Rural hospitals call for fiscal help as Pa. budget season wears on

Jun. 21—HARRISBURG — Hospital leaders hope for a boost in Pennsylvania's next budget to stabilize rural operations and improve access to obstetric and neonatal care for some 3.1 million residents in rural communities.

The Hospital and Healthsystem Association of Pennsylvania calls on state lawmakers and Gov. Josh Shapiro to provide more state funding in order to leverage federal resources to support rural facilities that are struggling to remain viable.

Lawmakers are working on budget negotiations as the June 30 deadline approaches. That deadline is hardly firm. Last year's budget wasn't adopted into law until August and wasn't completed in its entirety until December. Budgets have been late, at times routinely, during each of the last three gubernatorial administrations.

The trade group found that through fiscal year 2022, more than 25% of Pennsylvania's rural hospitals operated with a negative margin. Another 14% were barely breaking even.

Nursing vacancy rates in rural facilities reached 26% last year and 28% for nursing support staff, according to HAP.

As a result of staffing shortages, high costs and declining birth rates, approximately 41% of Pennsylvania's rural hospitals ended maternity care between 2011 and 2021, a study by the health care analytics firm Chartis found. About half of all women in rural counties live at least 30 minutes from a birthing hospital, according to HAP.

"We hope to see some funding earmarked to preserve rural hospitals and access to health care in rural communities. It has to be a priority. It won't happen by the nature of the rural market that we operate in. You have to decide as a commonwealth, and really as a nation, if rural health care access is a priority," Philip Pandolph, president and CEO, Meadville Medical Center, said.

Reimbursement for Medicaid and Medicare patients and lack of post-acute care services and supports like transportation or behavioral health combined with workforce shortages count among the most challenging trends in rural health care.

HAP and its members, about 235 hospitals and health systems, seek an additional $25 million from the commonwealth's general fund in the fiscal 2025 budget. The money would be used to leverage $55 million more from the federal government, bringing a combined $80 million to rural facilities.

"This funding could help shore up access to those critical services," Nicole Stallings, HAP's president and CEO, said. "It could also support things like EMS. We know transportation is a top concern in rural communities to get people to the hospital and also to other settings, like another hospital for a higher level of medical care or even to doctors appointments."

HAP similarly advocates for an additional $7 million in supplemental Medicaid funding for obstetric and neonatal units, which is proposed at a flat funding level $3.68 million, in order to bring another $8.6 million in federal funds to raise Washington's total match to $16.8 million.

Neither request is currently included in the governor's proposal, however, HAP is supportive of Shapiro's pitch to invest $35 million toward behavioral health through enhanced crisis response services, community walk-in centers and base funding for county programs.

The cost to operate an obstetrics unit is costly and its return is unpredictable. As Pandolph explained, Meadville Medical Center and others like it must keep the unit prepared around the clock throughout the year. That means having an obstetrician, specialty nurses, pediatrician and backup anesthetist on-call at all times.

"It's an expensive endeavor but we believe one worthy of preserving. We believe we save dozens of lives, moms and babies, by having access to premium care," Pandolph said. "We're proud to offer it. We're committed to continue to offer it but it becomes economically unfeasible."

Evan CEO says partnership was needed to surviveEvangelical Community Hospital in Lewisburg will soon, pending regulatory approval anticipated in the coming weeks, join the WellSpan Health network that will yield the once independent rural hospital more than $100 million in investments in the next three years.

Kendra Aucker, Evangelical's president and CEO, said the partnership was necessary to secure the hospital's future. Evangelical is "disproportionately dependent on Medicare," she said, limiting its opportunities to maintain fiscal independence. The hospital operated at a multi-million dollar loss each of the last two years.

This year, there are signs of a fiscal rebound. Aucker said the negative operating margin is far smaller thus far in 2024 compared to last year, and its nursing vacancy rates are a fraction of the state averages.

Still, she said, hospitals like Evangelical and other rural facilities would benefit from greater state support including increased funding for Medicaid patients.

"I'm very optimistic about our future," Aucker said, " but I think people have to wake up to the fact that rural and independent hospitals really can no longer make a go of it."

Pennsylvania Rural Health Model replacementThe sought-after $25 million is viewed as a bridge to buy time for the replacement of the Pennsylvania Rural Health Model, an experimental funding model through the federal government that expires at year's end. Within the model, 18 rural hospitals operate on a global budget where public and private insurers pay a fixed amount set in advance for health care services, providing stability in fiscal planning.

The Rural Health Redesign Center, created by state legislators to help oversee the Rural Health Model, is working on a replacement program proposal to be included in the fiscal 2026 budget, the nonprofit's executive director, Janice Walters, said during a House committee hearing earlier this year.

State Sen. Michele Brooks, R-Crawford/Lawrence/Mercer, said the Redesign Center has proven invaluable to the hospitals it's aiding and that funding to sustain its work should be included in whatever budget comes to pass.

Last year, Senate Republicans pushed for the successful inclusion of $50 million to aid hospitals and health systems that were failing fiscally. Brooks said she'd like to see that happen again.

Aside from direct financial relief, Brooks said regulatory reform is needed to eliminate duplicative paperwork, as one example, that can free up providers to spend more time with patients.

"I've got to believe every hospital will tell you it's not just about funding, it's about the barriers they face in regulatory processes that hinder and hurt patient care," Brooks said. "It's not just about health care, it's about quality health care."