do not fully cover the true cost of care.
  • The traditional volume-based reimbursement model that has been one of the cornerstones of American healthcare does not serve rural providers – which often lack sufficient volume – particularly well. The pitfalls of the volume-based model were on full display during the worst days of the COVID-19 pandemic, particularly when non-emergent procedures were suspended.
  • Recruiting physicians today most often involves recruiting a spouse as well; in other words, there must be a good job match for both parties to spur a relocation. Physician recruitment is more difficult in rural communities for the simple fact that there are fewer potential jobs for that spouse. In addition, the on-call coverage demands can be particularly significant in rural areas, because the number of available rotating on-call clinicians is simply fewer. I would be remiss if I didn’t mention the Merritt Hawkins firm, which is one of our original MHA Service Corporation Endorsed Business Partners, and is dedicated to working with our members to create solutions to some of the most vexing challenges of the day.
  • Lastly, it is no secret the country is in the middle of a behavioral health crisis, with a lack of available placements leading to behavioral health patients boarding in emergency departments throughout the state, awaiting placement in a more appropriate setting. Hospitals are experiencing higher costs caring for these patients, increasing security to protect other patients and staff, while receiving little to no reimbursement since these patients have yet to be admitted to an inpatient psychiatric unit. This lack of access is even worse in rural areas. For example, the Upper Peninsula only has one licensed child psychiatrist for the entire region.

The reality is that when we think about rural Michigan and the more densely populated areas of the state, we are all inextricably linked. There is no “us and them.” People from the big city travel every day to rural communities for conferences and events, meetings, sales calls, deliveries, vacations and visits with friends and family (and people from rural communities come to the big city for the same reasons). While we want to ensure the vibrancy of a hospital in a rural community so that the residents have access to quality healthcare, we should all want the same thing, because we never know when we might be on one of those sales calls or vacations and need that same access. This is not just theoretical, as I have countless stories about this phenomenon playing out in real life, and I suspect you do as well.

Moreover, hospitals are one of the largest – if not the largest – employers in many rural Michigan communities, playing a crucial role in the economic vibrancy of the state. Healthcare careers provide stable, good paying jobs and positively impact lives every day. Not only are hospitals important for access to care, but also as economic drivers. 121,000 total workers are associated with the healthcare sector in rural Michigan, including 81,000 direct jobs. These direct healthcare workers received $7.6 billion in total wages, salaries and benefits and contributed $1.4 billion in local, state and federal taxes. In addition, the existence of a hospital nearby is one very important item for businesses of all kinds when considering investment in a new factory, office or headquarters.

So, the vibrancy of our rural hospitals should be a priority. What is the MHA doing about it? As it turns out, we have done a lot. Beyond our advocacy on the traditional Medicaid and Medicare budgets, certificate of need, medical liability, workforce funding and many, many other public policy issues that affect all our members, here are just a few of our rural advocacy highlights:

  • We fought hard to secure passage of the Healthy Michigan Plan (our Medicaid expansion program) and have advocated for full funding in every budget cycle since. For the reasons cited above, this is particularly impactful for our rural hospitals.
  • We worked to pass, implement and protect the Critical Access Hospital program, which has created an important lifeline for 37 Michigan hospitals. And the MHA was successful in changing existing statue at the end of 2022 to make adoption of the new Rural Emergency Hospital designation possible for our members.
  • We have worked very hard to protect the 340B drug pricing program, which is vital to many rural hospitals and their ability to provide access to care to all in their communities. Our work includes advocacy with both the state legislature and Congress, and even in the federal courts, where the MHA has filed amicus curiae briefs related to recent 340B cases.
  • The MHA successfully advocated for two new supplemental Medicaid payment pools that specifically benefit our rural members with implementation of the rural access pool in fiscal year (FY) 2012 and the obstetrical stabilization fund in FY 2015. Our advocacy efforts were also successful in securing Medicaid outpatient rate increases in FY 2020, the first increase in two decades, followed by an additional increase in FY 2021. These increases resulted in a 63% increase for critical access hospitals and a 21% increase for all other hospitals compared to Jan. 1, 2020, rates.
  • We successfully advocated for an extension of both the Medicare-dependent Hospital and Low-volume Adjustment programs during the 2022 Congressional lame-duck session, which provide critical support to many rural hospitals.
  • Finally, we have successfully advocated for passage and implementation of state legislation that modernizes the scope of practice for certified registered nurse anesthetists and allows flexibility for each hospital to choose the anesthesia care model that best fits its location, staffing and resources to offer safe and effective patient care.

