Hillsdale Hospital News

Minisode: 2023 Look Ahead

On this week’s minisode, JJ and Rachel talk about how rural health closed out 2022 and what they’re looking forward to in 2023 here on Rural Health Rising.


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Audio Engineering & Original Music by Kenji Ulmer




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Rachel: Hello and welcome to another Mini-Sode. Today we’re talking about how Rural Health closed out 2022 and what we’re looking forward to in 2023 here at Rural Health Rising. I’m Rachel Lott.

JJ: And I’m JJ Hodshire

Rachel: And this is Rural Health rising. So, JJ, let’s talk about the big exciting news that came right at the end of 2022, which was the fiscal Year 23 appropriations bill. It passed both chambers and was signed into law by the President. So that was a nice Christmas present, right?

JJ: It was a great Christmas present. But Rachel, it came with a lot of sweat toil tears anxieties because you and I both spent a tremendous amount of time advocating for a lot of what we’re going to talk about today and what happened as a result of that bill. But it was a lot of work. I mean, our associations across Michigan, every state as well as NRHA and others, really went to bat for hospitals, in particular rural hospitals as well, because it impacts them the most with some of these programs.

Rachel: So, let me give an overview of what was included in the spill, because not only did a lot of work go into it, but a lot of good came out of it. Correct. So as far as appropriations go, it included the creation of the CDC Office of Rural Health. So that’s a $5 million appropriation, which includes lots of different things. One of the things that’s in there that to me is very exciting is it includes development of a Strategic Plan for Rural Health that maps the way forward both administratively and programmatically, which is important.

JJ: It’s the first I’ve ever witnessed this in legislation where they’ve actually focused on a Strategic Plan for preservation of rural Health. Right. I didn’t go back.

Rachel: I don’t know how that plays out in my CDC specifically, and what all that will entail within their scope. That’s great. And then there’s a lot of funding support directly for rural hospitals. So, 3.4 billion for the Rural Community Facilities Program and 2 million for Rural Hospital Technical Assistance Program. That’s through the USDA Rural development. 64 million for Medicare Rural Hospital Flexibility Grants program. That’s an increase in 2 million over the funding levels previously, and part of that is 21 million. Included in that 64 is 21 million for the Small Rural Hospital Improvement Grant program and 5 million to continue funding Rural Emergency Hospital their Ta program. And then also there’s some continuation of core rural healthcare programs, like twelve and a half million for the State Offices of Rural Health. That’s the same as before.

JJ: They play critical role.

Rachel: They really did.

JJ: Rachel, a lot of the work that happens here in Michigan in collaboration with MHA is also the Office of Rural Health.

Rachel: Right.

JJ: And we have a great relationship with them. But they actually administer the ship funding, which is the pass through of funding that we get for special projects, right.

Rachel: Which is I believe that I mentioned you.

JJ: Did you set the small rural hospital improvement grants?

Rachel: Yes.

JJ: That one.

Rachel: Is in there for our state Offices of Rural Health. We love them. 145,000,000 for our corp, which is the Rural Communities Opioids Response Program. That’s a $10 million increase.

JJ: Learning a lot about that right now. And the funding that had been set in place for addressing the opioid crisis in America was a very small amount. Initially. This has been several years ago, and it was highly competitive. But now, as the awareness is in our communities across this country, programs like this are very effective, because when we transition the opioid industry now, you have to sign a contract with your physician if you’re on Opioids, et cetera. A lot of those patients were left behind is what we call it, and patients denied resources. How do you give up something that you’ve been on for 15 or 20 years? So, creating programs like this that helps them and step therapies and some other things, very effective. Right.

