Care costs

Eighteen rural hospitals in South Carolina will be reimbursed by a combination of state and federal money for nearly 100 percent of their uncompensated care costs this year.

Abbeville County Hospital

Allendale County Hospital

Barnwell County Hospital

Chester County Hospital

Chesterfield General Hospital

Clarendon Memorial Hospital

Coastal Carolina Hospital

Colleton Medical Center

Edgefield County Hospital

Fairfield Memorial Hospital

Hampton Regional Medical Center

Lake City Community Hospital

Laurens County Hospital

Marion County Medical

Marlboro Park Hospital

McLeod Regional Medical Center in Dillon

Newberry County Hospital

Williamsburg Regional Hospital

It’s hard to pinpoint exactly when Lake City Community Hospital started serving fried chicken in its cafeteria, because they’ve been doing it every Thursday for as long as anyone can remember.

“It’s been at least 27, 30 years,” said Leesa Infinger, a human resources coordinator at the hospital. “When I’m enrolling new employees, I always tell them, ‘You’ll want to eat on Thursdays because it’s fried chicken day.’ ”

It’s a big draw for the community too. Hospital staff fry 100 pounds of chicken every Thursday because many Lake City residents show up to eat. The whole meal is less than $5 — cash only. “It’s a Lake City tradition,” Infinger said.

“Just imagine how culturally important that is,” said Tony Keck, director of the S.C. Department of Health and Human Services. “It’s an important place where people from the community come to gather, because they like fried chicken. Who doesn’t?”

Financial crisis

But Lake City Community Hospital is worth more than its fried chicken. And it also plays a more important role than simply the town’s main health care provider.

While Charleston-area residents have their pick of four hospital systems in three adjacent counties, residents in rural South Carolina have far fewer health care choices — and often only one choice. Rural hospitals employ thousands of residents in remote parts of the state and serve some of the poorest, sickest patients.

But as populations in rural South Carolina decline and hospital admissions drop everywhere, rural hospitals find themselves facing a financial crisis.

Lake City Community Hospital lost more than $2.7 million over four years between 2008 and 2011, according to the S.C. Department of Health and Human Services. In nearby Florence, the much larger McLeod Regional Medical Center posted a $186 million profit during the same time period.

Other rural hospitals fared far worse than Lake City. Coastal Carolina Hospital in Hardeeville lost $26.5 million over four years.

“(Rural hospitals) have a whole separate set of issues than urban hospitals, obviously,” Keck said. “Patient bed days have gone way, way down.”

This decline can be explained, in part, he said, because physician practices in rural areas are increasingly being purchased by larger hospitals. Doctors stop referring patients to rural hospitals and send them farther away to larger facilities.

“The other reason is patient choice,” Keck said. “People today will drive an hour to buy the right pair of shoes, and so, if you’re going to have a cardiac catheterization, people are driving to the larger medical centers.”

Lessons from Bamberg

Bamberg County Hospital, about 20 miles southwest of Orangeburg, was forced to close its doors last year for some of these same reasons.

“It was a devastating blow,” said Rep. Bakari Sellers, D-Bamberg. “Our hospital was the lifeblood of the community. Not only was it one of our largest employers, it provided much-needed care to a population — one that is aging.”

Sellers said he hoped that Bamberg County Hospital’s fate would send warning ripples throughout the health care industry in South Carolina. “But I’m afraid it fell on deaf ears,” he said.

It’s not only a problem in South Carolina. Three rural hospitals in Georgia closed in the past year, said Thorton Kirby, president of the S.C. Hospital Association.

“The other issue we’ve had a lot of conversations about over the last few years is the need to create more fresh or modernized business models that would be available to small, rural hospitals that are struggling,” Kirby said during a panel discussion at the S.C. Office of Rural Health annual conference in Columbia last week.

One of these models, which Bamberg County Hospital advocates are considering, would convert rural hospitals with empty patient beds into freestanding emergency departments.

“We haven’t done one of those in our state, but a lot of other states are starting to think the same way,” Kirby said.

Sellers introduced a bill this year in the General Assembly that would allow recently closed hospitals, like Bamberg County Hospital, to re-open as freestanding emergency departments and bypass some of the bureaucratic red tape new hospitals usually must navigate. He expects the bill to come to a vote in the House of Representatives when the Legislature reconvenes in January.

$20M in breathing room

Hospitals, by law, are required to treat patients in their emergency rooms, even patients without insurance and no means to pay a hospital bill.

The government uses a program called Disproportionate Share Hospital (DSH) payments to help hospitals shoulder some of the burden for this uncompensated care, but DSH payments don’t cover 100 percent of those costs. In fact, they don’t even cover 60 percent.

But that will change soon for 18 rural hospitals in South Carolina. The S.C. Department of Health and Human Services carved out $20 million from the total pool of DSH money, a projected $474 million this year, to reimburse these 18 hospitals for nearly 100 percent of their uncompensated care costs.

But it’s unclear if this extra money will help some of these beleaguered facilities in the long run.

Keck said the $20 million is designed to help stabilize rural hospitals as they transition from a business model that’s not working well, one based on filling hospital beds and performing surgeries and procedures, to something more sustainable.

“It’s just going to be very hard for rural hospitals to survive over time unless they partner or become something else, like a freestanding ED,” he said. “Some will actually be able to stick it out and be successful, but it’s going to differ by market. There’s not one solution, but what we need to do is give them the breathing room to actually sort of do it.”

Gov. Nikki Haley praised the plan in her January State of the State address.

“We’ve long known that rural hospitals face challenges that larger hospitals don’t, and now, for the first time ever, the State of South Carolina is going to treat them that way,” Haley said.

But the plan isn’t popular in every health care circle. Dollars diverted to rural hospitals threaten money traditionally paid to larger facilities. Keck said the South Carolina Hospital Association was intentionally not included in the decision to reimburse rural hospitals 100 percent of their uncompensated care costs when it was made last year.

“It’s our job to make the decision,” he said. “There is a lot of, sometimes, concern about anything that rocks the boat in terms of favoring one group of hospitals over another or, not even favoring, but changing the balance.”

‘More people die’

The first of these enhanced DSH payments are expected to be paid to rural hospitals this month or next.

“We haven’t gotten it yet,” said Butch McCutcheon, CEO of Lake City Community Hospital.

Lake City is one of the 18 rural hospitals designated by the state government to receive the enhanced DSH payments.

The hospital opened in November 1966 after Lake City residents voted for a tax district that helped finance the facility. Lake City Community Hospital, with 48 inpatient beds, still operates independently.

“The one single thing that stands out in my mind here is the emergency room. We average about 70 patients a day in the emergency room. Where would they go if we weren’t here?” McCutcheon said, just before he jumped in the hospital cafeteria line for fried chicken. “We’d have more people die.”