The first Chapter 9 case to be filed this year was the Jack County, Texas Hospital District (d/b/a Faith Community Health System – case # 20-40858).  The filing had nothing to do with the COVID-19 virus but rather a dispute over claims Blue Cross.  However, the docket contained a very interesting report from the Chartis Group that gives a picture of the financial pressures in rural healthcare for those readers interested in critical access and community hospitals.  

The Jack County hospital, northwest of Fort Worth, employs 250 people and is one of the larger employers in the county.   The county is home to about 9,000 and Jacksboro, the county seat, has a population of 4,500.  About seventeen percent of the population is over 65.  The facility has 17 beds and serves as an acute care hospital for the area.  The system also has three clinics in Jacksboro, Bowie and Alvord.  The facility is relatively new, having opened in 2015, which replaced a smaller, limited (“and structurally deficient”) facility dating back to the 1930’s.  Regions Bank owns the hospital revenue bonds secured by a deed of trust on the facility.  The docket mentions that the bonds exceed the value of the facility. 

A nearby hospital in Montague County has suspended operations. In Wise County the Bridgeport hospital shut down  The next closest hospitals other than Jack County are 45 miles and 50 miles away in Weatherford and Wichita Falls, about an hour away.  According to the filing, the hospital provides “full range of essential options of treatment for elderly, indigent and charity patients.” But for the Hospital, there would be no obstetrics in the region.

The Chartis report mentions that the risk of closure in Texas rural hospitals is among the highest in the country.  Rural hospitals in general are vulnerable to closing.  Since 2010, according to the Chartis Center, 120 facilities have closed across the country.  (The National Rural Health Association counts 124 closures since 2010.). Twenty were in Texas.  Beyond actual closure, Chartis classifies 41 of 152 Texas rural hospitals as “most vulnerable” to closure and 77 or 51% as “vulnerable” to closure.  Chartis also found that facilities were more vulnerable to closure in states that did not expand Medicaid under the Affordable Care Act than those states that did expand eligibility.  

According to the report, “States in the Southeast and Lower Great Plains have borne the brunt of the closure crisis.” Since 2010, these are some of the closure statistics:

The COVID-19 pandemic has exacerbated the fiscal plight of rural hospitals.  Discretionary services such as physical therapy, diabetes check-ins and routine care were stopped with the shutdowns, depriving rural hospitals of their bread and butter.  Texas re-opened last week, which may help rural hospitals begin discretionary services again.  

When I started taking notes for this commentary a month ago, there were no COVID-19 cases in Jack County. Today, there are four confirmed cases.  Neighboring Clay County to the north, has three cases.  Northeast of Jack, Montague County has nine cases and one death, while Wise County to the east of Jack (closer to the Fort Worth metro area), has 36 cases with two deaths.  These figures are from the John’s Hopkins University tracker which is updated hourly.  We suspect that the number of cases is light in these rural areas, since testing is not readily available and it is unlikely someone would drive an hour to the nearest large hospital to be tested.  From the John’s Hopkins map, it appears that the virus has been moving slowly westward from the Dallas-Fort Worth metro area.  

Professors at the University of Texas Center for Infectious Diseases in Austin put out a paper in April, the “Probability of current COVID-19 outbreaks in all US counties”.  In it, authors commented: “The chance of an unseen outbreak in a county without any reported cases is 9%. A single reported case suggests that community transmission is likely.” In their map of Texas, Jack County has the second highest probability of an outbreak compared with more densely populated areas such as Dallas/Fort Worth or Houston.  Will the county hospital be able to manage an outbreak? 

This is but one example of the healthcare situation in one part of Texas.  However, the UT report shows a map indicating the outbreak probability for the whole US.  Except for a wide strip of counties through the center of the country, most other counties fall into the highest risk categories.  

Pat Schou, President of the National Rural Health Association gave a live presentation on C-span April 8.  She invited call-in questions.  A few anecdotes from other parts of the country emerged:

• Hospitals have furloughed staff because COVID-19 patients were not showing up at the beginning of April.  They were also laying off people because they could not do elective surgery. 
• Many hospitals have less that 50 days cash on hand but were not able to apply for business loans.  The Paycheck Protection Program is open to rural healthcare providers and the Small Business Association is holding webinars in each region to promote the program.  
• These points were underscored by callers from both Pennsylvania and New York.
• Rural counties are ill-equipped to handle telemedicine and the libraries are closed.

The Cecil G. Sheps Center for Health Services Research at UNC produced an “infographic” detailing the categories of rural hospitals along with median days cash for each category (such as rural Prospective Payment System, Medicare Dependent Hospitals, Sole Community and Critical Access Hospitals).  For those wishing to go further, Sheps NC Rural Health Research Program produced the following paper: “Understanding the Broader Context of Rural Hospitals and Profitability” and has extensive further bibliography on these topics here.  

At this writing, the House passed a $3 trillion HEROES Act which would add $100 billion more for hospitals through the CARES Act Provider Relief Fund.  Odds for passage of this bill are slim to none, but some think the healthcare provisions may be dealt with in smaller, healthcare focused legislation.