Rachel: It takes much more of a medical approach than a punitive or criminal approach that we see a lot with something like this, with a substance use issue. And then twelve and a half million for the Rural Residency Development Program. That’s something we’re actually looking at. We are here at Hillsdale Hospital. We know the importance of not just recruiting providers, physicians in particular, to rural communities, but bringing them up in rural communities is a great opportunity. That’s a $2 million increase for that program, 125,000,000 for the National Health Service core. That’s a $3 million increase. And then 8 million for our moms, which is the Rural Maternity and Obstetrics Management Strategies Program at HRSA, and that is a $2 million increase. And then there were some non-appropriation provisions as well. So, one that we advocated for directly was the Pago sequester that was so important that is now deferred. It was deferred until January 2023, but now it’s deferred till January 2025. And that would have been a disastrous additional cut to Medicare reimbursement, which truly would have been the nail in the coffin for a lot of rural hospitals right now.

JJ: Well, even looking ahead, 25 is around the corner. Right. This still has to be addressed because this will have a devastating impact on rural hospitals. In terms of what the number means for Hillsdale and rural hospitals like ours, it’s the difference of actually making an operational profit or breaking even and having substantial losses. Now, when you have substantial losses, the detriment there is your hospital cannot sustain that long time. Rachel exactly. And therefore, you see closure. So, would a program like Sequestration impact a closure of a rural hospital? Absolutely. Which we have to tackle this in 25. But before 25, we have to spend a lot of time, and we’ll talk about that in a minute, advocating for this program starting now. Right.

Rachel: And with that, too, this is not. I want to clarify this pego sequester. This is not a rollback of the 2% sequestration that we already have. This would have been an additional 4%.

JJ: Absolutely.

Rachel: So, when we say disastrous, we mean.

JJ: Display when you’re on a zero margin. Anyway, the initial sequester sequestration was hard.

Rachel: Enough, but to add to that was totally untenable. Absolutely excited to see that. But we know there’s work ahead. Telehealth, this was another thing that we advocated for directly when we were in Washington, DC. In November is the current tele health flexibilities. Those are now authorized through December 31 of 2024, including what we were very specific about, audio only. We know in rural health that tele health does not always mean a video visit on a smartphone because we have people, including some of our own employees, even some of our own managers, that do not have great internet service at home and cannot actually have a call like that. But they have a landline that they can use, even some that truly they couldn’t even do audio only on a cell phone because of the type of cell phone signal that they have available to them that they would be doing it on a landline. So, making that available is critical, and it’s a big part, I think, in ensuring health equity for rural Americans.

JJ: It’s a future.

Rachel: This is another one that we have been very focused on constantly checking in with josh at the national rural health association, like, hey, any updates on the LVH? The low volume hospital and Medicare dependent hospital designations have both been extended through September 2024. We were looking at I can’t remember what the number was for us, but it was, I believe it was well over $800,000. No, it was that would have been an impact for us if that was not extended. So that is one that also it’s extended now through 2024. But our fight is really to get that codified into law that that will stay. And there have been bills presented before in that regard, but we need to work to push those forward. Also, add on payments in several areas have been extended for two years. So, ground ambulance, physician, home health, rural add on payments, and then there are some mental health provisions. So, coverage of marriage and family therapists and mental health counselors under Medicare. That is huge to be able to have that covered for Medicare. It’s one of those issues that when we talk about mental health, we’re not just talking about inpatient behavioral health, we’re not just talking about substance use disorder treatment. There’s a lot more that goes into that and needs to be addressed. And this works to do some of that. Also, again, talking about residency, 200 new residency slots are going to be coming out in fiscal year 26 for psychiatry or psychiatry specialties, much needed. And of those, a minimum of 10% have to go toward rural hospitals, which is incredible. So that’s awesome. Hopefully we can get one of those in that 10%.

JJ: Well, absolutely.

Rachel: And then lastly, the inclusion of a specific act called Restoring Hope for Mental Health and Well Being that passed the House of Representatives earlier in 2022. It’s got some grant and funding opportunities related to mental health and also substance use disorder treatment. So, what a way to wrap up 2022, right?

JJ: Yeah, absolutely. I think look at the majority of these measures. It’s impacting the health and wellness of our rural communities. In particular, I say rule because that’s what you and I deal with every day now. It impacts all of the communities. But when we look at rule, the opportunity for us not to have the sequestration in place means that we can continue to operate. Because if you shed 6% out of our bottom line, those are drastic cuts. Those are services, those are people, right? It’s not less paper clips and not buying a car.

