Rural critical access hospitals in North Dakota face 'daily struggle' to make ends meet, and coronavirus isn't helping

FARGO — The Towner County Medical Center has treated seven strokes as well as six trauma cases in a recent period early this year — urgent medical cases where minutes can mean the difference between life and death.

The medical center in Cando, a farming community of 1,064 in northeastern North Dakota, serves an area extending 60 miles in any direction. It recently was recognized by the National Rural Health Association as a top rural critical-access hospital.

But every year the Towner County Medical Center struggles to survive financially. The hospital is licensed at 20 beds but has an average daily census of four inpatients. The hospital operates with a profit margin of between 1% and 2% — a gap that easily can swing to a loss if unexpected costs arise.

In fact, as health providers gear up to deal with a possible surge of coronavirus infections, North Dakota’s 36 rural critical-access hospitals operate with an average 1.5% profit margin, and in any given year half are profitable and the other half operate at a loss, according to figures from the North Dakota Hospital Association.

An analysis of the financial performance of North Dakota's rural hospitals from 2011 through 2017 found that the average profit margin ranged from -5.24% to 2.99%. The figures were compiled from Medicare cost reports.

If North Dakota's urban medical centers fill up with people sick from COVID-19 infections, other patients could be sent to rural hospitals to relieve the pressure, said Tim Blasl, president of the North Dakota Hospital Association.

"That's why hospitals in rural areas are critical," he said. "We're seeing that in our state. It's just another reason why rural health care is so important in North Dakota."

But a recent national study determined that seven of North Dakota’s rural hospitals are financially “vulnerable” — that’s almost one in five — with two considered “most vulnerable” and five deemed “at risk.”

That analysis is contained in a new report by The Chartis Group, “The Rural Health Safety Net Under Pressure: Rural Hospital Vulnerability” that concludes 24.5% of the nation’s rural hospitals are vulnerable to closure.

Some North Dakota rural hospitals operate regularly at a loss — a situation Blasl said could be aggravated because hospitals are scaling back on elective procedures to create capacity for coronavirus patients.

For instance, St. Luke’s Medical Center in Crosby, located in Divide County in the state’s northwest corner, failed to turn a profit between 2011 and 2016, but eked out a 0.27% profit in 2017, according to Medicare cost report figures obtained by The Forum. The last two years, however, swung back to a loss.

“I wouldn’t be surprised in the last 20 years if we’ve always had a net loss,” said Jody Nelson, St. Luke’s top executive.

The 15-bed hospital continues to operate because of community support in the form of a city sales tax, county mill levy and foundation contributions, she said.

“Without all of these we wouldn’t be able to continue,” Nelson said. Together, she said, they contribute $400,000 to $600,000.

The struggling hospital gets a strong helping hand from the community because it’s paramount to maintain health care in this remote area of North Dakota. The next hospital is in Tioga, 50 miles away, and Williston is 60 miles.

“We get great community support,” Nelson said. “To be honest, it can literally be life and death.”.

As of 2017, 28 rural North Dakota hospitals had a supporting foundation, according to a survey by the Center for Rural Health at the University of North Dakota . Seventeen rural hospitals have some form of local tax support, the UND survey found.

In Cando, the Towner County Medical Center receives $70,000 to $75,000 per year from a local property tax to support the hospital. “That helps,” said Ben Bucher, the medical center’s chief executive officer.

The Towner County Medical Center moved from operating at a loss into the financial black five years ago, when it got a new top executive and solved its chronic challenges of recruiting medical providers.

“We were able to recruit more local talent,” Bucher said. “We were lucky enough to find workforce. We worked hard at recruiting across the state.”

Having to hire contract doctors and nurses is expensive, and the turnover is not welcomed by patients, who prefer stability, he said.

“When you have local talent the turnover is greatly reduced,” he said. The Towner County Medical Center’s roster of its contract physician and six nurse practitioners and physician’s assistants has been stable in recent years.

