Obamacare survives, but some rural hospitals may not

rural hospital

Just north of the Mackinac Bridge in St. Ignace, officials at Mackinac Straits Health System had cast an anxious eye as events unfolded last week in Washington, D.C. over the fate of Obamacare.  

Although a Republican replacement plan was dramatically pulled in Congress on Friday for lack of votes, the CEO at Mackinac Straits, Rod Nelson, is not ready to declare victory. He said he worries that the Republican rollback of insurance protections may yet return in another form.

“I’m relieved,” Nelson said. “But we’ve got a lot of work to do. I don’t think these people know what they are talking about.

While Mackinac Straits says it has dodged a bullet for now, Nelson and officials at other small Michigan hospitals say ongoing efforts to dismantle the Affordable Care Act, known as Obamacare, will slash funding for poor patients and threaten basic services ‒ or worse.

Nelson’s facility is a 15-bed hospital and nursing home that provides basic and 24-hour emergency room care, mostly for rural patients within a 25- to 30-mile radius, with some traveling from up to 70 miles away for chemotherapy.

Rod Nelson

Rod Nelson, CEO of Mackinac Straits Health System, said if Republicans in Washington narrow the scope of the Affordable Care Act his facility would have to cut into the services it provides rural residents in the Upper Peninsula.

“Small hospitals don't have the reserves and additional resources that larger systems have,” Nelson told Bridge in an earlier conversation, before Friday’s vote was pulled. If ACA provisions were stripped away, he said, Mackinac Straits would be “anticipating cuts into the millions of dollars.”

Among the services he said could be on the chopping block: A pediatric program that employs a physician's assistant and part-time physician, a seven-day-a week walk-in clinic and its chemotherapy program. He is one of three rural hospital chiefs who told Bridge Magazine they would face significant service cuts under an ACA repeal.

While repeal may no longer be likely, President Trump and some conservative members of Congress have hinted at future efforts to cripple or dismantle ACA provisions that small rural hospitals in Michigan say have helped to stabilize their finances. They note that an executive order the president signed on his first day in office remains in effect. That order instructs the government to “take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act.”

What that might mean is not entirely clear, but healthcare administrators in Michigan say they worry about a number of strategies Trump’s Administration can employ to reduce the number of people covered by Obamacare. That in turn could mean a spike in uncompensated care that drains the finances of smaller, independent hospitals.   

Mackinac Straits Health System

Some rural patients travel as far as 70 miles for chemotherapy at the tiny  Mackinac Straits Health System in St. Ignace.

Rural facilities at risk  

Mackinac Straits is one of 36 critical-access hospitals in rural Michigan, a federal designation for facilities with 25 beds or fewer that are located at least 35 miles from another hospital. By comparison to sprawling medical complexes in Detroit or Grand Rapids, these are humble facilities. But in sparsely settled regions where a large hospital may be 50 or 100 miles away, they are the lifeblood of basic health care.

Rural hospitals are especially vulnerable because they tend to run on thin profit margins and shoulder a larger share of poor patients whose coverage was projected to shrink under health care changes recently pushed by the GOP in Washington.

“There would be significant loss of insurance in rural Michigan,” said Margaret Greenwood-Ericksen, a national clinician scholar and clinical lecturer at the University of Michigan Medical School. She co-authored a January analysis of ways that repeal of the ACA could impact rural America.

“That means people can't get access to primary care, which is critical to preventing chronic conditions from getting worse. You have conditions like diabetes and high blood pressure, which puts you at risk for stroke and heart attack,” Greenwood-Ericksen said.

And when more uninsured patients wind up in the hospital, Greenwood-Ericksen said, that strains the rural health care system by driving up the cost of uncompensated care the ACA was designed to reign in.

“The hospital may be able to handle the stroke,” she said. “But either way, that hospital is not going to get any money for that encounter. That is going to add to the cost of uncompensated care. That could cause that hospital to close.”

About 85 miles west of Mackinac Straits Health System, CEO Robert Crumb of the U.P.'s Schoolcraft Memorial Hospital said he too is wary of future restrictions on the ACA.

With 30 percent of Schoolcraft’s patient population covered by Medicaid, Crumb said, any significant cutback in coverage for that group could force tough choices. Crumb said uncompensated care – now at 4 percent of its budget under the ACA – could be expected to rise to 6 percent or more if the ACA system is significantly changed.  

“Can we stay afloat?” he asked. “Or can we stay independent? It could force us to sell out (to a larger hospital system), which could be horrible. You would lose your local independence.”

Schoolcraft Memorial has just 12 beds, but for patients in the area, its services – especially its 24-hour emergency care - can be life saving. Crumb said more people would die without the hospital.