Rachel: We don’t have 4% of fat to trim.

JJ: There is no fat. There is no fat. And we’re finding that in rural health right now, Rachel, is that around this country, the significant concern is how long can rural hospitals sustain the losses month after month. And we have known for a fact just in the last quarter of even big systems financial losses all one has to do our listener today, go to Becker’s Healthcare, go to any Google search engine and type in hospital losses in 2022. And you would see without the government supplements, without all of the money that was given for COVID relief funds, is that hospitals in the new age that’s post pandemic are struggling and the volumes didn’t return. The cost of labor skyrocketed and that went across the spectrum. And it skyrocketed because contractors are wanting more money, employees are wanting more money, sign on bonuses, you name it. Unfortunately, in our industry, you and me, we in rural health do not have negotiating power, right? We’ve said that many times on this program. This is the disadvantage of rule is that I can’t go to Blue Cross, the Shield and Medicaid and say you’re going to pay me more because I have to pay these people more. That’s the way it works.

Rachel: We don’t have the grocery store in health care.

JJ: No, I went to the grocery store the other day and I paid a lot more money for a lot of products that I looked at my wife because I had not been shopping in a while, and said, oh my goodness. And the reason for that is because obviously as their costs go up for employees and their cost goes up for supply chain, they can transfer that cost to the consumer, right? We cannot.

Rachel: We can’t do that.

JJ: We do not even have an option to do that.

Rachel: And not only that, the way that we’re paid in particular by Medicare and Medicaid today, right now, is based on, I believe, 2016 cost reporting.

JJ: It is.

Rachel: So, we’re not even being compensated for any inflation that happened before 2020, 2021.

Rachel: And these record high inflation rates that.

JJ: We’re seeing else is what we’re looking at without an adjustment and even when the adjustments are going to be made, Rachel, they’re so insignificant, and I’m not being ungrateful, but they don’t match inflation, they don’t match the cost of labor, they don’t match any of that. Right? And so back to the point of the fact is that we have rural hospitals that are struggling in America right now and that are with very little cash on hand, who are faced with high labor cost, recruitment cost, supply chain costs. And think about that. In our industry, when the cost of shipping the milk to the grocery store increases, the gallon of milk goes to $4 a gallon, right? When the cost of shipping an instrument for a knee or a hip comes to the hospital and that’s an increased cost, it doesn’t go to the consumer, it doesn’t get paid for by the insurance company. We have to absorb that.

Rachel: Right?

JJ: And so, this is the difficulty that we face in our industry right now and everybody’s facing it, right? But these pieces of legislation, these continuation bills, both pieces are very important. So new legislation that restores and gives additional money, that’s great. But the continuation of a lot of these services that we count on, some of them even, are federal passthroughs to the state. So, when you think about disproportionate share, it’s a huge piece for us. When you think about OB stabilization funds that come from the state of Michigan through a pass through, when you think about ship funding, these are all hundreds of thousands leading to millions of dollars. That help. Again, it’s not additional, it’s just sustaining where we were historically over the last few years, right?

Rachel: So, I want to talk about some of that and get into our focus for 2023. But before we do, we would be remiss if we did not give a shout out to Carrie and Josh at the National Rural Health Association and their team and all of the work that they have done, both of them have been on our podcast as well to talk about some of these issues. Flip back. Yeah, they’re awesome. They keep us informed and up to date. We get emails from them all the time and their team members and then also Brian Peters and Laura Apple at the Michigan Health and Hospital Association and their teams who work tirelessly to advocate for rural health.

JJ: They do.

Rachel: They were in DC shortly before we were, I believe, doing some advocacy as well on the Hill and after. So, they were directly involved in making sure some of this stuff happened. So, we just want to give a shout out to those folks and their teams who were a part of making this happen and getting that bill across the finish line with all of those provisions. So, you’ve kind of hinted at some of this already, JJ. But what is our focus in 2023? What are we going to be looking at? What are we going to be talking about on Real Health Rising?

