Depending on the definition used, up to 98 percent of land in the United States is in rural areas and 32 percent of the U.S. population lives on that land. The experience of people living in rural areas varies greatly depending on geography and population. Just like all rural communities are not the same, all rural hospitals are not the same. For AAOS Now, Tamara Huff, MD, MBA, FAAOS, spoke with Edward Herrman, CEO of Hays Medical Center (HaysMed), a level 3, private, nonprofit community hospital in Hays, Kansas. HaysMed is a sole community hospital in rural western Kansas. Mr. Herrman discussed challenges facing his center as well as rural hospitals in general.

Dr. Huff: According to a 2011 survey of 145 administrators of rural hospitals in five states, 65 percent never have an orthopaedic surgeon on call. HaysMed employs three full-time orthopaedic surgeons. What are some of the challenges that your institution faces with recruiting and retaining orthopaedic surgeons?
Mr. Herrman: Orthopaedic surgery still has good operating margins, so most hospitals want to create and maintain that service line. It can be challenging for a facility to amass enough patient volume to support a full-time orthopaedic surgeon. Many of the smaller facilities around us only have one surgeon. Others are covered by traveling surgeons from out of state, which creates challenges with patient follow-up. Though much smaller than our facility, critical access hospitals (CAHs) are a major competitor for surgeons as well as patients.

CAHs have 25 or fewer beds [and] have much more favorable Medicare reimbursement schedules. These facilities can do low complexity and outpatient surgical procedures, which reimburse well and are favored by many surgeons.

Much of the challenge of maintaining access to care is rooted in the business of medicine. You mentioned the differences in Medicare reimbursement for hospitals like HaysMed versus CAHs. Can you speak more on reimbursement challenges facing your bottom line?
As a sole community hospital, we have poor negotiating leverage with private payers such as Blue Cross Blue Shield. As such, our negotiated reimbursement rates with private insurance companies are much lower than our larger health system rivals. It doesn’t matter that we have excellent patient outcomes and nationally recognized certifications. We serve a community that is far from the seat of power in our state that does not have the political weight of our larger competitors.

Politics are enmeshed in all facets of healthcare. What are some advocacy issues that affect the financial viability of HaysMed and other rural hospitals?
When the Affordable Care Act (ACA) was enacted in 2010, we (hospitals) agreed to payment cuts, with the promise that those losses would be made up by increased access to care. That has not panned out.

Unlike Medicare, the decisions regarding Medicaid participation are made by the state (Fig. 1). The ACA Medicaid expansion granted Medicaid coverage to nearly all adults with incomes up to 138 percent of the Federal Poverty Level (FPL; $20,783 for an individual in 2024) and provided states with an enhanced federal matching rate for their expansion populations. Kansas is one of 10 states that have not expanded Medicaid. Without Medicaid expansion, adults who are not disabled or elderly or do not have dependent children in Kansas cannot qualify for Medicaid no matter how little they earn. Parents with dependent children must make less than 33 percent of the FPL (which in 2024 was $6,858.39) to qualify for Medicaid in Kansas. A significant portion of our indigent patient population would be covered with Medicaid expansion. It would eliminate [around] $1.3 million in [medical] debt.

Another Medicaid-related challenge for our facility is the inability to participate in the 340B Drug Pricing Program. The 340B Drug Pricing Program is a part of the Public Health Service Act. It requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to healthcare organizations that care for many uninsured and low-income patients, including CAHs, sole community hospitals, rural referral centers, and public and nonprofit disproportionate share hospitals. Because we care for a smaller portion of Medicaid eligible patients (less than 8 percent of HaysMed patients are on Medicaid), HaysMed is not eligible to participate in the 340B Drug Pricing Program. Participation would save our hospital $12 million to $16 million annually.

Tamara Huff, MD, MBA, FAAOS, is an orthopaedic surgeon and owner of Vigeo Orthopaedics. Dr. Huff serves on the AAOS Health Systems Committee.

References

1. U.S. Department of Agriculture: Rural Definitions: Data Documentation and Methods. Available at: https://www.ers.usda.gov/webdocs/DataFiles/53180/25571_KS.pdf. Accessed Dec. 17, 2024.
2. Healthinsurance.org: Medicaid Eligibility and Enrollment in Kansas. Available at: https://www.healthinsurance.org/medicaid/kansas/. Accessed Dec. 17, 2024.
3. American Hospital Association: Fact Sheet: The 340B Drug Pricing Program. Available at: https://www.aha.org/fact-sheets/fact-sheet-340b-drug-pricing-program. Accessed Dec. 17, 2024.