“The nearest critical access hospital is an hour away. The nearest large medical facility is an-hour-and-a-half to two hours away. Without this hospital, if you have a heart attack or severe injury, you are not going to make it.”

The list of threatened rural hospitals also includes Munson Healthcare Charlevoix Hospital, a 25-bed hospital.

“We are operating on the margins,” said Lyn Jenks, the hospital president. “By that I mean we are lucky to make money on the reimbursement levels we have today.”

Lyn Jenks

Lyn Jenks, president of Munson Healthcare Charlevoix Hospital, said that if Washington narrows the population of patients eligible for the Affordable Care Act, that will lead to spikes in uncompensated care, endangering the hospital’s future.

Jenks said the hospital's “bad debt” – costs for uninsured patients – has declined by up to $1 million a year under the ACA, which extended insurance coverage to a greater number of lower-income patients.

“On a budget of $59 million a year, that's real money to us,” she said.

While Jenks said her hospital is fiscally healthy, a bump in uninsured patients could drive that debt back up – and force tough choices. That could include whether or not it continues to provide labor-and-delivery and other services for residents it serves Charlevoix and parts of Emmet and Antrim counties.

“We do provide obstetrics. We really believe it's part of our mission for the small community hospital. But when we are faced with those kinds of cuts, everything is on the table.”

A hospital industry executive said that GOP efforts to limit the federal government’s entanglement in healthcare could undermine treatment for opioid drug abuse – a rising crisis in rural areas across the nation. A 2016 study in conjunction with the University of Michigan’s C.S. Mott Children’s Hospital found that the percentage of babies born with drug withdrawal symptoms from opioids grew much faster from 2004 to 2013 in rural communities than in cities.

“This is very prevalent in rural Michigan,” said Laura Appel, senior vice president of the Michigan Health & Hospital Association.

The ACA funneled more money into treatment by mandating that states that expanded Medicaid – as Michigan did in 2014 – had to include substance abuse and mental health treatment in its coverage. As a result, the share of uninsured U.S. mental health and substance abuse hospitalizations fell from about 20 percent before the ACA to 5 percent in 2015. The Republican House plan would have ended that requirement. While it ultimately failed, it remains unclear if other strategies will be enacted to achieve a similar result.

Silence from congressional offices

Of the three dozen critical access hospitals in Michigan, 14 are in the 1st Congressional district held by Republican U.S. Rep. Jack Bergman – who voted for an earlier version of the House plan as a member of the chamber’s Budget Committee. His district encompasses much of the northern Lower Peninsula and all of the UP,  which has 11 critical access hospitals.

Before the vote was called off, CEO Nelson of Mackinac Straits sent a letter to Bergman urging him to oppose the House measure, writing: “I cannot believe our congressional delegation from our state and federal level would allow this legislation to proceed, devastating our most vulnerable population and crippling our local hospitals.”

Nelson said he had not heard back from Bergman. Bergman's office did not to respond to numerous requests by Bridge Magazine for comment on the health care measure's potential impact on his district (Bridge also reached out to U.S. Rep. Fred Upton, R-St. Joseph, whose 6th congressional district in southwest Michigan encompasses three critical access hospitals. Upton's office likewise did not respond).

Michigan Gov. Rick Snyder, along with three other GOP governors, sent a letter of their own before last week’s Washington vote. They told Republican leaders in Congress that they opposed the House GOP plan, writing that it did “not ensure the resources necessary to make sure no one is left out, and shifts significant new costs to states.”

Following defeat of the GOP plan, Snyder spokesperson Anna Heaton said Snyder is “devoted to finding a solution that works for federal and state governments and, most importantly, Michigan’s residents.

Facts matter. Trust matters. Journalism matters.

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Tue, 03/28/2017 - 9:14am

The Sky is falling, the sky is falling. Do you know what the eventual replacement policy will entail? It took 7 years to realize that the ACA can not sustain itself as designed, so when it fails and you get no reimbursements as promised, what is your plan? How did you survive before the ACA? Where does healthcare go when all facilities are run like the VA? That's the in your face reality of government run healthcare that nobody wants to acknowledge. The denial that it won't be like that is naive and ignores the history of government run programs. There are no fairy Godmothers in government.

Tue, 03/28/2017 - 3:47pm

Wonderful isn't it when your ox is not the one being gored?
Where to begin with so many lies and myths all in one place...

'...the ACA can not sustain itself as designed...' Yes, when you have one party doing everything in its power to sabotage it? It actually is doing far better than anyone anticipated with all the stuff the GOP did to try and make it fail. Of course, you and your GOP have no solution to fix it. Just the same things that never worked: tax credits, selling across state lines, health savings accounts.

