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Bridge Michigan
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Rural Michigan hospitals gutted by coronavirus, even those without cases

Just like many urban hospitals in Michigan, the bottom line at Chippewa County War Memorial Hospital in Sault Ste. Marie has been slammed by COVID-19.

With a statewide hold on “non-essential” procedures by a March 10 executive order of Gov. Gretchen Whitmer, revenues plunged by $4 million in a month at the Upper Peninsula hospital. It laid off 140 of 900 workers.

 

“We may make it for three months,” hospital president & CEO David Jahn told Bridge Magazine. “If this continues for longer than three months, it’s going to be very difficult.”

The fiscal picture is much the same at Beaumont Health in southeast Michigan. Officials announced Tuesday it is laying off nearly 2,500 of 38,000 employees at its eight hospitals, citing falling revenue from elective surgeries and outpatient office visits as it shifted to COVID-19 care.

The big difference, though, is Beaumont Health has treated more than 6,300 coronavirus patients and had 614 COVID-19 deaths, as of Thursday.

Chippewa County War Memorial Hospital has yet to treat a single confirmed COVID-19 patient. As of Thursday, there have been 65 COVID-19 cases in the entire U.P.

Whitmer’s executive order was to assure that hospitals would be ready for COVID-19 by freeing up space, personal protective equipment and manpower normally dedicated to elective procedures like knee replacement and colonoscopy. With the crush of COVID-19 cases in southeast Michigan, that’s proven to be a crucial step for many overrun hospitals.

But some rural hospital officials question whether it’s smart to continue to bar rural hospitals from elective procedures – a lifeblood of hospital revenue – when they have few or no COVID-19 cases.

“It is true you can make a really good argument, why did the U.P. have to stop doing these [elective] cases [when] there’s no COVID-19 cases here.? A lot of our surgeons are saying, ‘Why can’t we do these cases? This is crazy,’” Jahn said.

In Iron Mountain along the U.P. border with Wisconsin, Dickinson County Healthcare System is struggling with identical fiscal woes.

Hospital president and CEO Chuck Nelson told Bridge hospital revenue fell by $3 million in March as it ceased elective procedures and outpatient office visits dried up, forcing it to trim 10 percent of its workforce of 600 employees.

To date, Nelson said, Dickinson County Memorial Hospital has treated three COVID-19 patients, two of whom died. As of Thursday, it had no COVID-19 patients.

“The reality is, we’re not seeing the number of [COVID-19] cases we were expecting. I would argue at this point, the U.P. is a pretty good place to consider opening things up,” Nelson said.

And while metro Detroit hospitals are running at 60 percent occupancy and treating more than 2,000 COVID-19 patients, hospitals in northern Michigan are treating just a few and overall occupancy is far lower. In the Upper Peninsula, just 27 percent of beds are currently occupied by any patient, according to new hospital data released on Thursday.

Bridge reached out to a spokesperson for Whitmer and asked whether the governor would consider allowing some rural hospitals with few COVID-19 cases to resume non-essential procedures.

Deputy Press Secretary Bobby Leddy replied in an email statement: “Governor Whitmer’s top priority is the health and safety of Michiganders. By postponing all non-essential medical procedures, we have reduced the strain on hospital systems and preserved critical PPE for health care professionals on the front lines of this crisis.”

Ruthanne Sudderth, spokesperson for the Michigan Health and Hospital Association, told Bridge that MHA “at this point” does not support any exemption for rural hospitals on the halt for non-essential procedures.

“It’s a very delicate balancing act to how we resume some degree of normalcy,” Sudderth said. “We want to assure we don’t have an outbreak in a community where we don’t have the resources to handle it.

“Even if it’s in the U.P., the [Mackinac Bridge] does not provide immunity,” Suddarth said. “For a hospital that has only four ICU beds, five cases is too many.”

Sudderth acknowledged that some rural hospitals have reached out to MHA to ask when they might get back to full hospital functions.

But one health analyst said it would make sense for the governor to begin to relax the halt on non-essential procedures at hospitals where COVID-19 is not an issue.

“In facilities where they don’t have high rates of COVID-19, I think there’s going to be some ability to be doing some of these procedures soon,” said Marianne-Udow Phillips, executive director of the Center for Health and Research Transformation at the University of Michigan.

Texas, Oklahoma and Alaska have already opened their hospitals to certain elective procedures put on hold because of COVID-19, following the release of new guidance from he White House last week.

Even before the COVID-19 outbreak, rural hospitals across Michigan faced financial pressures that threatened their ability to stay in business.

A 2019 national analysis by the Chicago-based national health care consulting firm Navigant found that 18 rural hospitals in Michigan were at high risk of closing – about one-fourth of rural hospitals in the state and ninth highest such percentage in the nation.

Rural Michigan hospitals continue to face demographic trends that eat at their bottom line. Counties throughout the U.P. and northern Lower Peninsula suffered population losses from 2010 through 2017.

According to 2019 U.S. Census data, 21 of Michigan’s 83 counties – all rural – have a median age of 50 or older, the highest in the nation.

Rural hospitals suffer other disadvantages that push down profit margins.

To stay competitive, they need diagnostic tools like CT and MRI scanners that can cost upward of $2 million each. But those machines get less use in rural hospitals than at busy urban hospitals – and thus less revenue to pay for their cost. Rural hospitals staff costly 24-hour emergency rooms that also chew away at their bottom line.

Amid the COVID-19 crisis, some federal funds are trickling down to rural hospitals to help keep them afloat. The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $117 billion for hospitals and veterans’ health care.

Chippewa County War Memorial Hospital president and CEO Jahn said his hospital got about $3 million of those funds. But Jahn said part of that funding is tied to how many COVID-19 cases a hospital has had.

“I hope I’m wrong, but I don’t think we will get anything from that,” he said.

The U.P.’s Dickinson County Healthcare System has already survived a recent brush with insolvency. It was among the 18 at-risk Michigan hospitals in the 2019 Navigant report.

And as an independent hospital unaffiliated with a larger health care system, it does not have the luxury of outside help.

In 2018, the hospital board considered filing for bankruptcy protection, as total inpatient days tumbled 15 percent in just two years and revenue fell. It cut its workforce by more than a hundred employees and streamlined its operations.

By early 2020, Nelson told Bridge, its profit margins were “extremely good.”

That vanished with the pandemic.

“We are doing everything we can to conserve cash,” he said. “We are sitting there with a double whammy. We don’t have any COVID-19 patients and we can’t do any outpatient procedures.

“We’re in the sandwich.”

RESOURCES:

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