Health Care

Closing of Kansas hospital adds to Medicaid expansion debate

Mercy Hospital in Independence, Kan., has closed, joined dozens of rural hospitals around the country that have not been able to withstand recent financial and demographic challenges.
Mercy Hospital in Independence, Kan., has closed, joined dozens of rural hospitals around the country that have not been able to withstand recent financial and demographic challenges. The New York Times

The regulars sat around their table at Ane Mae’s coffee shop one morning last week, reminiscing and considering the world situation, but it didn’t take much to turn their attention to the biggest story in their own town.

Century-old Mercy Hospital, which had been losing millions of dollars in recent years, shut its doors for good on Oct. 10, leaving the 9,500 residents of Independence unsure who their doctors will be or where those residents will go in a medical emergency. Mercy was the town’s only hospital.

“I wonder why doctors would want to come here,” asked Ethan Temple, who used to work for the Arco petroleum company.

“They never did want to,” retired barber David Adey said. “We never had enough doctors in the past five years.”

Or patients, for that matter.

“A lot of the knowledgeable people in town didn’t want to go to Mercy,” confided Mike Renard, a former Hallmark employee.

Towns like Independence, which lies deep in the farm country of southeast Kansas, are having a hard time holding on to their hospitals. Mercy is the 56th rural hospital to close in the United States in the past five years, according to the North Carolina Rural Health Research Program.

Generally small and isolated, rural hospitals struggle to provide the latest services and technology. Few doctors want to make their career in rural medicine. And local patients are often drawn to whatever larger hospitals are within driving distance. That was all certainly true for Mercy.

But in Kansas, there’s another factor to consider in the life and death of rural hospitals: Medicaid expansion. It’s an option for states, through the Affordable Care Act, to offer Medicaid health care coverage to more people, largely low-income adults who don’t have children. With more people covered, hospitals don’t have to write off as many unpaid bills from uninsured patients.

Kansas and Missouri are among the dwindling number of states that have turned down expansion. Gov. Sam Brownback of Kansas has been adamant about it.

But Mercy Hospital’s demise has helped reignite the political debate in Kansas over Medicaid expansion.

Those favoring expansion, such as the Kansas Hospital Association, have been asking pointedly if the extra Medicaid revenue might have helped save the hospital. Brownback’s administration has insisted that Medicaid expansion offers little relief to rural hospitals and that it was the ACA that sank Mercy.

As people in Independence will tell you, it’s not that simple.

“Certainly, Medicaid expansion would have been a big deal for us,” said Mercy spokeswoman Joanne Smith. “But it was clearly not the only factor.”

Smith was one of the few people left in the hospital last week. Except for a few offices, the lights were out. As she spoke, workers outside pulled signs off the building. Plans call for demolishing the older parts of the hospital.

‘Small-town syndrome’

Mercy Hospital had many good years, but they were long gone.

When a distinctly modern circular wing was added in 1961, Mercy was hailed as the hospital of the future. More construction came in the 1980s and ’90s. At its peak in the early 1980s, the nonprofit Catholic hospital had more than 90 inpatient beds, and they were full.

But by last year, Mercy was staffing only 45 beds and, on average, just a fourth of them were filled. The hospital lost its two general surgeons and its only obstetrician. Last month, a busy day at Mercy would have meant five or six patients.

One reason for the decline has been the evolving nature of health care. As more things are done on an outpatient basis, hospitals are left with the sickest and most complex patients. It’s hard for a hospital Mercy’s size to provide that level of care.

Adding to the difficulty has been the constant turnover of physicians. Smith admitted that residents had grown dissatisfied with the unstable doctor-patient relationships this was causing.

But Independence also has what she called “small-town syndrome,” a tendency to assume that what bigger towns have is better.

Culturally, Independence looks south to Oklahoma. The Tulsa World is the big-city paper in town, and local cable TV streams Tulsa stations. It’s common for people in Independence and surrounding Montgomery County to make the 40-mile drive across the state line to Bartlesville to shop at the mall or dine at a chain restaurant like Chili’s.

And that’s where a growing number of residents have been getting their health care. About 49 percent of Montgomery County residents leave the county when they have to be hospitalized.

Most head to the 140-bed Jane Phillips Medical Center in Bartlesville. It provides a wider array of specialists and services than Mercy could hope to offer.

Red ink flowed

Demographics and economics also worked against Mercy Hospital.

Downtown Independence looks prosperous enough. Most of the storefronts are occupied, statues adorn many street corners and banners for the coming Neewollah celebration (that’s Halloween spelled backward) wave overhead.

But Montgomery County and the surrounding region have seen a lot of ups and downs in recent years, said Independence City Manager Micky Webb.

The oil industry left in the 1990s. Cessna gave the region a boost, building a plant to produce its small planes; it employs about 500 people. But earlier this year, the region lost hundreds of jobs when Amazon, at one time the largest employer, closed its distribution warehouse, and Southwire, a wire and cable manufacturer, shuttered its plant.

The closing of Mercy Hospital will take more jobs out of the local economy, Webb said.

“These were well-paying jobs. They’re not easily replaced.”

Montgomery County’s residents are generally older, poorer and sicker than the rest of Kansas or the nation, and the county’s population is declining. All these factors combine to create what hospital operators call an unfavorable “payer mix,” meaning it’s hard to stretch the available revenue from patients to cover expenses.

