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S.C.'s rural hospitals are in critical condition

The back wing of Bamberg County Hospital resembles a ghost town.

New paper room numbers taped on doors, but no patients inside. Chart notebooks in the nurses' station, but no notes in the books, and no nurses.

The 1950s-era tile floor is spotless, in part because few shoes hit it.

That wing of the financially struggling hospital looks a lot like the state of rural hospitals in South Carolina.

Some of the state's 30 rural hospitals, once the heart of their communities, are struggling to find a niche in a health care system that values the complicated procedures offered at large hospitals much more than the basic and emergency services provided by rural hospitals.

Fewer than half the beds in those 30 hospitals were filled on an average day from 2007 to 2009, according to a Medicaid/Medicare study. Their occupancy rate dropped by 8 percent during that period. Ten of the smallest 13 hospitals operated at a financial loss in those years; the seven smallest lost $34.5 million.

Rural hospitals are caught in a vicious cycle.

They don't have the customer volume to help pay for new technology and facilities that might lure specialty physicians to rural areas. But without those specialists, the hospitals can't perform the procedures that bring in the most money to pay for new technology and facilities.

Reductions in federal Medicare payments to hospitals in recent years hurt, as did the 3 percent reduction in state Medicaid reimbursements instituted last spring. Rural hospitals were exempt from the second round of Medicaid cuts in July.

State leaders recognize the need for facilities to serve residents far from large hospitals: Primary care and emergency care work best if done locally. The dilemma is how to restructure the financial end of the health system to allow those hospitals, or some facsimile, to survive.

"Over the next couple of years, you're going to see almost all rural hospitals go through major changes," said Tony Keck, director of the state Department of Health and Human Services. "It has tipped here."

Saving lives near home

Bamberg County Hospital could be the poster child for the dilemma.

The one-story brick structure was built in 1952, when the federal Hill-Burton Act helped pay for health care infrastructure in rural areas. Many of the other state's small county hospitals were built from the late 1940s into the 1960s.

Most Bamberg County residents have spent time in their hospital. They were born there, stitched up there or visited family members recuperating there. But they don't go there now. The hospital, with a 59-bed capacity, averaged about 7.69 occupied beds a day in 2010, according to federal hospital statistics.

The hospital lost about $2 million in 2008, though it had a profit of $572,000 in 2009 and $174,000 in 2010, according to federal hospital statistics. Its staff dropped from 252 in 2007 to 65 after the latest round of layoffs in July.

People in the county don't want the hospital to close. Several showed up at a recent County Council meeting to urge approval of emergency funding for the hospital.

"A lot of old people live in this county, and they don't want to drive to Orangeburg or Walterboro for care," said Billy McCormick, a Bamberg resident and former County Council member. "We can stabilize people here and save lives."

Health officials agree, saying many a "golden hour," the critical period after serious injuries, strokes or heart attacks, has been spent in rural hospitals.

John Hales, who recently was brought in as interim CEO at Bamberg, has managed other rural hospitals. "I can't tell you how many people came up to me and said if it wasn't for that facility, their loved one would not have made it," he said of the other hospitals he has managed. "But also, without health care, the community won't grow."

Gov. Nikki Haley, a Lexington County Republican who grew up in Bamberg, said she recognizes the hospital's value.

"I care about that little hospital," Haley said at a recent Aiken County Republican Party event. "I know what it does in the community, and we need to figure out how we are going to take care of these rural areas that don't have heavy populations, but still have people in need."

Bamberg County Hospital isn't waiting for state solutions.

The hospital filed for bankruptcy in June and laid off 35 of its 98 workers in July to smooth the way for a potential merger with Barnwell and Allendale counties into a regional hospital.

Allendale later pulled out of the plan, but the Bamberg and Barnwell hospital boards and county councils recently approved a plan to join with a private, for-profit company on a new 50-bed hospital.

Barnwell County Hospital has 53 beds. Shutting down the two old facilities and building a new one would cut the number of hospital beds in the two counties by more than half. But the number of beds is hardly a concern.

"The biggest problem is we have 50 employees and maybe two patients in the hospital. You can't survive that way," said Barnwell County Council member Lowell Jowers. "Most people in this county, myself included, we go to Columbia or Augusta or Aiken if we need special medical services."

'Going away'

State health industry leaders say pooling the resources of multiple counties is one possible solution, though they favor two other options -- rural facilities affiliating with financially strong urban hospitals or converting to a critical-care model that emphasizes primary and emergency care over inpatient services.

"The days of free-standing, rural hospitals are going away," said Graham Adams, CEO of the S.C. Office of Rural Health.

His office, which received a federal grant to examine the financial viability of 16 rural hospitals, is working with the S.C. Hospital Association and the state Department of Health and Human Services to create alternate models for rural areas.

The major players in the state - HHS, the hospital association, the rural health office, physicians and even BlueCross BlueShield, the largest private insurance payer - are planning a rural health summit in the coming months to discuss with changes that could make a difference. But Keck cautions that federally controlled Medicare, which pays claims for the elderly and some with disabilities, is the biggest player and the most difficult to change.

The state has more control over Medicaid, which pays for health care for the poor, children and some people with disabilities. Of the 60 general hospitals in the state, the top 12 largest (generally in urban areas) get 64.5 percent of the Medicaid claims. The 24 smallest (in rural areas) get 6.8 percent, according to HHS statistics.

So when the state gave rural hospitals a break by exempting them from the second round of cuts in Medicaid reimbursements in July, it didn't cost the state much - but it didn't help the hospitals much either.

"We need to look at reimbursement rates for rural hospitals and rural health care in general," Adams said. "Physicians gravitate toward things that are reimbursed at higher levels."

If the reimbursement system changed to encourage emergency and primary care, and if rural hospitals focused on those areas, health leaders believe the county facilities could hang on. Keck hopes to make some of those changes in the portion of the system HHS handles. And he has talked with hospital and insurance providers about encouraging those changes.

Keck acknowledges some of the current rural hospitals might not survive this wave of health care changes. He believes some communities would be better off abandoning their old hospitals and building smaller critical care centers with few hospital beds.

"We're trying not to think in terms of buildings but what people actually need in communities to improve health care," Keck said. "Increasingly what people need is primary care and the ability to prevent diseases in the first place, and with chronic diseases, control them better."

Rural hospitals play an important role in that process, Keck said. But they need to adapt to changing times, which might mean abandoning old buildings, or at least old approaches.

The many rural hospitals built in the 1950s and 1960s "are near the end of their natural lives," Keck said. "... What's the next step?"