Health Care

Iowa's rural hospitals balance tight budgets with patient needs

Some stay resilient - despite political uncertainty

Medical technician Ma Inmaculada Munoz runs a test in the laboratory at Van Buren County Hospital in Keosauqua, Iowa, on Thursday, May 11, 2017. (Jim Slosiarek/The Gazette)
Medical technician Ma Inmaculada Munoz runs a test in the laboratory at Van Buren County Hospital in Keosauqua, Iowa, on Thursday, May 11, 2017. (Jim Slosiarek/The Gazette)

It may be early on a Monday morning, but the sounds of cardio machines can be heard from down the hall at the Van Buren County Hospital.

On this sunny May day, Dave Glueck and Chris Everett are discussing the latest Russia news entangling President Donald Trump in — former FBI Director James Comey had just been fired and a special counsel had been appointed to investigate the campaign’s ties to Russia — and whether there is any merit behind the headlines.

Glueck, 74, is pulling and pushing on a NuStep — a cross trainer — while Everett, 66, pedals next to him on a stationary bike. The pair, along with a handful of others, come to the cardiopulmonary rehabilitation room three times every week to exercise and to socialize.


“We’re partners in this thing,” said Glueck, who is recovering from myriad health problems, including heart issues, a kidney removal and an aneurysm. He’s been coming here every Monday, Wednesday and Friday for eight years.

Everett, who has chronic obstructive pulmonary disease (COPD) and breathes through an oxygen tube, has been coming for 11 years. It’s helped her stay out of the hospital, she said, and maintain an independent life.

“I can get my own groceries and do housework,” she said.

Down the hall and around the corner, Dr. Tim Blair is chatting with Dr. Ethan Kuperman through the screen of an iPad. Kuperman, who works at the University of Iowa Hospitals and Clinics, is going through patients’ files with Blair and discussing medication and treatment options for the hospital’s inpatients.

It’s part of UIHC’s virtual hospitalist program — a collaborative telemedicine initiative that pairs a hospitalist, a physician focused on inpatient care, with doctors and nurses in rural areas to provide specialty care.


Shortly after their conversation wraps up, Blair walks the iPad and Kuperman around the department, to do rounds with patients. The pair go into Larry Taylor’s room. Taylor is watching CNN while a nurse enters information into his Electronic Health Record. Blair asks Taylor how he’s feeling, and Kuperman tells him they’ll be trying out some new medications.

Van Buren County Hospital may not be as big as hospitals in Iowa City, Cedar Rapids or Des Moines, but this tiny critical-access hospital in Keosauqua is full of life and activity.

In this southeast Iowa county that sits on the Iowa-Missouri border, there are a little more than 7,000 people. Manufacturing and agriculture are the main industries, but the county also attracts a good deal of tourism for its scenery, historic sites and trails. The hospital sees everything from stroke, heart attack and diabetes complications to farmers with a serious injury or the Amish in a horse-and-buggy accident.


There are 84 critical access hospitals — facilities with 25 or fewer beds that receive a special reimbursement rate from the federal Centers for Medicare and Medicaid Services to help compensate for lower patient volumes — scattered across Iowa, with a handful of larger, more regional facilities and more than 100 rural health clinics serving rural populations. They care for the nearly 36 percent of the state’s 3.1 million people who are living in rural areas.

Iowa’s rural hospitals have a more than $2.5 billion economic impact

- Iowa Hospital Association


Read more: Legislative solutions for rural hospitals

As with their urban counterparts, rural hospitals often are one of the largest employers in town and bring with them indirect economic benefits as well — businesses want their employees to be able to receive nearby care. Altogether, Iowa’s rural hospitals have a more than $2.5 billion economic impact, according to estimates from the Iowa Hospital Association.

And while the health care industry as a whole remains in a large state of flux as Congress debates how best to replace the Affordable Care Act, rural hospitals also must juggle other financial and logistical pressures.


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“We’re very mindful with what’s going on in Washington and Des Moines,” said Bill Bumgarner, president and chief executive officer of Spencer Municipal Hospital in northwest Iowa. “All we can do is focus on things we can control — ongoing planning, we do a significant strategic planning process every five years and refine that changing dynamic on an annual basis.”

The hospital in Clay County is licensed for 99 beds but has an average daily census of about 30, Bumgarner said. The hospital has a cancer center, behavioral health program and offers dialysis services — things for which most rural hospitals don’t have the capacity or resources.

Iowa's rural and urban demographics:

“Most of those decisions were made decades ago,” Bumgarner said. “It shows decisions that are made in present time can have dynamic consequences in the long term.”

