Give and Take: Federal Rural Health Funding Could Trigger Service Cuts

BIG SANDY, Mt. — The emergency department at Big Sandy Medical Center is a single room with a single curtain between two beds.

It’s one of several parts of the 25-bed rural hospital that needs renovation, former CEO Ron Wiens said.

He said the hospital, an essential service in the namesake town of nearly 800 in the state’s sprawling north-central High Plains, needs at least $1 million for deferred maintenance, including a failing HVAC system. But the facility struggles to pay salaries each month and can’t afford to make all the repairs, Wiens said.

Built by farmers and ranchers in 1965, Big Sandy Medical Center began with nine beds. Today, a similar community effort — donations and grants to plug financial holes each year — keeps it afloat.

Wiens, who recently left his post at the hospital, said he wants Big Sandy to be able to secure funding from Montana’s $50 billion federal Rural Health Transformation Program to renovate the hospital and direct payments to help secure its future. The state received more than $233 million in its first year of allocation.

But the hospital may not get the kind of help it was looking for.

Indeed, the five-year program focuses on new and creative ways to improve access to rural health care, not on directly funding services and renovations. And Montana is one of at least 10 states whose leaders say projects under the federal program could lead rural hospitals to cut services so they can continue offering emergency and other essential care.

Congressional Republicans created the fund as a last-minute sweetener to their One Big Beautiful Bill Act, signed into law last summer. The funding was intended to offset the disproportionate fallout expected in rural communities from the law, which is expected to reduce Medicaid spending by nearly $1 trillion over 10 years.

Montana’s request includes programs aimed at making it easier for rural residents to obtain medical care and lead healthy lives. For example, it says funding can be used to create community gardens, train paramedics to make house calls, open school-based clinics or set up mobile clinics in rural areas.

The request also states that rural hospitals in Montana may receive payments for implementing the recommendations, “including appropriately sizing inpatient services” to meet demand. In some cases, he says, right-sizing can mean “downsizing.” The state says hospitals will have a say and recommendations will be specific to each facility.

“That’s what puts all hospitals under stress, words like restructuring, reducing inpatient beds. Everyone is wondering, ‘What is this going to look like?'” Wiens said.

The Montana Department of Public Health and Human Services declined to answer questions about how it will conduct its rightsizing efforts.

A lifeline

Big Sandy cattle rancher Shane Chauvet doesn’t want services cut.

He credits Big Sandy Medical Center with saving his life after a flying piece of metal nearly severed his arm during a windstorm a few years ago.

“I looked, I saw it coming, and it went!” Chauvet called back.

His wife drove him to the hospital, where they banged frantically on the emergency room door as Chauvet’s blood pooled on the floor.

Due to the storm, staff worked on Chauvet without power or the ability to call a helicopter. He was then transported by ambulance 80 miles through heavy rain and hail to a larger hospital.

Chauvet understands the state’s plan doesn’t call for eliminating emergency care, but he worries cutting other services could lead to a downward spiral for the hospital and his city.

In Oklahoma, realignment of clinical services could mean “closing service lines,” depending on its application to the federal program. And in Wyoming, any facility that receives funding must agree to “reduce unprofitable, redundant, or nonessential service lines,” according to its rural health law.

Monique McBride, business operations administrator at the Wyoming Department of Health, said the department interprets right-sizing as helping rural hospitals provide essential services — such as emergency services, ambulance services and labor and delivery units — while maintaining long-term financial stability.

“This could involve limiting certain elective procedures that could be performed more affordably at higher-volume facilities. The main distinction here is urgent emergencies versus ‘shoppable’ services,” she said.

A new lease of life?

Seven of the ten states – Nebraska, North Dakota, Tennessee, Kansas, Nevada, South Carolina and Washington – where cuts to rural hospital services are on the table say they will help fund the conversion of hospitals to rural emergency hospitals. The newly created federal designation requires hospitals to suspend inpatient services and provides enhanced payments to help them maintain emergency and outpatient care.

At least 15 additional states wrote that they would use federal funding to scale, evaluate or adjust services – which could involve adding or removing services, or transitioning them to a telehealth or outpatient care setting.

Brock Slabach, chief operating officer of the National Rural Health Association, said, “Rural hospital administrators are rightly concerned that this funding will not go where it was intended.

He said cutting services that were losing money could backfire in the long run. For example, he said, stopping care during labor and delivery could drive more people out of small towns, further reducing patient numbers and hospital revenue.

The type of hospital services states will evaluate matters, said Tony Shih, senior adviser at the Commonwealth Fund, a nonprofit organization focused on making health care more equitable.

“If the end result is that high-margin services are taken away from local hospitals without anything being given in return, that can be financially damaging,” he said.

Shih noted that states’ plans to add more outpatient care could prove beneficial for patients. It will take time to know which states are helping stabilize rural hospitals, he said.

Rural hospital leaders say they know what changes will keep their facilities open and that states should not suggest or impose service reductions or other changes on their behalf.

Josh Hannes, who oversees rural health policy at the Colorado Hospital Association, said “top-down” guidelines won’t work.

He said association members believe they can achieve efficiencies and are eager to collaborate. But “a state agency should not make these decisions,” he said.

Hannes said members are concerned that Colorado’s plan to classify rural health care facilities as “a central node, spoke or telehealth node” could force service cuts. The classification will help determine “which services are sustainable locally and which are better delivered regionally or via telehealth,” according to its program application.

Spokespeople for the Colorado and Oklahoma health departments said no facility would be forced to end services. But Oklahoma spokeswoman Rachel Klein said some facilities may choose to do so as part of a broader effort to ensure they meet community needs while remaining financially stable.

“A hospital could shift some services to a nearby regional provider with a higher patient volume and specialized staff while expanding other local services,” such as primary, outpatient or community care, she said.

Wiens and Darrell Messersmith, CEO of Dahl Memorial Hospital in the southeastern Montana town of Ekalaka, said they fear the only way for hospitals to get their share of funding is to cut services or become rural emergency hospitals that don’t offer inpatient services.

“I would hate to see things evolve into a packing and shipping facility,” Messersmith said. “Right now, we’re functioning pretty well as an inpatient facility. »

Not all Montana health officials are worried.

Ed Buttrey, president and CEO of the Montana Hospital Association, said he believes his state’s plan could help rural hospitals become financially viable and survive Medicaid cuts. Buttrey is also a Republican lawmaker.

Chauvet, the Big Sandy rancher, said his views on whether isolated towns like his should have a hospital were forever changed because of his accident.

“I always said, ‘Oh, it’s nice to have them,’ but now I look at the hospital and say, ‘This is essential for our community,'” he said.