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South Carolina agency to try to save rural hospitals from closing

Barnwell, other towns face new reality after rural hospitals close

Southern Palmetto Hospital in Barnwell abruptly closed on Jan. 21, 2016, leaving residents in the county without a hospital or an emergency room.

A multimillion-dollar pool of state money set aside to help struggling hospitals is about to run out, but South Carolina's Medicaid agency's director says he still wants find ways to improve health care access in the state's rural areas.

A new source of state money, set aside in this year's budget, should help. While the new policy doesn't cap how much the state may spend, it will allow the S.C. Department of Health and Human Services to help pay for up to 25 percent of the capital costs associated with mergers between rural hospitals. 

Agency Director Joshua Baker said more of the state's rural hospitals are on the cusp of consolidating. Whether it happens this year or next, he said, the state Legislature is preparing for the eventuality. 

Baker threw out Williamsburg Regional Hospital and Lake City Community Hospital as possible candidates for a merger. Bamberg and Barnwell counties have both lost hospitals in recent years, and Baker said the money could be used to consolidate facilities in those areas, too. 

He said it will be key to consider local input in deciding how to keep health care in place.

"It’s not just what is desired, it is what is possible and what is sustainable," he said. "We would prefer that the community get there organically."

The new pool of money is part of the S.C. Rural Hospital Transformation Program, created to fortify rural hospitals as they face difficult circumstances.

The number of hospitals in rural communities has dwindled in recent years. Their profits have been squeezed as patients move away or seek care at other facilities, such as ambulatory centers. Insurance companies have also been pushing their members to look beyond hospitals for care. Rural hospitals also have less ability to negotiate rates, and their patient populations are generally older and sicker.

Jan Probst, director of the S.C. Rural Health Research Center at the University of South Carolina's Arnold School of Public Health, cautioned that mergers between large and small hospitals may not always be the best solution.

Some research shows that bigger hospitals, or hospitals that are acquired by out-of-state companies, can lead to higher costs for patients.

"When big firms buy smaller hospitals, you’re being managed by people who aren’t part of your community," Probst said. "They see you as a resource to be exploited."

Regardless, mergers may not be enough to keep pace with the number of hospital closures, Bloomberg recently reported. Hospitals have been closing at a rate of about 30 a year, according to the American Hospital Association.

Eight percent of 6,000 U.S. private and public hospitals are at risk of closing, according to Morgan Stanley analysis.

The 12 to 18 months should see an increase in shutdowns, Vikram Malhotra, a Morgan analyst, told Bloomberg.

Meantime, free-standing emergency departments are becoming more common.

Those facilities are better than nothing, Probst said.

That is what is happening in Fairfield County, where leaders decided they could no longer support the county-owned hospital there, WLTX-TV reported last year.

So they partnered with Columbia-based Providence Health to build a freestanding emergency department.

Now, the money the county had been spending on its own hospital will go to Providence, the TV station reported. 

It was originally former Gov. Nikki Haley's idea to create a pool of $40 million meant to help large systems combine with smaller ones. The program applies to facilities defined as "critical access hospitals." They must be in counties with decreasing populations.

The program is tailored to help hospitals try different models. Many have found relying on inpatients for revenue has not worked well.

Each project was eligible for $4 million. The bigger hospital had to make a 10-year commitment to the rural community. 

Baker said the last of the $40 million will likely be used this year, with two more rural hospitals seeking to use the funds. The director said those plans are still being drafted.

The $40 million fund wasn't a lifesaver for every community. Under Haley's leadership, at least three rural communities, including Bennettsville, Bamberg and Barnwell, saw their hospitals close. 

A priority for Baker's agency is making sure emergency services are available everywhere, he said.

"We will continue to play a role, to the extent that we can, so that those services remain available," he said.


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Reach Mary Katherine Wildeman at 843-937-5594. Follow her on Twitter @mkwildeman.