Rural hospitals generally have tight profit margins — often hovering between 3 percent and 5 percent. It can be a challenge to recruit physicians or other providers, and they are not always equipped to handle patients dealing with a mental health emergency.

What’s more, those living in rural areas typically are older, poorer and sicker than people who live in more urban areas. In Iowa, the average age of rural residents is eight years older than urban residents — 43.6 years old compared with 35.3, according to the most recent U.S. Census numbers.

Nearly 16 percent of those living in Van Buren County live in poverty, for example, higher than the state average of 12 percent. Eight percent lack health insurance compared with about 7 percent statewide.

That means these hospitals see far higher portions of patients on Medicaid or Medicare — at Van Buren County Hospital, more than 70 percent of patients are on government-sponsored health plans. This makes these hospitals more susceptible to bigger financial struggles when changes are made to those government programs such as sequestration — a 2 percent across-the-board cut to Medicare providers — and potential cuts to the Medicaid program outlined in the Republican-backed health care plan.


Those financial pressures have been the cause for 80 rural hospital closures around the country since 2010. Though there have been no such closures in Iowa, experts worry that federal changes to the Medicaid program could be the tipping point. In Texas, 13 hospitals have been shut down — the most of any state — while eight have closed in Tennessee, six in Georgia, and five in both Alabama and Mississippi.


“There’s been an uptick, an acceleration” in hospital closures, said Michael Topchik, national leader for rural health at iVantage Health Analytics, a consulting group that works with hospitals and health systems. “We are tracking an increase in vulnerability — 41 percent are losing money.”

“From my perspective, keeping hospitals alive in Iowa’s rural fabric is the difference between Iowa’s standing in overall quality of life."

- Kirk Norris

- CEO of the Iowa Hospital association


The majority of closures are concentrated in Southern states that did not expand Medicaid, according to the North Carolina Rural Health Research Program. In states that did expand Medicaid, people living in rural areas saw large gains in insurance coverage, while rural hospitals saw significant drops in charity care, which ultimately has made budgets more stable.

The uninsured rate among rural, non-elderly individuals fell by nearly one-third between 2013 and 2015, from 17 percent to 12 percent, according to a Kaiser Family Foundation analysis.

Those drops were more significant in states that expanded Medicaid, such as Iowa, which granted coverage to an additional 150,000 people through the Iowa Health and Wellness Plan. In Iowa, charity care at non-urban hospitals fell significantly, from $74 million in 2011 to $40 million in 2015, according to data provided by the Iowa Hospital Association.

“Nebraska and Iowa enjoy a very favorable rural hospital performance, while Kansas is among the worst in the country,” Topchik said. “There are a lot of reasons why that’s the case — policy on the state level but also (Medicaid) expansion. Iowa started out strong and got stronger while Kansas started weaker and got weaker.”

Two rural hospitals have closed in Kansas — which has not expanded Medicaid — while three-quarters of its rural providers operate at a loss. The median operating profit margin in Kansas is minus 6.3 percent, according to iVantage. Meanwhile, in Iowa, two-thirds of its rural providers have a positive profit margin, with the median margin increasing between 2011 and 2015 from 1.7 percent to 3 percent.

Iowa’s relatively stable population, as well as large number of county hospitals — which means they have property tax support — also are contributing factors to why the state’s rural hospital’s have better financial performance, said Kirk Norris, chief executive officer of the Iowa Hospital Association, which represents the state’s 118 hospitals.


“From my perspective, keeping hospitals alive in Iowa’s rural fabric is the difference between Iowa’s standing in overall quality of life,” he said.

Still, more than 30 of Iowa’s rural hospitals have a negative profit margin, a number that could grow if Republican-led efforts to roll back the Medicaid expansion and convert the Medicaid program to a per-capita cap succeed.

Source: Chartis Center for Rural Health. Map by John McGlothlen / The Gazette

Under the current Medicaid funding mechanism, the federal government pays for about 60 percent of Medicaid costs while states kick in the remaining 40 percent. This number fluctuates as the Medicaid population expands or shrinks. Under a per-capita cap, the federal government would pay a certain dollar figure for each Medicaid member, and states would be responsible for costs in excess of the per-capita cap.

“The No. 1 challenge (facing rural hospitals) would be the repeal of the Medicaid expansion. It is also, secondarily, the loss, for example, of our two insurance carriers providing coverage to 50,000 Iowans,” Norris said, referring to Wellmark Blue Cross and Blue Shield and Aetna’s decisions to no longer sell individual health plans. “Charity care levels need to stay in check. You take those away, those people won’t stop needing care.”