JJ: A lot. But it’s all centered on to me.

Rachel: Oh, you mean like the word a lot?

JJ: I see lots. Not Rachel lots. But our advocacy is going to continue to focus on how do you sustain rural healthcare in America? And so, we’ll get there through many ways. But first and foremost is there were seven kids in our family. And what I realized with my parents is the loudest one always gets the attention. And so, I was the last. I was a quiet, meek, they forgot about me. It’s okay. I’m over it now.

Rachel: But you can tell us.

JJ: Exactly. It’s the loudest that usually gets attention. And what we had to realize, Rachel, and that which we did not do here prior to your arrival and my arrival is we didn’t advocate in Lansing, in Washington. We just didn’t. We were counting on other people to do that or just hoping that we would get something. One thing we’ve done, I feel remarkably well, is tell our story and advocate for Hillsdale, which is advocating for rural health. So, as we look at our focus in the next year, I think our focus is helping other rural hospitals. And the way we do that is advance ourselves and them is advocacy of rural health in general. Now, what does that look like? Well, what we know is that even through this opportunity that we have to go to the American people and to share our story through the rural Health Rising is to tell our unique stories. When we bring a speaker on that talks about the challenges of a hospitalist program in rural America, that’s real. How do you recruit and sustain physicians in a rural community? And we’ve had more like when we.

Rachel: Had John Gadwood on from our CRNA team to talk about those kinds of challenges.

JJ: Absolutely. And to tell that story. Now I’m telling that story. I’m on an MHA panel in a few weeks, and I’m going to be telling the story of CRNAs, what that work is. It’s not just isolated to rural health rising or to one avenue. We’re everywhere, man. I mean, we have to be everywhere. And so, we’re in Lansing, which we have been you and I took a ride there and have spent a lot of time on the phone and otherwise. We flew to Washington recently, and we’re going to fly again next year. We’re going to be advocating for rural health. It’s going to become a regular thing. And I think what is very important is what is facing rural hospitals. What’s facing all hospitals is the things that we just shared about the cost structure, the supply chain. That’s not going away, Rachel. We know it’s only going to be impacted but the reimbursements are not coming proportionate to the rise of these costs. And as a result of that, you have losses. And losses over time cannot be sustained, which means your hospitals close. Now, what happens when your rural hospital closes? Well, the impact and devastation on your rural economy is your economies are gone in those communities. They are. I mean, I’m not being dramatic, right? But when we are the largest or second largest or third largest employer in rural America and you take away the generated revenue that the employees are purchasing cars and the organization is purchasing cars and the organization is buying the groceries, you separate that away and it gets outsourced to other communities through mergers or acquisitions. What happens is you end up with a depressed economy, loss of jobs, and many more patients are switching to government payers, which is Medicaid. Right. Can’t sustain that. Right.

Rachel: And this is in a lot of ways, I see this as kind of a battle for the soul of rural America. Because without health care, to your point, in rural America, it will cease to exist as we know it today.

JJ: Oh, absolutely.

Rachel: And so much of our nation’s ability to function depends on rural America and rural Americans, agriculture in particular. That’s an easy example. But this is something that affects everyone, not just people who live or work in rural communities. And I think it’s going to be interesting too. We’ll probably be talking more and more about everyone now in healthcare is starting to understand the financial pressures that we have been facing.

JJ: Finally.

Rachel: And I think I’ve probably said on this podcast before, part of me is like, welcome to the club, everybody. And the other part of me is like, wouldn’t it be nice to be able to lose hundreds of millions of dollars and still keep your door doors open?

JJ: What a lovely and not even really be impacted by it.

Rachel: Right. So, I think there’s going to be a bit of a reckoning between the way healthcare is being paid currently there has to be, and what the future models are going to be. Because for one, a lot of the things that are often touted as well here are some fixes. They’re not enough. They’re never enough. Expanding Medicaid has kept hospitals from closing, but it hasn’t given them financial stability.

