“Significant regulatory changes brought about by the Affordable Care Act and payment reform at the federal and state level make it increasingly difficult for small rural hospitals to remain independent,” Caverna CEO Alan Alexander said in a news release.
In a merger expected to be complete by year’s end, not-for-profit Caverna will join not-for-profit Commonwealth Health Corp., the parent company of The Medical Center at Bowling Green and will change its name to The Medical Center at Caverna, Alyssa Harvey reports for the Bowling Green Daily News.
Caverna, a 25-bed, critical-access hospital, was named one of 15 rural hospitals in “poor financial health” by State Auditor Adam Edelen in a report last year.
The report said rural hospitals struggle with high administrative costs associated with Medicaid managed care, higher-than-average penalties from Medicare for readmitting patients within 30 days, managed-care policies related to emergency room visits that often didn’t cover the cost of care, and ongoing complaints of slow, low or denied payments from the managed-care organizations.
MCOs in Kentucky signed new contracts with the state this year that addressed many of these issues, but these new contracts only went into effect July 1.
Edelen’s report said that to survive, some hospitals would have to change their business models, and merging with larger hospitals could be an option.
Rural hospitals in Nicholas and Fulton counties have closed in the last year.
“I see it as a trend. The industry is going through some very rapid and massive changes,” Alan Palmer, director of marketing at TriStar Greenview Regional Hospital, told Harvey for a separate article. “A lot of pressures are being put on smaller or rural facilities. It’s a matter of survival and these smaller communities believe they deserve to have a health care facility in their communities.”
Palmer noted that HCA, Greenview’s parent company, has a spinoff company called LifePoint Health that owns rural hospitals.
LifePoint announced earlier this month that it had acquired Fleming County Hospital, which had been listed in “fair financial health” in Edelen’s report.
Fleming County Judge-Executive Larry Foxworthy, who sits on the hospital board as a non-voting member, told Christy Hoots of The Ledger Independent in Maysville that the facility had struggled since it was built in 2008.
“Reserves are down,” Foxworthy said. “Unless something is done, the hospital may go bankrupt. We don’t want to see that happen. We need to make sure the hospital stays open and has a presence in Fleming County.”
LifePoint owns nine other Kentucky hospitals: Bluegrass Community Hospital in Versailles; Bourbon Community Hospital in Paris; Clark Regional Medical Center in Winchester; Georgetown Community Hospital in Georgetown; Jackson Purchase Medical Center in Mayfield; Lake Cumberland Regional Hospital in Somerset; Logan Memorial Hospital in Russellville; Meadowview Regional Medical Center in Maysville; and Spring View Hospital in Lebanon.
The Daily News reported that T.J. Samson Community Hospital in Glasgow, a nonprofit that has chosen to not merge with a larger hospital, has cut between 39 and 49 employees and made salary adjustments in all departments in 2014. It also offered about 45 employees early retirement, of which about 24 people, including then-CEO Bill Kindred, accepted.