Medicare works fine and would be a great replacement but the GOP can't see past its ideological nose to recognize that. All the GOP ever sees is tax cuts for the wealthy and corporations. Like Comcast and our wonderful health insurers? Let them take over?!
Government is what we make it and 'obstruct' it. The 'free market' doesn't work for healthcare, public utilities, etc. Proven over and over again.

Tue, 03/28/2017 - 4:55pm

Rick, When first proposed Medicare was projected to cost roughly one tenth of what it actually costs today. The only reason it exists is that my grandkids are going to be stuck paying the medical bill for their great grand parents who didn't want to pay their own bill! That's some interesting definition of success!

Allan Blackburn
Tue, 03/28/2017 - 6:12pm

It's a payroll deduction that all of us have paid in to our entire working career. So is Social Security. Our government came up with a fancy way to fix Social Security under Reagan and took much more out of our checks to cover the baby boomers and then raided it ever since, to cover for budget deficits caused through massive tax cuts to the wealthy. Yes our grand kids may get stuck with the tab as they will come along again because no one remembers history. They will claim that they have to save it again by raising the retirement age and lowering any benefits. It will not surprise me at all that they wish to privatize it. Imagine all of those fund managers now getting fees from our social security payroll deductions. The plan from a Senator in Texas is to voucherize Medicare, giving you a paltry sum to pay for your monthly premium on the open market. Naturally the insurance industry will benefit but we sure will not.

Wed, 03/29/2017 - 7:55am

The money withheld from most folks pay checks relative to their medical demands and even social security checks is gone in a very few years. And again the only way these programs exist is that they are backed by the unlimited? borrowing of the federal government. Don't worry no insurance company would ever touch these programs as they exist or they'd have their executives tossed in jail.

Sun, 04/02/2017 - 12:52pm

Long on opinion, short on facts. Republicans keep saying (since both programs started) that SS and Medicare will run out of money. They haven't. Both need adjustments (like stopping the fixed ceiling - $118,500k - for Social Security tax) but the GOP won't allow that. Not even to discuss it! They're not interesting in fixing issues - just ending both. And the defense budget (biggest in the world) is untouchable and that's where most of our fraud & waste takes place. Wondering where our taxes go? 54% to the Pentagon (2016 budget)! For corporations to charge super high prices for 'weapons systems' that don't work. F-35?

Wed, 03/29/2017 - 2:04pm


Le Roy G. Barnett
Tue, 03/28/2017 - 9:37am

It is ironic that most of the hospitals in jeopardy are in rural Michigan, the very districts that went most heavily for Trump in the last election. The residents in these areas clearly decided that they were willing to put local medical facilities at risk, and so they should be allowed to proceed with their experiment to see if it has any lessons to convey.

William C. Plumpe
Tue, 03/28/2017 - 10:13am

Sadly but unfortunately truly it is the height of irony that "repeal and replace" the vaunted roll back of Obamacare would hurt rural areas the most where Trump support is strong. Those who were dumb enough to vote for Trump will be some of the first to feel the pain. But gee who cares if you get sick and die because Obamacare is repealed!!! Just proves again that you have to be careful what you ask for because you just might get it. If you "voted for change" and voted for Trump well this is change. Don't like it or are scared? Too bad. Join the rest of us who at least were smart enough not to vote for Trump. At least we can blame you when things get even more screwed up. Thanks for being really stupid.

Tue, 03/28/2017 - 11:28am

It is sad when a main metric of Obamacare, and to some extent, Trumpcare, is the number of people who have health insurance. So what good is this insurance, even if the premium is entirely covered, when the deductible and / or the co-pay is beyond the means of most people. Nobody seems to have addressed the fact that citizens of the USA pay more for healthcare and receive lower results rankings than many other citizens of the world. Even Cuba is a more desirable place to receive healthcare in terms of results than the USA.

Instead of how many are insured, we should be looking at a single payer system to eliminate the overhead (i.e. executive bonuses) of the insurance industry. We should be looking at uniform procedure pricing to eliminate the redistributive pricing that currently exists. Let there be Medicare for all, and use tax credits to pay the premiums. Allow negotiated pricing such as Medicare uses to keep costs down. Fund the development of electronic records so that procedures are not duplicated on one who sees different doctors. Allow new high priced drugs to enter the system only when they have shown a proven result. And dare I say it, but the 97 year old Great Grandpa may be denied that new hip he desires, or the 34 year old daughter who has a flatline bran scan be allowed to die in dignity.

Tue, 03/28/2017 - 4:02pm

This has the makings of a brilliant idea! Instead of Medicare for all, how about Medical tourism for poor people to Cuba!

