Could a Sublette hospital work?

by Derek Farr

With the Rural Health Care District (RHCD) cutting budgets to keep in the black, it’s an unlikely time to discuss building a hospital.

And with hospitals from Idaho to New York cutting staff and slashing operating hours, suggesting such a facility right here in Sublette County might seem outlandish.

There are major difficulties. Perhaps no segment of the health-care industry is more challenging than rural health.

But one rural hospital in Hettinger, N.D., has etched out extraordinary success; unlikely as it sounds, it has expanded its services while many others have struggled to keep their lights on.

Is it possible the Hettinger health-system template could be used in Sublette County?

Hettinger hospital

Hettinger is a rural town of 1,300 located deep in the agricultural plains of southwest North Dakota.

More than 150 miles from Bismarck, the nearest “big city,” Hettinger is the Adams County seat – population 2,600.

The town is home to the West River Health Services (WRHS), “a nationally recognized model rural health-care delivery system,” according to its Web site.

The centerpiece of the WRHS system is a 25-bed hospital with a 24-hour emergency room, an intensive care unit, a stress lab and a birthing unit among others.

WRHS is more than a hospital; it also includes six community clinics, a foot and ankle clinic, eye center, ambulance service, pharmacy, fitness center, long-term care center and an assisted living center.

The system is staffed by seven family practitioners: one general practitioner, two internal medicine/geriatric physicians, a general surgeon, one radiologist, one optometrist, a podiatrist and one pediatrician.

The system also employs a full complement of nurses, physician assistants, paramedics EMTs, janitors, maids, maintenance personnel and administrators.

Why in Sublette County?

The most obvious reason to build a hospital is to increase health services. While both RHCD clinics are almost universally applauded for their exceptional quality care, many county citizens would benefit from additional health services such as birthing, advanced chemotherapy and basic surgeries.

That aside, two other arguments for a hospital address the county’s attractiveness to elderly citizens and its need for alternative economic infrastructures.

Elderly people often gravitate toward a community with an advanced heath facility. It is possible a Sublette hospital would incentivize an older demographic to either move here or to not move away. That in turn may provide a hospital with a much-needed financial base.

Another argument for a hospital relates to the county’s post-boom economy. When the last gas well produces the last cubic foot of Sublette methane, a hospital could offer the infrastructure for high-paying, high-quality jobs. The Hettinger hospital alone employs around 250 people, many of whom earn lucrative salaries.

Funding

The biggest hurdle is the price of such a facility. Not only are the buildings, equipment, and supplies expensive, staff salaries perpetually consume a pretty penny.

The WRHS pays all its bills without taxpayer money. Instead, it is a foundation (WRHSF) consisting of three 501C3 not-for-profit corporations.

With an annual operating budget of $26 million, the health system’s funds come from medical service fees, private donations and a $4-million endowment.

“Like most hospitals, our fees don’t cover our cost entirely,” said outgoing WRHSF Fund Development Officer Allen McIntyre. “That’s why philanthropy is so important.”

The hospital is so adept at collecting donations, they recently completed a fundraising campaign for an $8-million extension. In the last two years, the foundation raised $1.5 million.

One key to the foundation’s success is its longevity. The hospital system originally opened in 1950. The current facility began operation in 1984. The hospital building was constructed for about $250,000 – a drop in the bucket by today’s standards.

Another key is the hospital’s service area. While Adams County has a population of 2,600, the WRHS services a 25,000-mile area consisting of 25,000 people. It uses its outlying clinics to attract a bigger patient base and that base tends to be older.

Factors

While there are plenty of factors keeping the Hettinger hospital flourishing, two stand above the others.

The first is demographics. Half of Hettinger’s patients are on Medicare, which becomes a financial base. And to accommodate those patients the hospital is a Critical Access Hospital (CAH). That designation allows a hospital to remain viable by caring for Medicare patients.

Medicare margins are lowest for small, rural hospitals. For example, if a health system provides $1 of care, Medicare pays 80 cents.

To combat that WRHS has been granted the designation of CAH and Rural Health Clinic (RHC). Both programs are designed to provide cost-plus-based reimbursement for services.

Those types of programs are fundamental to WRHS’s financial success, according to CEO Jim Long.

“One thing we do try to take advantage of any type of federal designation or program that is a benefit to us,” he said.

The reimbursements are particularly beneficial with an aging population. Within an hour’s drive of Hettinger, there are about 200 nursing home beds.

Volume game

Medical clinics need patients to stay afloat financially. Without a critical mass of patients, a health facility cannot remain solvent.

The WRHS coverage area provides enough patients to break critical mass. The hospital does about 1,000 surgeries every year. In the past 11 months the hospital has recorded 1,473 emergency-room visits, 40,000 clinic encounters and 839 ultrasounds.

But those numbers could not be matched in the Upper Green River Valley.

While 50 percent of WRHS’s patients are on Medicare, the number for RHCD is 16 percent. And while the WRHS has 200 nursing home beds within an hour drive, the number for RHCD is closer to 100.

“This is a volume game,” said RHCD’s Dr. Jim Quirk. “That’s the problem with rural medicine; the volumes never really add up to a viable business.”

Quirk says a standard model for a birthing unit requires 100 births a year. In Hettinger, that hospital delivered 91 babies in the last 11 months. In Sublette County, the number wouldn’t come close.

One problem is that births require anesthesiologists who make up to $250,000 a year. Quirk pointed to the Red Lodge, Mont., hospital that has about 50 births a year.

“It just doesn’t make sense to have somebody on the books and use them one time a week or less,” he said.

A certain number of patients are required to sustain any service, but in the case of a hospital, prices rise dramatically. The funds required to staff a hospital 24/7 with trained medical personnel and kitchen, laundry and cleaning crews are enormous.

“There is a huge overhead for small hospitals,” Quirk said. The RHCD is already struggling with expenses tallied at $17 million.

And right now the numbers don’t indicated a new facility would be feasible.

According to Quirk, the Pinedale Clinic had 1,393 patient contacts in February. Quirk estimated they transported out less than 10 percent of those contacts. In other words, more than 90 percent of the patient contacts were handled by existing facilities.

“We take care of a majority of what walks through our door,” he said. “And we ship the rest where they need to go.”

For those whose condition required additional care at a large facility, Quirk said, some would be transported regardless of services offered by a small hospital.

More numbers

Doctors are people too, and the more practice they get with a particular ailment, the better they become at treating it.

Quirk argued that even simple surgeries require a critical mass of patients.

And if you suffer a complicated medical problem, Quirk stated you’re better off in a large facility with doctors who specialize in that particular problem.

Quirk said right now the RHCD is operating under the available business model and “an exceptional care model.”

That doesn’t mean Quirk rejected the idea of a new hospital outright. He simply thinks it’s a bit soon.

“Do I think that a hospital is in Sublette County’s immediate future?” he postulated. “No.”

He said in 10 to 15 years with the same growth pattern the community might be ready.

But that’s under current models. One thing is for certain: Not all health districts are equal. Hettinger proves that.

And all locations aren’t equal.

“We are in the most remote medical location in the Lower 48,” Quirk explained. “I feel pretty comfortable saying that.”

Health care is a top issue across the nation. More people are requiring more care. And as the price of care increases, the debate about facilities and services will continue to escalate.

Luckily, Sublette County has a rural health care system to study if someday its population, economics and timing are right.