Greenwood Leflore Hospital could cut its losses by as much as $5 million a year if Mississippi were to expand Medicaid, according to industry officials. They say, however, it’s unlikely the state Legislature will drop its longstanding resistance to expansion of the government health insurance program.
“We don’t see any movement from our elected officials on that,” said Richard Roberson, vice president for policy and state advocacy for the Mississippi Hospital Association. “Unfortunately I think it’s still taboo to talk about it.”
Roberson and Tim Moore, the president and CEO of MHA, discussed in a 45-minute interview Tuesday the crisis facing hospitals in Mississippi, particularly those in rural areas, and what their association is doing to try to help them stay afloat.
The interview occurred less than two hours before Greenwood Leflore Hospital reported losing another $2 million in October and seeing its available cash reserves fall to less than $2 million. All of those reserves and then some are in the form of a loan from the federal Medicare program.
The endangered hospital had been counting on a friendly takeover by the University of Mississippi Medical Center, but that plan collapsed earlier this month when UMMC backed away from entering a long-term lease of the Greenwood hospital.
The hospital, which has implemented three rounds of job cuts and closed or curtailed a number of services, is now trying to hang on long enough for Congress or the Mississippi Legislature to provide relief.
Gary Marchand, the interim CEO, estimated Tuesday that without additional help, the hospital will have to close in late December or early January. He said, however, that hospital officials are involved in discussions with unnamed private parties that could provide funding to keep the hospital operating into early next summer — during which time it is hoped that a longer-term solution could be found.
That solution, said Roberson and Moore, starts with making changes to the Medicaid program, the state-operated insurance program for the indigent and disabled that is largely funded by the federal government.
Since 2014, states have been able to expand Medicaid to cover a larger share of their uninsured population, with the federal government picking up at least 90% of the cost of claims of the newly eligible beneficiaries. Mississippi is one of 12 Republican-dominated states that have rejected Medicaid expansion, with both Gov. Tate Reeves and House Speaker Philip Gunn unequivocally opposed to expansion. “Politically you’ve got a few folks that just aren’t going to do it in spite of the economic benefits for the state of Mississippi, in spite of the health care benefits for working people that don’t have health insurance coverage, and in spite of the benefits it would provide for the health care providers in the form of additional reimbursement,” Roberson said.
He acknowledged that Medicaid expansion alone would not be enough to save failing hospitals, but it would help by reducing what they are currently spending to treat the uninsured. Statewide, MHA estimates, Medicaid expansion would reduce the cost of indigent care by $200 million to $250 million a year.
“That helps get your nose above water,” he said. “It doesn’t necessarily get your whole neck and shoulders.”
MHA is also advocating for elimination or reduction of the state taxes that hospitals pay on their Medicaid revenues and for an increase in the supplemental payments from Medicaid.
Some of these reforms would require legislative action, but at least one of the supplemental funding programs could be made more generous if the state’s Division of Medicaid sought and received a formula change from the federal government.
Currently those supplements are based on the difference between what Medicaid pays for a service and what Medicare, the health insurance program for the elderly, does. MHA is asking the Division of Medicaid to change the formula, as allowed by federal law, to instead base the supplement on the difference between Medicaid reimbursements and the average commercial rate.
That formula change would generate a few hundred million dollars annually for the state’s hospitals, according to the MHA officials.
Moore worked at Greenwood Leflore Hospital from 2000 to 2004, first as the chief operating officer and later as the interim CEO. He said the financial troubles with which the Greenwood hospital has been dealing are being felt all around the state.
Prior to the COVID-19 pandemic, Mississippi hospitals were losing a combined $11 million a month, according to Moore. Now it’s probably double that, as costs have risen 15% to 20% while revenues are “up a couple of percentage points at best,” Roberson said.
While rural hospitals are faring the worst, the state’s major health systems are projecting losses through all of next year, Moore said. “We know that we’ve got hospitals that are in financial peril now. If there is not something done about the revenue side of the equation, there are going to be more that join that.”
The Center for Health Care Quality and Payment Reform says Mississippi leads the nation in endangered rural hospitals, with 24 at risk of closing within the next two to three years.
In an effort to buy time, the Greenwood hospital since May has significantly reduced staff, shut down entire units, including intensive care and labor and delivery, and either closed or transitioned to UMMC at least a half-dozen outpatient clinics. The latest closure is the pulmonology clinic, whose two physicians, Drs. Joe Pressler and Rachael Faught, played an instrumental role in guiding the community through surges of the COVID-19 pandemic. That clinic closes Nov. 30.
The hospital’s employment as of Tuesday stood at 519, with another 47 employed by Aramark, the private contractor that handles laundry, housekeeping, maintenance and food services at the hospital. In May, before the first round of layoffs, the combined employment was right at 900.
Marchand said he does not anticipate any further reductions in staff or services at the hospital, which is jointly owned by the city of Greenwood and Leflore County. The county’s Board of Supervisors, however, believes further reductions are possible and has asked Samuel Odle, an Indianapolis-based consultant retained by the county, to help identify them.
Marchand said that the hospital on Monday provided Odle, a senior policy adviser with Bose Public Affairs Group, with a “tranche” of publicly available data, including financial statements. He said Odle also requested personnel information, including physician contracts and employee pay rates. That information, Marchand said, will be provided once the hospital receives a confidentiality agreement from Odle.
Marchand said he is doubtful the research will identify any substantial expenses that can be reduced and keep the hospital operating even at its current slimmed-down capacity.
“You’re not going to find a significant amount of cost to get out of the system to provide the services that we’re currently providing, but we’re willing to try,” he said.
Tim Moore, the CEO of the Mississippi Hospital Association, concurred that the Greenwood hospital may have already exhausted all the avenues for cost reductions.
“There’s no way that you can cut yourself to prosperity,” he said.
“The more you cut, the less services you provide, the harder it is to maintain your viability.”
On Tuesday, the hospital board approved reinstating the contracts of 24 physician employees and one independent physician who serves as the medical director of a hospital department. Those physicians had been given in September a 90-day notice that their contracts would be terminated, a formality that was designed to prepare for the transition to UMMC. The only physicians, according to Marchand, whose contracts were not reinstated were the two pulmonologists and an obstetrician who opted to not work for UMMC when it took over the Greenwood hospital’s obstetrics clinic last month.
Marchand said the hospital is also investigating the possibility of pursuing designation as a “critical access” or “rural emergency” hospital, either of which would entitle it to additional Medicare funding.
The hospital would have to reduce its bed count, though, to qualify. It is currently licensed for 208 beds, although it hasn’t needed anywhere near that many for years. In 2019, the year before the pandemic, the average patient census was 67, according to hospital records. This past year, the average was 33, and most recently, the hospital has been staffing only 12 to 16 beds. A critical access hospital can have no more than 25 inpatient beds, and a rural emergency hospital no more than 50.
The Greenwood hospital has received two pieces of good news recently that will soften, at least temporarily, its cash crunch.
It has been granted a hardship extension on the payback of its Medicare loan. Installments on the loan, which had an outstanding balance of $5.5 million at the end of October, had been averaging almost $900,000 a month between April and September. That loan is now on a five-year repayment schedule of $102,000 a month.
In addition, the state Division of Medicaid has announced that it will be sending the state’s hospitals in November their supplemental payments for December and January, in addition to the November payment. That will infuse an additional $1.2 million into the Greenwood hospital’s operations.
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