Our advocacy is also focused on ensuring our members can tell their story and connect with lawmakers, both at the state and federal levels. The MHA hosted its first ever Rural Advocacy Day last September in Lansing to facilitate conversation between rural hospital leaders and members of the Michigan Legislature. The MHA also accompanied members in February for the National Rural Health Association’s Rural Health Policy Institute event. MHA members met with Michigan’s congressional delegation and staff during the trip to discuss rural health issues facing Michigan hospitals. And if you haven’t yet had the opportunity to listen to the Rural Health Rising podcasts, I encourage you to tune in to our friend JJ Hodshire, the CEO of Hillsdale Hospital and an MHA Board member, as he does a fantastic job shining a light on a wide range of rural health issues – with an impressive set of special guests – in real time.

Successful advocacy and storytelling require teamwork. As mentioned above, for years we have partnered closely with the AHA and the National Rural Health Association. We have also enjoyed a close partnership with the Michigan Center for Rural Health (MCRH), and I am pleased to share Hunter Nostrant, CEO of Helen Newberry Joy Hospital, is a member of both the MHA Board of Trustees as well as the MCRH Board.

The mission of the MHA is to advance the health of individuals and communities, and in that context, we have always strived to represent all our members and communities. Each hospital is vital to the health of our great state. While the path forward may be difficult, I’m encouraged by the many rural hospital leaders – some of the nicest, and most talented people that I have met – that have developed innovative and strategic ways to address these challenges and position themselves to be able to care for their communities for years to come.

As always, I welcome your thoughts.

Hospital Funding Approved, CRNA Legislation Signed into Law

capitol background

Michigan Capitol BuildingSenate Bill (SB) 27, a supplemental budget bill containing funding for $160 million of COVID-19 relief for Michigan hospitals which accounts for the cost of treating COVID-19 patients, was passed in the Senate and is being sent to the governor for signature. The MHA will work with the Michigan Department of Health and Human Services on the distribution of the funding. The association will keep members apprised of further action on this bill or other supplemental appropriations that impact hospitals.

In addition, Gov. Gretchen Whitmer signed into law July 13 MHA-supported legislation modernizing the scope of practice for Certified Registered Nurse Anesthetists (CRNAs) as Public Act 53 of 2021. Introduced as House Bill 4359 by Rep. Mary Whiteford (R-Casco Township), the new law will allow flexibility for each hospital to choose the anesthesia care model that best fits its location, staffing and resources to offer safe and effective patient care by eliminating the state requirement that a CRNA must work under direct physician supervision.

This change has long been an MHA priority and will eliminate a costly regulation for hospitals while maintaining patient safety. The MHA worked diligently with other stakeholders representing provider groups as the bill was negotiated. The Michigan State Medical Society was neutral on the final version of the legislation signed by the governor, which includes a provision maintaining physician input on patient care and patient-centered care teams.

The MHA testified in support of the legislation in both the House and Senate and applauds the work of both chambers and the governor in passing the law.

The new law, which is set to take effect Oct. 11, brings Michigan in line with 42 other states and the U.S. military. To fully implement the law, the governor must submit a letter to the Centers for Medicare & Medicaid Services to formally exercise the exemption from the federal supervision requirement for CRNAs once the federal declaration of emergency related to the COVID-19 pandemic ends. The MHA will urge the governor to perform this final action when appropriate.

Questions on the budget or the new rules for CRNAs in Michigan can be directed to Adam Carlson at the MHA.