Arizona rural hospitals committed to patients but will collapse without funding, hospital CEO says

The federal government shutdown has impacted a number of areas — including health care.

Democrats’ reason for not voting for the continuing resolutions to fund the government is based on concerns about Affordable Care Act premiums, but the shutdown itself is also affecting other funding.

The shutdown is impacting the Medicaid Disproportionate Share Hospital fund, which helps pay for care at hospitals that have a high percentage of low-income patients. The American Hospital Association says the shutdown means a loss of $8 billion in that fund nationwide.

Travis Udall is the CEO of Little Colorado Medical Center in Winslow. He joined The Show to discuss the issue, starting with whether overall the shutdown has affected his hospital’s operations so far.

Full conversation

TRAVIS UDALL: It has not. Those shutdowns don't affect the Medicaid payments, and so we've been able to operate as is. So everything's been good so far.

BRODIE: No delays or anything in getting payments or anything like that? 

UDALL: No. Some of the issues that we've been seeing have come from the congressional budget that was passed earlier in the summer, and so that's changed some of the way things are done, and we've seen some reductions there. But currently with the shutdown, no, we have not seen anything yet.

BRODIE: OK, are you expecting that you will at some point, if this drags on for much longer?

UDALL: I imagine that it could as pressure starts to put on funds and whatnot. So we'll see. We've kind of prepared for that, and we're in a good place financially to kind of weather that a little bit for a time being.

BRODIE: How do you try to plan for something when you're not maybe entirely sure what it is you're planning for exactly?

UDALL: That's every day of my life, Mark.

Travis Udall

BRODIE: Fair.

UDALL: I wake up and go, “I wonder what I should plan for today. I know it's coming, but I don't know what it is.” We know that things are volatile, just in health care as a whole, with insurance, Medicaid, AHCCCS payments, and so we invest in outpatient services that bring outside revenue sources into our hospital that cover the down times. So it's just a constant of the life that we live.

BRODIE: I'm wondering if some of that preparation also includes the fact that, barring any changes, there’s going to be a number of fewer people who have access to Medicaid in this state going forward, you know, starting sometime next year or the year after.

UDALL: Yeah, that is the projection. And so, like I said, we'll see. We're anticipating that kind of, but it's hard to tell, because I don't think they can really project what that's going to look like.

And so it's actually helped our small hospitals collaborate a little bit better. Hospitals tend, especially in rural areas, we tend to get siloed, and so we really don't know what's going on in the outside world. And so it really helps when we talk and collaborate with each other and try to understand issues going on in different communities, so it helps us make better decisions.

BRODIE: Do you have a sense of what percentage of patients who come through your doors are Medicaid patients?

UDALL: Yeah, about 70%.

BRODIE: Wow, that's a lot. 

UDALL: It is. Someone put us on a list of possible closures on the congressional list. We weren't aware of that, so we started getting phone calls and whatnot. Because we had such a high Medicaid utilization, they claimed that we were going to be in danger of closing, which was not true. We do have high utilization, but we also have a good payer mix.

And like I said, we have some outpatient services we've invested in that bring outside revenues in, so it helps balance out some of those shortfalls at times.

BRODIE: Well, I wonder, when you talk about other payers, you know, obviously the one of the reasons for this shutdown is that there's concern about the loss of subsidies for folks who get their insurance through the Affordable Care Act marketplace.

I wonder how concerning that might be if there are people who can't maybe afford their private insurance, who potentially go on Medicaid, or maybe just are not eligible for Medicaid, given the new restrictions, and then it's maybe more uncompensated care for you.

UDALL: Yeah. And that is a pattern that will probably take place. We serve a portion of the Navajo and Hopi reservation here. So we see a high number of Native patients that come in with their AHCCCS system, and that is not affected by these reductions.

One of the biggest challenges we have the small hospitals have is just the uninsured. Anybody can come to an ER, and if they have no insurance, they have no money, we're required to treat them, which we should. But then we lose on that. There we don't get compensated for that. And that's one of the biggest challenges we have. That's where we lose some of the most money.

BRODIE: Yeah, and I would imagine that as especially, in a place where such a high percentage of folks are on Medicaid, knowing that cuts are coming, that must be quite a concern, knowing that there might just be more free care that you have to offer to people.

UDALL: Correct. And so they're going to show up to the ER. And they know if they come to the ER, we are required to treat them, and we are dedicated to that, but that also puts us in a huge financial situation where we know that we're not going to get reimbursed for that.

BRODIE: Yeah, I'm wondering if you have been affected by reductions, or just flat out cuts to money for disproportionate share hospitals.

UDALL: Yes, we have. It was reduced by $1.7 million for the coming year.

BRODIE: And what has that meant for your hospital?

UDALL: Well, this year, it was kept in place. We received the amount. But next year, going forward, and so we've already started to make reductions in our personnel. You know, for most businesses, 70% of the budget goes into employees. So we've been trying to reduce some of our employee population, and we're going to prepare for that going in the coming year.

We haven't done that yet, but we're strategically looking at where we are going to make cuts and reduce positions, if we have to. And so we're approaching the cliff.

BRODIE: How deep do you think that cliff is? How big do you think that is?

UDALL: I don't know. My background is kind of unique. I come from an education background. I was actually a retired school superintendent in the White Mountains, and so I live that world every year with educational budgets.

And so what happens is, and they're actually doing it right now, they make the decision, they make the cuts, they announce those, they announce all the different changes, and then the adjustments start as the pressure comes back to the politicians and policy makers. Then they start to make adjustments.

So right now, I think the state and the federal government set up this rural health care fund that we have to apply for. We will be submitting our request for some of the projects, some of our costs, and it'll go through a vetting process, and we'll see if we receive some of that funding. We're one of the few hospitals that deliver babies. We still have an OB department, and that's another decision.

Most small hospitals have abandoned the OB services because it loses money. It's the lowest reimbursement program, and it has the highest liability insurance and costs. But this area, we call it the desert, the OB desert, and women have to travel nearly two hours to have a baby delivered, and so we've committed to try to make this work.

We're working with Indian Health as well. They've helped us to keep the program going. So those are some of the things that we face, but that's something that will come up on the table of whether or not we're going to eliminate that to save. We lose nearly a million dollars on delivering babies a year.

BRODIE: Wow, I would think that's a non-insignificant part of your overall budget.

UDALL: It is, but our commitment to these rural areas that are in such need, we find ways to make it happen and compensate for but eventually it will collapse if we cannot get enough funding to sustain it.