JJ: No, absolutely right.

Rachel: Because it’s still a low reimbursement rate.

JJ: Absolutely.

Rachel: So, strategies like that, there’s a lot of different things that’s just one example don’t necessarily always work because we still don’t have as the economy fluctuates, we don’t have any stable footing because we are not able to operate as the free market operates.

JJ: No.

Rachel: But at the same time, our expenses are based on the free market and.

JJ: Expected to meet those expenses. Right.

Rachel: It’s a losing battle.

JJ: It is.

Rachel: So, something has to change.

JJ: Right? It does. And I think if you were to look at what is our primary focus in 23. That’s going to be maybe even a little more different than what we experienced in 22. It’s really getting you hear this word crowdfunding, right? Right. And that’s where everybody pitches in and you get some money and you get a project done. Right. Crowdfunding think about crowd advocacy. We’re going to call it that. We get all of these rule hospitals and rule makes up our United States of America, and rule are sending congressional leaders to Washington is really to band together in a rule advocacy like we’ve never seen before. I think it’s going to require that means we have to stop our divisions. We have to stop the idea that we are going to put that person out of business or this person out of business. And I think our primary focus should be to come together for crowd advocacy, for stopping mergers and acquisitions. Number one, yes. Rachel I’m going to call it yes, they’re dangerous.

Rachel: They are.

JJ: They do not lead to better health outcomes.

Rachel: No.

JJ: They lead to higher cost and community suffer. Right. Period.

Rachel: And there are a very small handful of people who get very wealthy in.

JJ: The process, called the brokers who sell the hospital to the other hospital and the CEOs executives who get the parachute, the golden parachute. It’s wrong. So, we need to advocate for these to either be strictly monitored like they were supposed to be and under the eye of the federal government, the Department of justice, so that we can ensure that there’s no violation of the Sherman Antitrust Act, et cetera. But stopping mergers and acquisitions, I think, should be a primary focus. Number two, at the state level, advocacy for all So, the ARPA and other funds that came through. You have a lot of states that are still sitting on this money.

Rachel: Oh, yeah.

JJ: And then you have billions of dollars, b with a billion, especially in Michigan.

Rachel: Right.

JJ: I heard the other day when we were speaking to a senator that there was four to 5 billion. I thought it was six, 6 billion. Something crazy still sitting in.

Rachel: We can’t even keep track of it at so many billions.

JJ: Billion with a b.

Rachel: Right, exactly. In American dollars.

JJ: And we’re being told that this is happening across the country. Now, think about this. Not only do they allocate that money to the state, the state, then allocates that money to the locals. The locals are sitting on our own county here. Millions of dollars, unbudgeted, unrestricted funds that they have not assigned anywhere. And so, while all of these devastations are occurring, we need to encourage no. M and A utilization of those ARPA funds for the available funds that are available and then some kind of provisions and limits on travelers. Rachel yes.

Rachel: This is one that, as you know, always gets me fired up. And there has been a bill proposed in Michigan. I haven’t looked lately to see.

JJ: Who.

Rachel: Might be bringing that same thing forward in this new legislature. But the cost of contract labor and travelers not just travelers, it’s also contract labor. We’ve seen that with contract labor we have certain disciplines or types of professions within our hospital and within rural hospitals in general that are typically and almost always contracted through a group of some kind. And you are getting hit up for more money from these folks as well. So those increases in costs are significant. And for the travelers in particular, they serve a need that is very specific in health care related to when we are in a pinch and we don’t have a staff member to care for a patient or to meet our current volumes. We have to have somebody until we get a full time hire in that can be trained because it’s also the training process that takes a long time. Yeah, it’s not a week of training to be oriented in a hospital as a nurse, for example. So that work is very important. But it’s been used as a way to just charge a lot more for hospitals, make a lot more money. And it is a huge contributor to the financial losses that hospitals are sustaining right now. And it also is a huge contributor, I believe, to the morale of healthcare workers who are committed to a community, committed to a hospital, committed to decades, a group of patients that often are their neighbors and their family. Members and their friends who are making a third of the nurse working next to them who just flew in from out of town to fill in for several weeks. And it’s demoralizing and it’s inappropriate and it is unethical, and I think it should be illegal.

