10 Alabama Hospitals Have Closed in the Last 3 Years: Will Yours be Next?
Birmingham News, April 17, 2014
It's a long list with some familiar names: Chilton Medical Center, Cooper Green Mercy Hospital, Hartselle Medical Center, Infirmary West.
All gone. Joined by ... Florala Memorial, Elba General, Searcy, Greil Memorial Psychiatric, Randolph Medical Center, and Southwest Alabama Medical Center:
Ten hospitals shuttered in the last three years.
Seventeen have succumbed since 2000, including the 617-bed Physicians Medical Center Carraway in Birmingham.
Part of it can be blamed on long-term and ongoing national trends where outpatient treatments, better technology and other factors reduce expensive inpatient stays.
But recently there are extreme pressures on hospital budgets related to health care reforms, Medicare cuts, the lack of Medicaid expansion and Alabama's peculiar health-care landscape that are pushing hospitals, especially those in rural areas, to the brink.
There are 94 acute care hospitals in Alabama, according to the Alabama Hospital Association.
During 2012, the average operating margin for a rural hospital was 1.1 percent and 22 rural hospitals were operating with a negative margin.
Where the hospital's money comes from Source: Alabama Hospital Association
Glenn Sisk, CEO of Coosa Valley Medical Center, said the three biggest factors stressing hospital budgets in Alabama are no Medicaid expansion, $220 billion in Medicare cuts to hospital services and Alabama's low wage index which helps determine Medicare reimbursement rates.
"It's well documented Governor Bentley will not expand Medicaid," Sisk said. "The problem associated with that goes back to the passage of the (Affordable Care Act) bill several years ago. It imposed cuts of $225 billion nationwide to hospitals.
"While that was a difficult pill to swallow for hospitals, there was the promise that everyone in America would have some level of insurance."
But when the Supreme Court allowed states to make their own decisions regarding Medicaid expansion, that promise of expanded revenue, not to mention expanded health care, was not delivered in about two dozen states choosing not to expand.
What this sets up are two dilemmas, the financial one and the public health one, Sisk said.
"This is not just a financial issue but a public health issue," Sisk said. "We are generally treating ER's as primary care office settings, It's very expensive, and it also causes people to delay care."
[Below see map of 46 Alabama hospitals closed since 1969]
Dr. Will Ferniany, president of UAB Medicine, said the financial pressures on hospitals can be seen through the lens of the payers.
A pie chart shows the three biggest payers of hospital bills as Medicare with 38 percent of the revenue; commercial insurance, 31 percent and Medicaid 20 percent.
Medicare dollars have been cut. Medicaid is a money loser for hospitals. Ferniany said UAB gets about 67 cents on every patient dollar spent on Medicaid. And so to make ends meet hospitals have to squeeze what they can out of the commercial insurance side, which in Alabama is primarily the formidable Blue Cross and Blue Shield of Alabama, which has major market share and is quick to point out it has had some of the lowest premium rates in the country.
Ferniany adds another payment stressor -- high deductibles.
The trend toward high deductibles is leaving more patients with the inability to pay the bills before meeting their $6,000 or $12,000 deductible, he said.
Now the roots of some of Alabama's hospital woes go back many decades when the state took advantage of funding to build small community hospitals, said Dr. Allen Perkins, chairman of Department of Family Medicine at the University of South Alabama. and president of the Alabama Rural Health Association. As time passed, those hospitals didn't have the reach needed.
"Alabama is behind the curve on regionalization of care," Perkins said.
In other states when hospitals reached their useful life, new bigger hospitals were built, he said, like building a big new high school to address population trends and needs.
Perkins said a regional system of care giving is needed, but it need not necessarily include hospitals.
"We need care delivery but we don't need all care to be provided by hospitals, and we don't need hospitals to provide every service."
But we do need health care infrastructure, he said.
"Optimistically what I see happening is the leadership in the state comes to understand that without health-care infrastructure, we cannot recruit industry," Perkins said. "Pessimistically, I see a lot of hospitals closing."
10 since '11
Hospitals closings since 2011
1.Florala Memorial Hospital, Dec. 27, 2013
2.Elba General Hospital, Jan. 31, 2013
3.Chilton Medical Center, March 5, 2013
4.Cooper Green Mercy Hospital, Dec. 31, 2012
5.Searcy Hospital, Oct. 31, 2012
6.Infirmary West, Oct. 31, 2012
7.Greil Memorial Psychiatric, Aug. 31, 2012
8.Hartselle Medical Center, Jan. 31, 2012
9.Southwest Alabama Medical Center, Aug. 5, 2011
10.Randolph Medical Center, March 17, 2011