One of three hospitals in Kansas owned by EmpowerHMS announced Thursday it has closed its doors immediately, saying revenue hasn't been enough to cover payroll.
The board of directors of Oswego Community Hospital, located in Oswego in the far southeast corner of the state, announced the decision in an emailed statement. Included in the hospital's closure, according to a Facebook post from the hospital's page, were the Oswego Community Clinic and the Chetopa Community Clinic.
Among the reasons cited by the hospital for its failure was the decision by Kansas legislators and leaders not to expand Medicaid.
"Like many rural hospitals across the country, we have struggled to remain open despite the many external and internal challenges that are no different from the ones that adversely affect all rural and critical access hospitals across the country," the email said. "At Oswego, we have weathered low patient volumes; high number of uninsured patients; low reimbursement rates; difficulty in getting payment from private insurance providers; low Medicaid and Medicare rates; and the state’s refusal to expand Medicaid.
"The trickle of low revenue stream we have generated has not been enough to cover payroll, let alone to meet all of the other costly expenses needed to operate and maintain a hospital. As such, the hospital’s budget has had to be supplemented on a daily basis in order to stay open. The monies invested in the facility have unfortunately not been enough to make it financially viable for the long term."
The hospital is owned by EmpowerHMS, a Kansas City-based company that is part of The Empower Group. Empower has come under fire as its rural hospitals nationwide have struggled to pay bills, including falling behind on utility payments and employee paychecks. The other two hospitals in Kansas are Horton Community Hospital and Hillsboro Community Hospital.
The issue of expanding Medicaid has been raised as other rural Kansas hospitals have closed in the past few years. Those closures included Mercy hospitals in Fort Scott and Independence.
“Once again, we see the consequences of failing to expand Medicaid," Gov. Laura Kelly said Thursday in a statement. "Another Kansas hospital, this time in Oswego, has closed its doors. Studies show about 30 percent of our state’s hospitals are considered financially vulnerable. In small communities across our state these facilities are at serious risk of closure.
“Just by expanding KanCare, the state’s Medicaid program, we can help keep these important facilities open and provide affordable health care to 150,000 more Kansans — no matter where they live. It is time to put politics aside and do what is best for the families and communities of Kansas.
“I look forward to legislators following through on their pledge to move our agenda through the committee process and allow for a full floor debate on our Medicaid expansion proposal.”
Rep. Dan Hawkins, a conservative Wichita Republican who is House majority leader, said blaming the lack of Medicaid expansion is a great narrative that is "just ridiculous" in reality. He pointed to the Fort Scott closure.
"If you’re losing $15 million, we give you $2 million, you’re going to stay open?" he said. "You can blame it on Medicaid expansion, but Medicaid expansion is not going to save hospitals. It’s just not."
Hawkins said hospital use has shifted over the years, and that has had an effect on revenue
April Holman, executive director of the Alliance for a Healthy Kansas, disagreed with the idea that Medicaid expansion wouldn't be a significant factor in saving hospitals.
"There are a number of issues in rural health and for almost all of them, Medicaid expansion would play a role in helping to improve the condition," she said, adding that "one of the few benefits" of being one of the last states to expand Medicaid gives Kansas officials plenty of data and experiences to consider from other states
"Rural hospitals in non-expansion states, such as Kansas, are six times more likely to close than rural hospitals in states that have expanded Medicaid," she said. "I don’t think that it will fix all of the problems, but I think it will help to fix most of the problems. It will be a contributing factor in alleviating financial difficulties in individual families, in rural hospitals. It will help to strengthen communities."
Brock Slabach, vice president of member services for the Kansas Rural Health Association based in Leawood, testified this week in front of the Kansas House rural revitalization committee on Tuesday about this issue. He said the data tells the story.
"Forty-six percent of hospitals nationwide have a negative operating margin," Slabach said. "Kansas has the notoriety of having 86 percent of our rural hospitals with negative operating margins."
The median operating margin for Kansas hospitals is minus 7.6 percent, he said. Other non-expansion states have an average median operating margin of 0.2 percent. But for states that expanded Medicaid, the median operating margin is 1.5 percent, Slabach said.
"Those are very important numbers in terms of sustainability of these facilities," he said.
Cindy Samuelson, spokeswoman for the Kansas Hospital Association, said hospital closures are devastating blows for communities, for patients but also for economic infrastructure. One-third of Kansas' rural hospitals are considered financially vulnerable, she said.
"Closure of community hospitals is becoming an all too common occurrence in our state," she said. "The precise reasons for these closures vary from hospital to hospital, but one common thread in Kansas is our state’s failure to take advantage of KanCare expansion. Since the opportunity initially arose, Kansas has left more than $3 billion on the table that could have gone toward strengthening access to health care in our state. All rural and urban, large and small hospitals would benefit. If Kansas had taken advantage of the opportunity to expand KanCare, it would have meant an additional $84,000 (annual average) to Oswego Community Hospital."