Quorum Report: Against Backdrop of Proposed Tax Cuts; Rural Hospital Closures Accelerate

Reimbursement rate cuts from 2011 were never restored; rural hospitals have some of the highest rates of uninsured

Rural hospitals are closing at such an alarming rate in Texas that hospital administrators are beginning to fear wide swaths of the state may be left without the benefit of trauma care and some areas may have no hospital within 100 miles.

Rural and community health care providers are calling it, ironically, a death by a thousand cuts, including the budget cuts of 2011. Jack Endres, the administrator of East Texas Medical Center – Jacksonville, has seen three hospitals in his own chain go under since late last year: Clarksville, Mount Vernon and Gilmer.

“Keeping these hospitals open is no longer sustainable,” Endres said. “It’s not like it’s done. We’re only accelerating.”

East Texas Medical Center Regional Healthcare System was once a system of 15 hospitals, including 3 in Tyler. Along with the three hospitals that closed at the end of 2014, the chain’s hospitals in Crockett, Fairfield and Trinity have given notice.

“I think we’re going to see a large number of small rural hospitals close this year and next year,” Endres said. “A large number of the rurals are going to go under unless we can get relief from the cuts in reimbursements that the state and federal government have imposed on us. It’s no longer sustainable.”

The era of cost shifting is over, Endres said. There are no more costs to cut. For hospitals in the rural and community network – known as the Texas Organization of Rural and Community Hospitals – the news out of Austin isn’t good. These hospitals, which cover 85 percent of the state’s geography, also carry the burden of some the state’s highest rates of uninsured patients.

The state’s average rate of uninsured residents is 26 percent. The percentage in rural areas can sometimes run as high as 50 percent. Of the 15 Texas counties with the highest uninsured rates, 14 are located in rural areas.

The talk is all tax relief in Austin, even though the cuts to reimbursements made in the 2011 budget have yet to be restored to the state’s hospitals, Endres said. Endres’ own chain contains the region’s single Level 1 Trauma Center in East Texas, in Tyler. The chain considers the trauma center its social and moral obligation, but keeping specialists of all types on call around the clock is a costly burden.

“We’re not being paid enough to keep it open,” Endres said. “It doesn’t pay for itself.”

This is not just a Texas problem. One analyst’s projection puts another 283 hospitals on the brink of closure. But Texas dominates, if only for its vastness. Statistics show 45 hospitals have closed across the country since 2010. A quarter of those are located in Texas, with the trend increasing its pace.

The only solution would be a major reversal in reimbursement rates or a significant increase in insurance coverage. That looks unlikely. Endres predicts health care may dwindle to a limited number of hospitals in rural areas, supported by tertiary facilities that can offer a limited range of services.

Edith Gonzalez died in late 2013. The toddler choked on a grape, but when her family rushed her to Shelby Regional Medical Center in Center, the doors were locked and the parking lot was empty. Endres says that trend won’t be reversed. Without access to medical care, some outcomes can be predicted.

“People will die,” Endres said.

By Kimberly Reeves March 6, 2015 10:07 AM


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