Back in Keosauqua, Ray Brownsworth, the president and chief executive officer of the hospital, would rather talk about the opportunities the hospital is facing than the challenges. During a tour of the facility, he brags about staff and shows off new equipment.

“Rural health care can mean quality care,” he said.

Brownsworth has been in charge of the hospital for about three years now. He’s made a big push to update infrastructure and technology. The hospital was able to secure a grant to buy a new nearly $500,000 CT scanner. It bought a $250,000 medicine dispensing unit about a year ago that has helped staff improve patient safety and outcomes. And Brownsworth has plans for a $2 million expansion and update of the emergency department, adding more rooms, including a negative pressure room to better contain contagious diseases or pesticides.

Those improvements already are paying off — the new CT scan is a 64 slice — meaning it captures 64 simultaneous images — compared with the old one, which was a 6 slice. Staff use it several times a day, for stroke patients to trauma patients.



“We’re investing heavily from a capital standpoint,” he said. “There’s a lot of stuff we want to do, but we need to be more profitable.”

Those investments also come at a high price. The hospital had a nearly minus 9 percent operating profit margin last year, according to iVantage Health Analytics. But Brownsworth is looking toward the future and strategies to keep both the hospital and its patients healthy.

Van Buren County Hospital is strongly affiliated with the University of Iowa Hospitals and Clinics, a relationship that offers the rural hospital specialists that regularly visit, telemedicine options and sharing of electronic medical records, which keeps physicians on both ends up-to-date when it comes to patient care.

Brownsworth also has plenty of worries. He’s run into issues with the three private insurers now managing the state’s Medicaid population — improper and missing payments now total nearly $500,000, he said. Mental health care, which always has been a challenge, is becoming more of a difficulty as the hospital must sometimes send patients across the state to the only open inpatients beds. And he’s got open physician jobs he needs to fill.

But he’s proud of the work that he and his staff do every day.

“We’re prepared to weather the difficult times ahead,” he said.


Iowa’s congressional delegation have been champions for rural health care providers over the years, introducing legislation to help hospitals maintain financial stability. Here’s a look at a few of their ideas:


The Save Rural Hospitals Act, introduced in 2015 by Reps. Sam Graves, R-Mo., and Dave Loebsack, D-Iowa, would eliminate the Medicare Sequester for rural hospitals — a 2 percent across-the-board cut for all Medicare providers.

“Iowa is at or near bottom in terms on Medicare reimbursement rates,” Loebsack said. “That’s something we’ve got to deal with. Further cuts are unacceptable, but that’s what happened. We cut an additional 2 percent, which is totally unacceptable.”

The bill also would provide a permanent extension of the rural ambulance and super-rural ambulance payments and provide an innovation model for rural hospitals that continue to struggle. This model would ensure access to emergency care and allow hospitals the choice to offer outpatient care that meets the health needs of the community.


“With all the doom and gloom, the Graves-Loebsack approach could be silver lining,” said Michael Topchik, national leader for rural health at iVantage Health Analytics, a consulting group that works with hospitals and health systems.

But the biggest threat of the moment, Loebsack said, is the repeal of the Affordable Care Act.

“That’s what I hear about the most at the moment, ‘Don’t turn back the clock on Medicaid expansion,’” he said.



The Rural Hospital Access Act, introduced in 2017 by Sen. Chuck Grassley, R-Iowa, permanently would extend key Medicare rural hospital programs — the Medicare Dependent Hospital and Low-Volume Hospital programs.

The Medicare Dependent Hospital designation helps smaller hospitals with a large share of Medicare beneficiaries maintain financial stability. There currently are 160 Medicare Dependent Hospitals in 30 states, including five in Iowa — Keokuk Area Hospital, Skiff Medical Center in Newton, Spencer Municipal Hospital, Fort Madison Community Hospital and Lakes Regional Health Care in Spirit Lake.

The Low-Volume Hospital designation offers hospitals that treat a low patient volume a payment formula that recognizes the fixed costs of treating these patients relative to the fee-for-service payment system that favors high beneficiary volume. There are 594 low-volume hospitals nationwide.

Without an extension, these two programs will expire Oct. 1, 2017.



The Rural Community Hospital Demonstration Extension Act, introduced in 2015 and co-sponsored by Rep. Rod Blum, R-Iowa, bill would extend the Rural Community Hospital Demonstration program for five years, along with other provisions addressing hospital services. The program tests the feasibility of cost-based reimbursements for hospitals that are too large to receive the critical access hospital designation, such as Grinnell Regional Medical Center.

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