Rural Arkansas hospitals have fared better than those in surrounding states because of the state’s expansion of the Medicaid population, but they face increasing financial pressures that could lead to relationships with larger systems.
That’s according to directors of two health policy organizations: Dr. Joe Thompson, director of the Arkansas Center for Health Improvement; and Ray Hanley, president and chief executive officer of the Arkansas Foundation for Medical Care. Thompson foresees a nationwide crisis in rural healthcare financing occurring in the next five to 10 years, as Americans continue migrating from rural to urban areas. When that crisis occurs, 70 U.S. senators representing 35 states will have to respond.
Hanley said rural hospitals’ current financial state is “very shaky. I think a lot of those are hanging on by their fingernails.” The situation could lead to purchases by better-financed larger systems or to management partnership agreements. Thompson foresees more of the latter.
“I think you’re going to see some new innovation in network management is how I would say it, as opposed to mergers and acquisitions,” he said.
While 52 rural hospitals closed between January 2010 and November 2019 in surrounding states, only one closed in Arkansas — DeQueen Medical Center, which shut its doors last May. Those numbers come from the Arkansas Center for Health Improvement using information from the North Carolina Rural Health Research Program. Crittenden Regional Hospital, an urban facility, closed in 2014.
Thompson said Arkansas has avoided hospital closures because the state expanded its Medicaid population under the Affordable Care Act, otherwise known as Obamacare, reducing episodes of uncompensated care. The state created a program known then as the “private option” and now as Arkansas Works. It uses mostly federal dollars to purchase private insurance for lower-income adults. As of Dec. 1, the program covered 250,280 Arkansans. All of the surrounding states opted not to expand their Medicaid population except Louisiana, which also has had only one rural hospital closure.
However, the future of Arkansas Works, along with the Affordable Care Act, is uncertain. Arkansas under Attorney General Leslie Rutledge has joined a Texas-led lawsuit seeking to dismantle the entire federal healthcare law. A Texas judge ruled in 2018 that the previous year’s congressional repeal of a tax penalty for individuals without health insurance invalidated the entire law. Then in December, an appeals court agreed that the law’s individual mandate to purchase health insurance is unconstitutional, but it sent the case back to that judge to reconsider how much of the rest of the law should remain standing. An eventual U.S. Supreme Court decision seems likely.
The case is causing uncertainty in the healthcare industry. If the law were overturned, a fractured and divided Congress would need to create a replacement to provide clarity to the healthcare system. The chance of that happening is “slim to nil,” Hanley said.
“The only thing you have for certain right now for better or worse is the Affordable Care Act, and its fate is hanging in the balance before the court right now,” he said.
While the state is involved in one court case to overturn the ACA, it’s involved in another to defend Arkansas Works, one of its programs it created to administer the act. A federal judge last year blocked the program’s requirement, along with a similar one in Kentucky, that some members of the expanded population work or engage in other activities to maintain their benefits. An Appeals Court panel has ruled that the workforce requirement is unconstitutional.
Thompson said a number of states have work requirements that are less problematic legally. Nebraska, for example, provides dental benefits to recipients who work.
“I think you’re still seeing viable dialogue on the work requirement, but some folks are looking at it in a little bit more of a carrot than a stick approach,” he said. “So even if Arkansas and Kentucky’s got struck down, I think you’re still going to have work requirement options available to states.”
Hanley said the biggest trend in healthcare is the failure of the industry to control costs, which affects everyone. Out of pocket costs are a burden to patients and lead to some to avoid seeking care. Employers also face higher costs.
Hanley said the state has an “extremely unhealthy population.” According to the United Health Foundation, 22.7% of the state’s adult population smokes, and 37.1% of the population is obese. The state ranks 48th in both categories. Moreover, 13.9% of adults have been diagnosed with diabetes, ranking the state 46th. Use of e-cigarettes has become a major problem among young people. Arkansas is the number two state in prescribed opioids. According to the National Institute on Drug Abuse, providers wrote 105.4 prescriptions for every 100 Arkansans, which is nearly twice the national rate of 58.7. And Thompson said methamphetamine abuse is a bigger problem in Arkansas than opioids.
A growing issue is what Thompson called “ZIP code risk,” which he described as the “environmental contribution to your poor health that the healthcare system’s never going to solve.” Those involve access to clinical services, lower overall educational achievement, and the absence of a nearby grocery store.
“If you’re not affluent and you don’t have a relative that’s in the clinical system, I think navigation’s going to get tough,” he said.
One bright spot is the fact that the state’s two newly formed osteopathic schools will soon be increasing Arkansas’ supply of doctors if they remain in the state, Hanley said.
Editor’s note: This article first appeared in Talk Business & Politics annual State of the State magazine.