Last year, 14 percent of the people in the region Mercy Hospital served were uninsured, compared with 11 percent uninsured statewide. To make up for losses from uninsured patients, hospitals need large numbers of patients with private insurance that pay hospitals more generously than government Medicare and Medicaid programs. But in Mercy’s region, just 51 percent of the population is privately insured; statewide it’s 65 percent.

Red ink started to spill several years ago. During the 2013 fiscal year, which started in June 2012, the hospital nearly broke even. But when the clinics and other services Mercy operated were factored in, the loss was more than $1 million. The following year, the hospital lost nearly $1.2 million; overall losses totaled $2.9 million.

By this year the hospital alone was losing roughly $3 million, and total losses topped $4 million.

So, would Medicaid expansion alone have saved Mercy? The Kansas Hospital Association estimates the hospital would have gained close to $1.7 million in additional revenue each year had more people been covered by Medicaid.

Medicaid expansion makes sense as a way to relieve hospitals of the need to cover the cost of uninsured patients by trying to charge insured patients more, said Robert St. Peter, president of the Kansas Health Institute, a Topeka-based think tank.

“But it’s an oversimplication to say it would have determined the outcome for Mercy Hospital,” he said. “And I’d be skeptical about pointing to it as the only factor or main factor in any particular hospital’s survival.”

The human factor

While Medicaid expansion may not have saved Mercy Hospital, there are some in Montgomery County who say it could save many individuals.

About 22 miles south of Independence in Coffeyville, at the Community Health Center of Southeast Kansas, physician Julie Griffin cares for many of the working poor who lack insurance coverage but who would qualify for Medicaid if the state expanded the program.

These are proud people, she said, who often feel embarrassed when they can’t pay their medical bills.

“People feel so belittled when they have to fill out a financial aid form,” Griffin said. “No one should feel shame for trying to get health care.”

One of Griffin’s patients went into heart failure recently. The woman worked a night shift at a nursing home, a job, Griffin warned, that would eventually kill her.

Griffin has been trying to get her patient approved for Medicaid so the patient can be placed on the waiting list for a heart transplant. In an expanded Medicaid program, the woman would qualify for coverage, but the Kansas program now doesn’t cover most able-bodied adults. Until the woman is formally determined to be disabled, she doesn’t qualify.

Griffin is scornful of Brownback’s stance that the state shouldn’t extend Medicaid to the able-bodied while there are still people with disabilities who need additional services.

“Should a politician be judging who is able-bodied?” Griffin asked. With Mercy Hospital closing, “it shakes my confidence in the decisions coming out of the governor’s office. I question whether they hear me and hear my patients. I think he needs to listen.”

At least some politicians in Topeka appear ready, eagerly or grudgingly.

“My sense is a lot of legislators are saying we need to have that discussion (about Medicaid expansion). We need to take a hard look at that issue,” said Rep. Linda Gallagher, a Lenexa Republican. “I do support that myself. I do hope that at least one of the bills that have been in the works on Medicaid expansion, I hope they get some action in committees and get moved out so we can actually debate it.”

“I know that’s on the table. I don’t think any decision has been made on that,” said Rep. Tony Barton, a Leavenworth Republican. “I think it would be moving in the wrong direction. I’ll leave it at that.”

Brownback said he wants to look forward to what Independence needs.

“We can look back and dissect (Mercy Hospital) later,” he said. “Right now, we want to get health care provided for the people of Independence.”

‘It’s a burden’

Independence and Mercy Hospital already have made preparations.

Mercy has a tentative agreement with the Tulsa-based St. John Health System, which operates Jane Phillips Medical Center, to take over most of Mercy’s outpatient services and primary care practices. St. John also plans to provide an urgent care clinic in town that will be open extended hours every day and staffed by a physician.

Eventually, St. John may open a freestanding emergency room that would be a satellite of Jane Phillips. But that may depend on how willing residents are to use their new hometown health care, said Smith, the Mercy spokeswoman.

“I know the community is very concerned about losing their emergency room,” she said, “but there has to be some commitment by the community.”

In the meantime, the city’s emergency medical services department has been preparing to take more people to the emergency room at Jane Phillips.

Much of the necessary work already had been done several years ago, before Mercy’s fate was in question, when the city merged EMS and the fire department. Firefighters received medical training and medical equipment was added to fire trucks. That quadrupled the city’s EMS capacity.

“If we hadn’t done that, we’d be in a world of trouble now,” said city public safety director David Cowan.

Heart attack and serious trauma cases from Independence already were being sent to Bartlesville or Tulsa for care. But ambulances had been stopping at Mercy Hospital for an initial doctor’s evaluation before proceeding.

With Mercy gone, the city is equipping ambulances with telemetry to relay heart patients’ EKGs to doctors in the Jane Phillips emergency room and videoconferencing to allow doctors in Tulsa’s trauma center to evaluate injuries.

“I think a lot of what our needs are will be met,” Cowan said.

But it’s coming at a cost to local taxpayers.

Independence already has spent close to $300,000 on its new EMS equipment. And there’s concern now that Mercy is gone, Cowan said, that more uninsured people will go to the emergency rooms of city- and county-run hospitals in neighboring Coffeyville, Neodesha and Parsons.

“It’s a burden to this community,” Cowan said. “We’re just looking for relief.”

Alan Bavley: 816-234-4858, @AlanBavley

Dave Helling: 816-234-4656, @dhellingkc

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