Kentucky rural hospitals run the risk of closing

A new study shows 68 percent of Kentucky rural hospitals are below the national average in financial strength and one third of them are in poor financial health.

Kentucky Auditor of Public Accounts Adam Edelen found hospitals are increasing their administration costs to keep up with Medicaid Managed Care Organizations.

“My view is not enough of the resources that we’re investing as tax payers have gotten to providers,” Edelen said.

MCO’S are supposed to cover Medicaid patient’s costs and pay hospitals between 30 to 90 days, Edelen and several area health care institutions at a meeting in Princeton Monday about these results, agreed that doesn’t always happen.

Marshall County Hospital CEO David Fuqua said most times their hospital aren’t paid within 90 days.

“It’s very difficult because it’s hard to budget for, it’s hard to manage for, and the cash flow becomes a huge issue, especially for smaller institutions.”

Part of the problem is they’re five different MCO’s within the state with different processes. Edelen recommends renegotiating contracts to create a set standard to make claims easier.

“The MCO project has to be renegotiated in a way that squares the deal for patients, providers, and taxpayers,” Edelen said.

It’s also creating more wait time for patients. Graves County Health Department Director Noel Copeland said check in and check out times have doubled because it takes longer to check how Medicaid patients are covered.

“We’re getting paid less and we’re seeing fewer in the day because of the obstacles placed in front of us,” Copeland said.

Edelen said to encourage the next administration to keep doing studies that track the performance of rural hospitals so decisions can be made based on facts.

“If we lose an analysis based on facts, it becomes based on politics. We’re going to wake up in a few years and we’re going to have a lot of politicians who feel like they’ve won the argument, but we’re going to have a whole litany of hospitals in rural Kentucky that have closed,” Edelen said.

A rural hospital shut down also really hurts a community. Edelen said they’re usually the biggest employer and pay a higher wage than other jobs in the area. He said not having a hospital hinders economic development.

“A factory is not going to locate in a community in an advanced manufacturing world where a fellow who’s been hurt on the line can’t be stitched up quickly,” Edelen said.

Forty-four of 52 rural hospitals that participated in Edelen’s study had an average of 72 percent of patients on Medicaid or Medicare, and they’re combined administration costs go up about $157,000.  Half of those hospitals said they increased administrative employee hours, hired more administrative employees, and increased over-time because of Medicaid managed care.