If Greenwood Leflore Hospital is going to stay viable for the long term, it will require both government insurance programs — Medicare and Medicaid — to start paying closer to what it costs to provide the care, says the hospital’s interim CEO.
“There’s a huge mismatch going on right now in the health care industry with respect to revenues and costs,” Gary Marchand said Tuesday during a presentation to a joint meeting of the Greenwood Rotary and Exchange clubs.
Marchand, in a nearly 50-minute program, covered much of the same ground as he has previously about the circumstances that led to the Greenwood hospital’s financial crisis and the avenues it is pursuing to try to stay open.
Although the Greenwood hospital was losing money even before the arrival of COVID-19, it was the pandemic that has pushed it perilously close to insolvency, according to Marchand.
During the initial 15 months of the pandemic, the hospital was able to avoid tapping into its reserves, thanks to government relief funds, mostly from Washington, that totaled about $34 million.
In June 2021, the hospital still had $20 million in the bank, Marchand said. Then came the delta and omicron waves, and to make ends meet, the hospital began spending down its reserves, expecting that more relief would be coming from Congress and the Mississippi Legislature. Neither materialized.
“We’re finding out late in the game that there’s no more relief coming,” he said. “That’s really a huge part of the problem that we’re trying now to work out of — the fact that we used those cash reserves to provide current services.”
The Greenwood hospital has tried to buy time with job cuts and the shutdown or curtailing of services, but the fundamental problem remains, Marchand said. Neither Medicare nor Medicaid pays what it costs the hospital to provide care to the elderly, poor or disabled covered by one or both of the government insurers.
Medicare covers only about 85% of the treatment costs and Medicaid 95%, according to Marchand. With three-fourths of the hospital’s patient mix covered by these two programs, there are not enough patients with higher-paying commercial insurance to make up the difference, he said.
“Seventy-five percent of the time Greenwood Leflore Hospital is caring for a governmental patient. We are looking for a governmental solution.”
Marchand said he does not expect the Mississippi Legislature to expand the Medicaid program, as provided under the federal Affordable Care Act, to cover the so-called “working poor.” Mississippi is one of 11 states that have refused to expand Medicaid, and Gov. Tate Reeves and the majority of the Republican leadership at the Capitol remain firmly opposed to the idea.
Marchand is more hopeful about a proposal, crafted by the Mississippi Hospital Association, that would increase one of the Medicaid supplement programs by $450 million statewide and give priority in the distribution formula to small or rural hospitals.
Separately, the Greenwood hospital is pursuing designation as either a “critical access” or “rural emergency” hospital. Either would provide the hospital with higher Medicare payments
Marchand said the critical access designation would appear to produce the greatest financial benefit, and it would allow the hospital to continue to provide inpatient care, though limited to no more than 25 beds. The hospital is currently licensed for 208 beds, but cutting it to 25 would not be an issue, now that the hospital has closed its intensive care and labor and delivery units, Marchand said.
The biggest hurdle is getting a waiver from the federal government on the rule that says a critical access hospital cannot be within 35 miles of another hospital. Greenwood’s hospital is within 35 miles of hospitals in Winona, Ruleville and Indianola. The University of Mississippi Medical Center in Grenada is right on the edge of the distance limit.
U.S. Rep. Bennie Thompson has said, however, that he would be willing to help Greenwood obtain a waiver.
Marchand said the hospital’s finances would also be helped if fewer residents went for medical services elsewhere that Greenwood Leflore can provide. Thirty percent of the residents in the four main counties served by the hospital seek health care outside of the area, mostly in Jackson, he said.
“Obviously they take some revenue with them when they do that,” he said.
In response to a question from the audience, Marchand discounted speculation that UMMC, with whom the Greenwood hospital had been in talks for months about a long-term lease, had feigned interest only as a way to lure some of the Greenwood physicians to work for UMMC.
Before UMMC announced in early November that it was no longer interested in a takeover, it had acquired two of the Greenwood hospital’s outpatient clinics — one for pediatrics and the other for obstetrics and gynecology. In all, five physicians previously employed by the Greenwood hospital — three pediatricians, one obstetrician and one pulmonologist — now work for UMMC.
“I don’t agree with the thought that they raided some of our physicians from us,” Marchand said. “I can tell you they spent an awful lot of money kicking the tires from Greenwood Leflore Hospital.”
Although Greenwood’s hospital crisis has been at the forefront, Marchand reiterated that it’s not the only endangered hospital in the state. Numerous hospital and health officials have said as much, including Dr. Dan Edney, the state health officer.
Edney, according to Marchand, told him that at least a half-dozen other hospitals will be in the same predicament if something is not done soon.
“Greenwood Leflore is the first canary in the coal mine,” Marchand recalled Edney saying. “I can tell you there are six canaries standing right behind you that are going to follow you in.”
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
