Greenwood Leflore Hospital has put a pencil to its efforts to secure additional funding from the government’s two main insurance programs.
If the hospital is successful, it could bring in at least $11 million more a year — possibly enough to keep the hospital in operation indefinitely into the future.
That’s the judgment of interim CEO Gary Marchand. In an update to the hospital’s employees and medical staff this past week, he more fully outlined the potential impact of the hospital’s efforts to secure additional Medicare and Medicaid funds.
Roughly half of the hospital’s patients are on Medicare, the insurance program for the elderly, and another quarter of the patients are on Medicaid, which provides coverage for the poor and disabled. Hospital officials say both insurance programs currently reimburse at rates that are less than the cost of the care, and there are not enough private-pay patients to overcome the difference.
The lopsided payer mix along with other factors, such as the region’s declining population, have caused the hospital to lose millions of dollars annually for several years. That includes a $17.1 million loss in fiscal year 2022 that wiped out the last of the hospital’s steadily declining cash reserves and pushed it to the brink of insolvency once a proposed long-term lease to the University of Mississippi Medical Center fell through.
Pivotal to the Greenwood hospital’s retooled survival plan is being designated as a “critical access hospital,” which would increase its Medicare reimbursement rate. According to Marchand’s memo, hospital officials estimate the designation would produce an additional $11 million to $14 million a year.
To be eligible, the 208-bed hospital will be officially mothballing as of Wednesday 163 acute care beds and 10 rehabilitation beds. The hospital has not used its full bed capacity in decades. Most recently, it has been staffing only up to 20 inpatient beds as one of its cost-cutting moves. The reduction of more than 80% of its licensed beds for an indefinite period of time will leave the hospital with 25 acute care and 10 rehabilitation beds, which are within the maximum threshold for a critical access hospital.
The Greenwood hospital must also secure a waiver to the regulation that says a critical access hospital cannot be within 35 miles of another hospital. There are at least three hospitals located less than 35 miles from Greenwood’s. The hospital is working with Mississippi’s congressional delegation — specifically Rep. Bennie Thompson and Sens. Roger Wicker and Cindy Hyde-Smith — to try to be granted that waiver.
Separately, the hospital is hopeful that an initiative, spearheaded by the Mississippi Hospital Association, to change how Medicaid supplement payments are calculated will be successful. It appears, however, that this potential new pot of money will be substantially less than originally anticipated.
Currently, the supplement payments are calculated based on the difference between Medicaid and Medicare reimbursements. The proposed new formula would produce a more generous result by instead comparing the difference between the amount Medicaid reimburses and the amount reimbursed by an average commercial policy. The federal Centers for Medicare and Medicaid Services, which regulates the two insurance programs, recently approved such a change for Louisiana.
Mississippi’s Division of Medicaid originally projected the change could produce up to $450 million in additional funding for the state’s hospitals, but that has since been reduced to less than $100 million, according to Richard Roberson, general counsel for the Mississippi Hospital Association. Greenwood Leflore Hospital’s cut, extrapolating from earlier projections provided by Marchand, would be less than $1 million annually.
Neither of these long-term prospects, even if they prove successful, is expected to kick in before July. Marchand has previously said it could be mid- to late summer before the hospital learns whether it has been approved for “critical access” designation.
That leaves the hospital, which is jointly owned by Greenwood and Leflore County, striving to stay afloat in the interim. The city and county have committed so far about $4.25 million in cash or free utilities to buy some time. The hospital has filed a claim for $6 million with the Federal Emergency Management Agency for expenses related to the COVID-19 pandemic. And the Legislature is looking at setting aside $70 million to $80 million in an emergency grant pool for the state’s struggling hospitals. If enacted into law, that legislation could produce between $500,000 and $1 million in a onetime payment for the Greenwood hospital, according to Marchand.
For now, the hospital is in a waiting game to see what transpires at the Capitol.
When asked how much additional time legislative action might buy the hospital, Marchand did not venture a guess.
“No absolutes until the session is over,” he said in an email.
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