JJ: It’s time to stop. I would love to see something like that change. And I am the proponent to say that keep government out as far as you can. But this is a case where government has to get involved in regulation, right? It is. Whether we like it or not, they have to get involved because this cannot be sustained in our economy today.

Rachel: Right. And the ultimate loser becomes the taxpayer at some point because it drives up the cost of health care overall. And that slowly now, it might take seven years for us to recoup that with the way the pricing works, but eventually it does damage the taxpayer ultimately. So, the government has a responsibility as well in that regard.

JJ: Yes. Well, the last item, of course, I think is going to be a focus for us that I know it’s going to be a focus for us that I really feel that other small rural hospitals need to do a better job of, because we haven’t done a good.

Rachel: Job of it until now.

JJ: Right in our wheelhouse is earmarks grants, opportunities for funding that would help offset equipment purchases. You know, when you think about when we have cash on hand, let’s just say I’ve got 100 days. And that 100 days equals $35 million. That’s what we have. That’s the savings account. But you have to purchase five or ten pieces of equipment next year in order to stay relevant in the market, right? Number two, it’s end of life, whatever it is. But MRI, millions of dollars, CT, millions of dollars. We’re not talking about cheap equipment, right? And so that eats your cash on hand. Then you get below those 100 days, then what we call trip debt covenant, which means the government says, oh, the bond holders, no, you can’t go below 100 days. Well, we had to buy that piece of equipment. Well, now you’re in default. And so, all of these things happen. And in order to help keep that money in the quote unquote savings account, hospitals are going to have to get earmarks and grant funding for projects that they would normally be funding out of their general fund, because the general fund is being eaten alive from paying these travelers and paying the contractors and the increase of cost from the supply chain. So in order to afford the equipment and to provide state of the art equipment, you’re going to have to see more earmarks and grant funding that the federal government and state governments are going to have to give. They’re going to have to do it right.

Rachel: And if you don’t like the term earmark, you can call it congressionally directed funding, that’s fine. But my perspective on that as well I know there are some people who have political or ethical or moral objections to earmarks, but it’s going to someone’s community.

JJ: It sure is.

Rachel: So, it’s our job to get whatever we can get here to our community.

JJ: And I will fight every inch of the way in 2023 to ensure that our hospital in Hillsdale County is viable for another 100 years. But my commitment and yours, Rachel, I know, is we are going to advocate for rural health in America.

Rachel: Yes.

JJ: And that is going to be our high focus next year. And we have to worry about back home making sure our margin is right here. But ultimately, it’s going to be a very busy year. I’m excited.

Rachel: I’m excited, too.

JJ: It’s going to be a lot of.

Rachel: You know, the stakes are high and the opportunity is powerful.

JJ: It’s powerful. It is.

Rachel: Thank you for joining us for today’s mini-sode. If you have a topic or issue You want us to cover on a future mini-sode, shoot us an email at marketing@hillsdalehospital.com. You can also find Hillsdale Hospital on Facebook and Instagram.

JJ: And with that, don’t forget to subscribe wherever you get your podcast. And if you like what you hear, leave us a five-star review on Apple podcast and tell others why they should listen to your feedback helps more listeners find rural health rising. You can also find us now on Twitter. I’m at Hillsdale CEO JJ. Rachel’s at Rural Health Rage. And you can. Also follow our podcast at rural Health pod. Until next time, stay safe, stay healthy and stay strong.

Rachel: Rural Health Rising is a production of Hillsdale Hospital in Hillsdale, Michigan and a proud member of the Health Podcast network hosted by JJ. Hodshire and Rachel Lott. Audio engineering and original music by Kenji Olmer.

JJ: For more episodes, interviews and more information, visit ruralhealthrising.com you.