In a recently released special report from Kentucky Auditor Adam Edelen, local hospital Twin Lakes Regional Medical Center (TLRMC) was ranked as having the sixth best financial position out of 44 rural Kentucky hospitals listed.

The report analyzes the strength of rural hospitals in the state of Kentucky–the ninth most rural state in the country– and concludes that a majority ofKentucky’s rural hospitals fared below the national average in assessed financial strength.

A full one-third of the hospitals analyzed were rated as being in poor financial health and could be in danger of having to cut employees, eliminate services, or possibly even close the hospital.

Residents of Grayson County and surrounding counties received good news from the report, however.

Of the 44 rural Kentucky hospitals listed, TLRMC was determined to have the sixth best financial position, and, when taking out the two smaller, Critical Access hospitals ranked higher, TLRMC is rated fourth among all comparable rural, acute care hospitals in the commonwealth.

“The importance of rural hospitals cannot be overstated,” said Edelen. “They provide healthcare to 45 percent of Kentuckians and serve a disproportionate share of low-income and elderly citizens. In many rural communities in particular, hospitals are the first or second largest employer and typically pay higher-than-average wages than other employers.”

The hospital rankings were based on profitability, amount of cash on hand, the age of buildings and equipment, and amount of debt held.

Numerous hospital administrators and others interested in the topic attended forums hosted by Edelen around the state regarding the status of Kentucky’srural hospitals–one of which was held at the Elizabethtown Community and Technical College Leitchfield campus in August of 2014–and participated in his survey to engage healthcare providers and the hospital community on the financial status of their facilities.

The auditor’s report raises concerns about maintaining adequate access to healthcare in rural Kentucky and makes recommendations intended to help rural hospitals as the healthcare landscape undergoes a rapid and challenging transformation, according to a news release from Edelen’s office.

“We are at a critical juncture in the journey to improving the health of Kentuckians,” Edelen said. “We’ve made significant strides toward getting more people insured, but we have to make sure those individuals, many of whom are poor and elderly, have places to access care.”

The report said the total number of providers in Kentucky–from doctors to hospice workers–decreased by 5,852 from 2011 to 2014, a decline of 15 percent.

“The drop confirms our fears that many of our providers are struggling to make the transition to a new healthcare delivery model,” Edelen said. “It’s important that policy-makers get engaged and help ensure that access to care in ruralKentucky remains intact.”

Edelen said those hospitals are vital to their communities due to their distances to larger, regional hospitals.

The effects are already being felt in many rural Kentucky communities. Nicholas County Hospital closed its doors in 2014, and Parkway Regional Hospital, inFulton, closed in March of this year, according to a TLRMC news release.

The auditor’s report rates 15 rural Kentucky hospitals in “Poor” condition and at risk of doing the same. Some of these hospitals have declared bankruptcy or are on the verge of doing so.

TLRMC Chief Financial Officer Scott Arndell attributes the local hospital’s strong financial health and high ranking to a series of good decisions and hard work over the past 30 years.

“First of all, we have recruited a medical staff that is bigger and better than what most communities like Leitchfield have,” Arndell said. “Because of that, we are able to offer a much larger, wider scope of services than typical rural hospitals. This means more people living here are able to stay close to home for their healthcare.”

In addition to obstetrics and orthopedic surgery, as examples of services not typically provided at rural hospitals, Arndell also discussed the hospital’s general surgeons.

“Most rural hospitals only have one general surgeon on staff, and some don’t have any,” Arndell said. “We have three. That sets us apart from many hospitals and helps our bottom line.”

Another factor in their success, according to Arndell, is the willingness of hospital leaders to invest in newer, more advanced equipment than most comparable hospitals.

Lastly, Arndell mentioned the hospital’s workforce as being a major reason for TLRMC’s success up to this point.

“Our employees have had to outwork most other hospitals’ employees,” Arndell said. “Because Grayson County has a higher number of residents onMedicaid, our margin for error is very small. We have had no choice but to ask our employees to work harder because we are getting paid less than providers with a larger percentage of patients with private insurance.”

The Kentucky Hospital Association (KHA), a not-for-profit organization of which all Kentucky hospitals are members, commented on the report, as well.

KHA President Michael Rust said, “We are grateful for Auditor Edelen and to have his support in acknowledgement that many of Kentucky’s rural hospitals are struggling and have been forced to respond to down economies, increased hospital bad debt, and massive cuts in Medicaid and Medicare payments due to the Affordable Care Act’s (ACA) health insurance reform.”

The hospitals in the survey indicated that, on average, 72 percent of patients received Medicaid or Medicare, meaning a significant number of low-income and elderly patients are affected when rural hospitals cannot stay afloat.

The financial situation facing these hospitals could become more difficult as the percentage of private pay patients declines, the Disproportionate Share Hospital payments go away, and the federal government makes cuts toMedicare fee-for-service payments, according to the TLRMC news release.

“While expansion has decreased the amount of uncompensated care that hospitals were previously burdened with, there are new challenges lurking on the horizon,” Edelen said. “We need to get in a position where we are monitoring the impact, so we don’t get caught off guard by a rural hospital and major employer in a community going under.”

Rust said, “The auditor’s report was a great starting point for ongoing discussions and collaboration between providers and leaders on insuring providers are reimbursed fairly, especially by Medicaid managed care organizations, as the program covers more than one in four Kentuckians.”

In regards to the financial challenges facing TLRMC, Arndell points to decreasing government payments to hospitals being phased in as the effects of the ACA kick in.

“The Federal government will soon stop paying 100 percent of Medicaid costs, going down to 90 percent by 2020,” Arndell said. “The Kentucky Medicaid program already pays hospitals less than the actual cost to treat Medicaidpatients which is even more difficult in a county like ours. With the overall financial condition of Kentucky, one has to wonder if the state can make up the difference, or will they simply keep cutting our payments? The effects will be more profound for smaller, rural hospitals like TLRMC. It is going to be very challenging for us even though we are starting at a better place than most.”

The full report can be found on the Kentucky Auditor’s websitewww.auditor.ky.gov.

– Matt Lasley is with Grayson County News-Gazette, Leitchfield, Ky