Sun, 04/02/2017 - 12:56pm

Actually Cuba's medical system is very good for a poor country (thanks to a 50 year embargo). If you look at the statistics (and you won't) they have much better outcomes than we do: the BBC - In 2006, BBC flagship news programme Newsnight featured Cuba's Healthcare system as part of a series identifying "the world's best public services". The report noted that "Thanks chiefly to the American economic blockade, but partly also to the web of strange rules and regulations that constrict Cuban life, the economy is in a terrible mess: national income per head is minuscule, and resources are amazingly tight. Healthcare, however, is a top national priority" The report stated that life expectancy and infant mortality rates are nearly the same as the USA's. Its doctor-to-patient ratios stand comparison to any country in Western Europe. Its annual total health spend per head, however, comes in at $251; just over a tenth of the UK's. The report concluded that the population's admirable health is one of the key reasons why Castro is still in power.[73] A 2006 poll carried out by the Gallup Organization's Costa Rican affiliate — Consultoría Interdisciplinaria en Desarrollo (CID) — found that about three-quarters of urban Cubans responded positively to the question "do you have confidence to your country's health care system".[74]

Kevin Grand
Tue, 03/28/2017 - 11:39am

Mr. Roelofs,

We obviously have a different definition of "surviving".

However, if you want to keep thinking that everything will be fine and dandy despite the warning signs that things aren't going too well for most of the country (and of course the "promises" of being able to keep our plan, doctor and $2,500/year in savings), by all means...be my guest!

Dave Maxwell
Tue, 03/28/2017 - 3:11pm

So we now claim that obamacare saved the small hospitals from going out of business? There's a whole lot more than that to the story. I consider this news hysterics.

David Waymire
Tue, 03/28/2017 - 4:01pm

"We?" No, it's three leaders responsible for providing health care in their communities. I believe they know what they are talking about. And the reality is, rural communities are losing good paying jobs and population. Those jobs and people will not be returning. So that means the hospitals are catering to a poorer and poorer and older and older clientele. End Medicaid Expansion (i.e., kill the Healthy Michigan Plan) and those facilities will not survive. The irony is, those counties were big Trump supporters -- fooled into thinking his promises.

If you know there is "more to the story," please offer it.

Allan Blackburn
Tue, 03/28/2017 - 4:18pm

Convenient to dismiss news that your opinion disagrees with. Who are you anyway?
Our local hospital provided$14 million in uncompensated care and had to merge with a large hospital to survive. As a CEO of a healthcare business for a quarter of a century I stake my reputation on this article. I know all of the quoted CEO's and worked with them for years. If you live in one of those areas and their hospitals collapse, maybe you can charter a plane to take you to a Big City provider. Or, if you don't care because you think that it will not affect you, think again. Two thirds of Medicaid reimbursement goes towards nursing care for the elderly. Maybe you think Grandma and Grandpa should work for their care yet I assure you, they already have.

Tue, 03/28/2017 - 4:28pm

Unfortunately all these discussions of medical care financing for the indigent or otherwise amount to a game of financial musical chairs. Either the hospitals get stuck with eating it and/or they try to pass it off onto the other patients (or their insurance cos.) in their bills, the state's tax payers get stuck with it, or it's covered through Obamacare (added to the deficit and our grandkids get stuck with it). Nothing has really been improved and like it or not we're a long way down the road in a wrong direction - we should any and all medical treatments desired and someone else should pay the bill.

Walt Orlowski
Mon, 04/10/2017 - 12:56am

Lets get real. We just have to throw out all the DO NOTHING". They say they want less Government. The fact is We are the government and we want Medicare for all citizens. Medicare is a proven universal government health care system that does a great job of controlling costs. Read the Explanation of Benefits after your procedures and you find out the high prices for these procedures that hospitals and doctors charge and Medicare says "No Way" and makes the charges a lot more reasonable. I know what I am writing about because I have been on Medicare for 23 years. Folks you have just got to work to convince the Republicans in office or get rid of them.

Bill Hart
Mon, 04/10/2017 - 5:40pm

The deafness of this elected official mirrors his predecessor, Dr. Benishek... follow the straight party line and let the devil take the hindmost. "Where have you gone Joe DiMaggio, a nation turns its lonely eyes to you...". Come on Jack, feel the people's needs.

Bill Hart
Tue, 04/11/2017 - 2:58pm

Folks... A real threat to the critical access hospital networks that essentially provide the majority of health and medical care for rural communities is the Trump/Ryan proposed elimination of the 340B drug pricing component. In many of our CAHs, this price break is the difference between being in the black and being in the red at the end of the year! Let's be very careful as the GOP rolls out their next iteration of the AHAC - some details are critical and rural providers are in peril with balance sheets razor thin. Most rural communities served by CAHs simply cannot find the financial resources within their strapped economies to fill holes caused by the current federal administration's slash and burn policies (notwithstanding the lofty promises made during the campaign).