Rural South Carolina hospitals close, more threatened

Rural South Carolina hospitals close, more threatened

Statehouse Report
February 12, 2016

By Andy Brack, editor and publisher |

Looking at South Carolina’s rural hospitals generally isn’t a pretty picture. Since 2010, four have closed. Another 10, says one expert, are seriously threatened.

Just last week came word that the Williamsburg Regional Hospital in Kingstree suspended operations after fall floods made more than half of the hospital unusable. Plans call for modular buildings to be in place in just a few weeks, pending state approval, but insiders say the “temporary suspension” might just be nice talk that is a prelude to outright closure, especially if the cost for the modular units is excessive.

Rural hospitals like the one in Kingstree have been threatened for years thanks to out-migration of residents to urban and suburban areas, low tax bases to pay for costs, a large number of poor and uninsured residents, and national changes in health care that prioritize outpatient care over hospital stays.

Since 2010, some 67 rural hospitals, not including Williamsburg County’s, have closed in the U.S. In South Carolina, that number includes hospitals in Marlboro and Bamberg counties, as well as Southern Palmetto Hospital in Barnwell. In January, it announced closure after losing $2.5 million last year.

According to Becker’s Hospital CFO, rural hospitals in states like South Carolina are twice as likely to close if the states did not expand Medicaid programs after passage of the Affordable Care Act. When that law passed, the state was offered $11 billion over seven years to expand Medicaid programs to pay for health care for those living in poverty who were not children and who were younger than 65 but without affordable access to care. That translated to more than 200,000 residents.

Medicaid expansion is a lifeline

Three years ago, the S.C. Hospital Association warned state lawmakers that failure to expand Medicaid under Obamacare could hurt rural hospitals, which were already under threat mainly because of dwindling revenues and Medicaid reimbursement dollars.

By adding the poor to the rolls of those covered by health insurance, rural hospitals would get a vital lifeline of operating revenue, a steadier stream of money that would help them survive, SCHA officials said.

SCHA vice president Rozalynn Goodwin today says while South Carolina has missed the initial years of federal Medicaid expansion money worth billions of dollars, there’s probably $9 billion still on the table. More importantly, legislators who passively listened a couple years ago to the warnings are now actively hearing them from constituents who are fed up that they can’t qualify for Obamacare because they are too poor. [The way that the law is written, there’s a “coverage gap” that keeps people in poverty from getting Obamacare unless a state expands Medicaid to cover them. As a result, they’re still uninsured.]

“They’re paying more attention now,” Goodwin said of state lawmakers. In part, that’s because states with similar values, such as Arkansas and Kentucky, were able to expand. Since they did, they’re seeing big savings in state funds. For example, without Medicaid expansion, South Carolina pays 100 percent of costs of care of thousands of inmates. But with expansion, they’re generally covered under Obamacare and the state only has to meet a small match. States that have expanded Medicaid to allow those in poverty to be covered also are seeing cost savings in care for pregnant woman and those who are disabled, she said.

Health economist Lynn Bailey of Columbia added, “The Medicaid expansion money gave them [rural hospitals in other states] an operating revenue lifeline because in rural areas, they could cover their operating costs. And when you denied expansion in those areas [in South Carolina], those folks lost any hope of ever being able to generate sufficient revenues to cover their operating costs.”

Rural hospital closures hurt rural communities

Rural hospitals are economic drivers of smaller areas, Bailey said. To lose them is the economic equivalent of cutting off your nose in spite of your face.

“The value as an economic entity of a hospital is every bit as important as landing the new super WalMart or the automobile parts plant that’s going to feed Volvo,” she said. “You’ve got to have a health care facility and when you let the hospital close — when the horse leaves the barn, the barn is going to fall down.”

SouthernCarolina Regional Development Alliance President and CEO Danny Black says losing a hospital, as has happened in two of his counties, is a devastating blow to a community.

“It raises fear for the elderly — that they can’t get to care when needed.  Same for emergencies,” he said. “It hurts my job [to generate economic development] by raising concerns of existing industry, but may turn away projects looking at a community.”

Bamberg County Council member Trent Kinard said most people in his area headed out of the county for in-patient care before closure. But when his community’s 59-bed hospital in 2012 shut down, there was a major impact.

“It has affected our poorer population that has to travel further and now they have to sit in a hospital by themselves because family can’t come to visit,” he said. “We took a huge hit to employment when the hospital closed.”

What’s next?

State lawmakers could still vote to accept federal Medicaid expansion dollars, although they’ve missed out on at least $2.7 billion so far. They’d also need to sway Obamacare opponent Gov. Nikki Haley to accept the funding. If legislators were to eventually take the expansion funds to cover those in poverty, the match the state would be required to pay would be capped at 10 percent, compared to 30 percent for regular Medicaid funds.

While Goodwin says lawmakers are listening more, Kinard is more emphatic: “We must get our members of the House and Senate here in South Carolina to see the need for emergency care here in rural South Carolina. I understand that many rural areas are unable to sustain a fully operational hospital but with the closing of Bamberg — and now Barnwell — some residents will be forced to wait 30 to 45 minutes for life-saving care.”

Bailey points a finger of blame at Republican Haley, who has staked out a political position to oppose federal Medicaid expansion as a way to oppose Democratic President Barack Obama.

“Nikki Haley has, like just about every other Republican governor, abandoned rural hospitals — walked away,” she said. “We could have done some policy things at the regulatory level to ease the burden on rural hospitals. But we didn’t.”

Some GOP governors, Goodwin pointed out, have accepted Medicaid expansion dollars. Example: Rising GOP presidential candidate John Kasich, the governor of Ohio.

“He thought it was a moral imperative,” Goodwin said, adding that Ohio saw numerous state tax savings by accepting federal dollars for Obamacare.

Bailey, who said at least 10 other rural hospitals are threatened, emphasized state officials needed to recognize that saving rural hospitals through regulatory changes and things like accepting the Medicaid expansion dollars is an economic decision as much as a health one.

“If you’re willing to do a tax deal to get and maintain a manufacturing plant, you ought to be willing to do that for a hospital.”