Over the past 30 years, I have had the privilege of serving as CEO of hospitals in Maine and New York, giving me a close and personal view of changes in the health care industry. Some changes, such as increased safety protocols and integrated record-keeping, are excellent and have resulted in better patient outcomes. But in other ways, hospitals — in particular, rural hospitals — have had to respond to changing demographics and regulatory requirements with adjustments to both operations and patient care delivery. These changes often outpace reimbursements, making it difficult for hospitals to maintain a healthy balance sheet.
Rural medicine is challenging, not only for my hospital, Calais Regional Hospital, but also for rural hospitals across the country. More than a fifth of the nation’s rural hospitals are at high risk of closing. In real terms, this means 430 hospitals across 43 states that generate about $21.2 billion in yearly patient revenue and employ about 150,000 people are near insolvency. Since 2010, 113 rural hospitals have closed, according to the Cecil G. Shep’s Center for Health Services Research.
Hospitals save lives. They are also foundational to the economies of rural communities. Rural hospitals are often one of the largest providers of skilled and high-wage employment in their communities. When a hospital closes, per-capita income falls by 4 percent and unemployment rises by 1.6 percent.
All communities need the same basic hospital services found in larger population centers: electrocardiograms to diagnose a heart attack, physical therapy for a hip replacement, emergency rooms for falls and injuries, and so on. We provide these services and many more. But unlike hospitals serving larger populations, the costs of maintaining these services are spread out over fewer patients. Many of our service lines operate at a loss. Health care leaders around the state can tell you firsthand the difficult choices involved in keeping a small, community hospital open.
In addition, rural hospitals such as Calais Regional Hospital have nearly the same administrative and regulatory burdens as large hospitals. Compliance consumes a disproportionate amount of staff time at our hospital. Regulations such as the six-year “look-back” period on a hospital’s cost report create financial uncertainty because back-dated rulings can be applied retroactively to reimbursements, forcing hospitals to pay millions in adjustments years after the fact. Some states have implemented three-year limits on open cost reports to alleviate this issue. Maine is not one of those states. According to the American Hospital Association, hospitals and health systems are dedicating approximately $39 billion per year to comply with federal regulations, which takes resources away from patient care with minimal evidence to show that patients are better for it.
In response to downward trending utilization, regulatory challenges and inadequate reimbursements, Calais Regional Hospital has adjusted service lines and implemented changes that have increased efficiency and brought the hospital closer to break-even. There is more work to do. We recently made the difficult decision to file for Chapter 11 bankruptcy protection while we restructure our debt. Our goal is to emerge from Chapter 11 a stronger and more resilient hospital and to keep high-quality health care accessible in our region and jobs in our community.
At the end of the day, we cannot afford to lose this community hospital. Local access to health care matters. Proximity to a hospital is more than just a matter of convenience, it is a matter of life and death. Research shows the farther the hospital, the worse the outcome, not only for victims of heart attacks or car crashes, but also for cancer patients and those requiring care for chronic conditions such as diabetes and Alzheimer’s. If Calais Regional Hospital closed, thousands of area residents would be faced with commutes of over an hour or more to the nearest hospital.
We are committed to keeping the doors open at Calais Regional Hospital.
We have served this community for more than 100 years and will continue to work in good faith to keep our community healthy in the decades to come. I firmly believe with the support of our community, we can keep health care accessible in our corner of Maine.
Rod Boula is CEO of Calais Regional Hospital.