West Memphis hospital’s struggles mirror troubling trends

April 28--Within 10 miles of Downtown Memphis, a hospital across the Mississippi River in Arkansas is endangered by trends reshaping health care.

Fewer patients are being admitted to Crittenden Regional Hospital in West Memphis. Revenue has dropped while expenses, such as adopting electronic health records and recruiting key physicians, are growing.

The Affordable Care Act will provide some help. A novel use of federal Medicaid expansion dollars in Arkansas will buy private health coverage for nearly 140,000 citizens throughout the state determined eligible so far. But to help pay for federal health reform, growth is being cut in special payments to hospitals that serve larger numbers of uninsured and low-income patients.

Faced with operating losses in four of the five years through 2012, Crittenden Regional is turning to county voters on June 24 to approve a 1 percent sales tax that would expire after five years, collecting a total of about $30 million for the hospital.

Nationwide, more hospital consolidations, bankruptcies and closures are forecast with trends that since 2008 have earned nonprofit hospitals a negative outlook from Moody's Investors Service.

The outlook is especially challenging for states, including Tennessee and Mississippi, that have not accepted federal expansion of Medicaid, said Craig Becker, president of the Tennessee Hospital Association.

"There's going to be a lot more of consolidation or a lot more closures, either way it's pretty much I think a foregone conclusion at this rate, especially without expansion it's going to be far worse," Becker said.

A report to Congress in March by the Medicare Payment Advisory Commission found that 17 acute care hospitals closed in 2012 and 17 opened. Four closures were in rural areas.

"In light of changes in the practice of medicine, reductions in inpatient discharges and declining occupancy rates, we may see more than 17 closures per year in the future," the report says.

At Crittenden Regional, the retirement or relocation of four key internal medicine physicians and three general surgeons were major causes leading to a 22-percent decline in admissions from 2008 to 2013, said Gene Cashman III, chief executive officer of the hospital. The average daily number of patients has slipped from 59 in 2008 to 42 last year. The hospital is licensed for 150 beds.

Recruiting new physicians and moving to electronic health records at the hospital are examples of rising expenses, while revenue has slid, leaving red ink in four of the five years through 2012 and $15.7 million in the red since 2006.

Moody's, a business which studies a borrower's ability to repay debts, reported in its 2014 outlook on not-for-profit hospitals a common trend.

Hospitals like Crittenden Regional that serve large proportions of uninsured and low-income patients will see growth reduced in special payments, called disproportionate share, from Medicare. Last year, these payments totaled $2.4 million for the hospital. Of the patients at the hospital, 63 percent receive Medicare, 15 percent Medicaid, 12 percent are covered by commercial insurance and 10 percent are "self pay," or uninsured.

Paul Cunningham, executive vice president of the Arkansas Hospital Association estimated that a third of the state's hospitals, which include 84 acute care facilities, may be struggling financially. About 20 have asked voters for sales or property tax help, he said.

At Crittenden Regional, the sales tax revenue would help a cash-strapped nonprofit hospital with 420 full-time employees and $30 million in salary and benefits recruit the doctors it needs and invest in its future, said Cashman, who works for Memphis-based Methodist Le Bonheur Healthcare.

Crittenden Regional affiliated with Methodist in what was based on a group purchasing arrangement, but extended to a management agreement that placed Cashman as CEO since October 2012, he said.

With at least one fourth of Crittenden County's population of about 50,000 living in poverty, Cashman said that without Crittenden Regional open, residents now receiving care at the hospital and from its six clinics, home health, hospice and other services would delay or not seek care. At their sickest, they might be transported across the river to Memphis.

"The impact on Memphis would be their neighbor to the west would no longer have a community hospital to care for hundreds of thousands of people," Cashman said, referring to patient visits.

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