“So when you come to Cando you know who you’re going to see,” Bucher said. “You’re going to see a familiar face.”

In fact, the nursing and physician shortages — actually, difficulties filling all medical vacancies — posed the biggest challenge for North Dakota hospitals, according to a spokesman.

“The No. 1 thing we hear from our members is workforce,” Blasl said. “Contracted labor is expensive.”

Bucher, who took the Cando medical center’s helm five years ago, doubles as a nurse practitioner, a role that occupies 30% of his time. Nelson doubles as the chief financial officer in addition to her role as chief executive officer at St. Luke’s Medical Center in Crosby.

Critical access hospital is a favorable designation given to rural hospitals that meet certain federal requirements. Eligible hospitals must have 25 or fewer beds, generally be located more than 35 miles from another hospital and must provide 24/7 emergency care services, among other requirements.

In return, they qualify for cost-based Medicare reimbursements that help them survive financially with the lower volumes facing rural hospitals, a policy adopted in the late 1990s after a wave of rural hospital closures.

Originally, critical access reimbursements covered 101% of allowed costs, but that has dwindled over time to 92% to 95% of true costs, Blasl said. Still, he added, “It’s been very, very beneficial for rural areas across this country.”

The higher reimbursements and other policies have helped, Bucher and Nelson said. More recently, the expansion of Medicaid, which covers an additional 20,000 North Dakota residents, has helped stabilize rural hospital finances, they said.

Since North Dakota lawmakers approved Medicaid expansion in 2014, hospitals saw their bad debt and charity care expenses drop by 45% by 2016, according to the North Dakota Hospital Association.

A federal program that enables rural hospitals to receive discounted medication also is a significant part of the financial safety net, Nelson and Bucher said.

“Right now,” Bucher said of the two programs, “that’s our profit margin.”

The revenues and savings from Medicaid expansion and drug discounts, in fact, have enabled Towner County Medical Center to add services, including 3D mammography and a chemotherapy infusion center.

The programs also have enabled the Cando medical center to provide medical-assisted therapy to more than 100 opioid addicts, likely helping reduce overdose deaths, Bucher said. Six of ten of those patients, he said, are covered by Medicaid expansion.

“We’re constantly expanding services in this area, not just surviving,” Bucher said. “We owe that to our patients.”

Grants also are vital in keeping the doors to rural hospitals open, Nelson said.

Overall, despite the challenges, Blasl believes North Dakota’s rural critical access hospitals are not in imminent jeopardy of closing.

“I think it’s at this point stable,” he said. He quickly added, though, that the future remains uncertain, including the fate of the Affordable Care Act, which allowed states to expand their Medicaid programs.

“If that goes away, what’s the plan?” he asked. “Medicaid expansion has really helped North Dakota in terms of stability.”

Reports have shown that 75% or more of hospital closures in recent years have been in states that have not expanded Medicaid, Blasl said.

Hospital administrators and the community are determined to keep St. Luke’s Medical Center open, despite formidable challenges that show no sign of abating.

“It’s always been our plan to stay on our own,” Nelson said. “The need is here. But it is a struggle. It’s a daily struggle to do that.”

Twelve North Dakota rural hospitals were named 2020 top 100 critical access hospitals by The Chartis Center for Rural Health for overall excellence in rural health care.

The announcement was made at the National Rural Health Association's annual rural health policy institute, held recently in Washington, D.C. The hospitals earning the recognition:

CHI Carrington Health Center, CHI Lisbon Health, CHI St. Alexius Health Devils Lake, First Care Health Center Park River, Jacobson' Memorial Hospital Care Center in Elgin, Jamestown Regional Medical Center, Linton Hospital, Sanford Medical Center Mayville, St. Andrews Health Center Bottineau, Towner County Medical Center Cando, West River Regional Medical Center Hettinger and Wishek Community Hospital.

Top-performing hospitals excel in managing risk, achieving higher quality and better outcomes and increasing patient satisfaction while operating at a lower cost than their peers.

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