Magee General Hospital

Opened in 1935 and incorporated in 1942, Magee General Hospital faced bankruptcy in recent years and pulled itself out of the debt under the supervision of CEO Greg Gibbes and a Board of Directors, but it currently functions with day-to-day cash on hand during the COVID-19 pandemic.

MAGEE — As Gregg Gibbes walked through the doors of his new hospital in April 2019, he faced a frightening yet all-too-possible future: The facility he had been tasked with leading was at risk of shutting down, taking hundreds of jobs with it and leaving Simpson County without an essential source of medical care.

Magee General Hospital, a nonprofit, 44-bed acute-care facility located midway between Jackson and Hattiesburg, had filed for bankruptcy eight months earlier in a bid by former owners to save the beloved community facility from financial death. The hospital is an economic hub in the area and an essential source of care both for elderly Simpson County residents who can’t make the drive to Jackson and for victims of car accidents on U.S. 49 South.

Gibbes’ new job was to bring it back to life. Entering as the new CEO, he was part of a restructured board of directors and a shrewd plan to beat the bankruptcy through sharing staff with a critical-access hospital in Covington County 20 miles to the south.

This May, Magee General exited its bankruptcy, achieving a feat the likes of which “you’d be hard-pressed to find another rural hospital” completing successfully, said Gibbes, who is also CEO of Covington County Hospital.

But now a second storm is ravaging the land. After the pandemic forced Magee General to cut elective care, which six months ago accounted for two-thirds of its revenue, the hospital must confront a pandemic that has been the latest battle for survival for rural hospitals.

 • • •

To date, Magee General has received the lowest amount of coronavirus-related stimulus money of any acute-care facility in the state, according to the Mississippi Hospital Association and the Department of Health and Human Services.

Hospitals and profitability

“There have been some days that you cross your fingers and hope that nobody else declines,” said Dr. George Gillespie, Magee General’s head physician.

To navigate Chapter 11 bankruptcy over the past two years, Magee General had to be guided out of a storm of uncompensated care costs, increasingly expensive equipment and shrinking elective care visits — common challenges for rural hospitals in the South.

“There was a lot to cover in those first few days and weeks, particularly meeting staff and learning their needs,” Gibbes said. “But I never second-guessed the decision to take over Magee General, nor have I ever second-guessed this hospital’s great potential.”

 Since 2014, five rural hospitals in the state have shut down — and many of Mississippi’s remaining rural hospitals are teetering.

A study earlier this year by the Chartis Center for Rural Health named nearly two-thirds of Mississippi’s rural hospitals as “vulnerable” or “most vulnerable” to closure. All of these hospitals, including Magee General, lost money in 2017, according to data from the Center for Medicaid and Medicaid Services.

Nationally, 58% of rural hospitals made a profit.

At the heart of rural hospitals’ financial struggles are uncompensated care costs amounting to hundreds of millions annually. Those woes could have been aided through Medicaid expansion, an option state lawmakers have rejected, despite Mississippi having some of the nation’s highest death rates for chronic illnesses such as diabetes and heart disease.

Arkansas, which did expand Medicaid, has seen only one rural hospital close. In contrast, 52 rural hospitals closed in surrounding states over the past decade, according to the Arkansas Center for Health Improvement.

Asked if he was concerned about rural hospitals closing in Mississippi and if those hospitals would have been better off if Medicaid had expanded, Mississippi Gov. Tate Reeves replied, “I do not believe that Medicaid expansion was the right thing for Mississippi in 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, and I do not believe that Medicaid expansion is the right approach for Mississippi in 2020, either.”

• • •

Built during the Great Depression, Magee General Hospital now has 310 staffers, making it Simpson County’s third-largest employer behind Walmart and the Simpson County School District. It annually distributes over

$31 million in wages, salaries and benefits, according to Hospital Association data.

Pam Wallace manages community relations for Magee General. She grew up in Magee and has worked at the hospital since 1997, when she took her first high school job there as a file clerk. Her mother was an emergency room technician there from 1975 to 2014, and her grandmother was a nursing aide.

While Magee General had faced its share of challenges through her years on staff, Wallace said the bankruptcy, which allowed the hospital to forgo debt-service payments as it operated off of elective-care revenue, was particularly hard.

“I had people come up to me at church, for example, saying, ‘Oh — I heard the hospital is filing bankruptcy and that you're not going to have a job tomorrow,’ ” she said. “I never batted an eye.”

Magee General's successful exit from bankruptcy was a victory, but the virus has dimmed what should have been a time of triumph.

“After the bankruptcy, we thought we would be able to breathe a little bit,” she said. “Now, we’re working in a whole new world.”

Coronavirus cases in Simpson County for a while remained low, with 230 cases recorded there as of July 1 — a figure that placed its per-capita death and case rates well below the state’s average for many weeks.

And the virus’s early days were quiet at Magee General, Gillespie said. The hospital had begun discussing how to prepare as early as January, and braced itself in March by suspending its radiology, surgery, sleep lab and other outpatient services and converting 30 inpatient rooms to a negative pressure environment for COVID-19 patients.

But it’s been a different situation since July began, when cases soared in Simpson County and around the state.

Magee General, which as an acute care facility typically sends patients in need of urgent care to Jackson or Hattiesburg, has filled its available beds with COVID patients. In recent days, the count of patients in its coronavirus isolation ward has hovered around 25 (its average daily patient census before the virus was 19).

“I have seen more COVID-positive people coming into the ER with symptoms over the last week or two than I have during the whole pandemic,” Gillespie, the doctor, said in an interview during the last week of June.

Low staff numbers were an issue from the virus’ onset, Wallace said, particularly among the nursing staff, as some had departed during the bankruptcy in search of what they saw as more stable job opportunities.

“Our staff is tired, and everyone is doing double the work,” she said.

The hospital struggled to acquire medical equipment in the virus’ early days amid a “logjam for everyone competing to secure stock from the same national suppliers,” Gibbes said. Now, the state has provided Magee General six ventilators, giving doctors extra time to find care in Jackson or Hattiesburg for sicker patients.

“If we happened to have more than one patient start to go south with respiratory difficulties, we can take care of that one patient,” Gillespie said. “But if another patient starts going down...we're limited in our resources.”

• • •

Hospitals and cash on hand

Even as it emerged from bankruptcy on May 29, Magee General was denied a financial lifeline that went to many other rural hospitals as the virus spread.

In April, rural hospitals around Mississippi received $317 million in CARES Act rural distribution funds, money that salvaged many hospitals’ precarious cash-on-hand situations. By the end of May, hospitals statewide had lost $450 million in revenue for the fiscal year due to uncompensated care — a figure that doesn’t include another $81 million in COVID expenses since the pandemic began.

CARES funding that hospitals received in April went toward “plugging the drain” of already lost revenue before the pandemic struck, he said. But the federal government considers Magee General part of the Jackson metropolitan area, although it’s almost an hour’s drive from the capital city. That decision made Magee ineligible for rural hospital funds.

A separate $350,000 CARES payment it received doubled its number of days’ cash-on-hand, which had wavered between eight and 10 days before the virus hit and elective care was cut. After that cash ran out, Magee was back to operating with single-digit days’ cash on hand.

“I think most rural hospitals operate with at least four to five times the amount of cash on hand we did (before COVID-19),” Gibbes said. “Our hospital depends on elective care. ... We’ve had no choice but to be lean.”

• • •

One-fourth of the 9,000 patients Magee General’s emergency department served last year were uninsured, and nearly half its patients were on Medicare — numbers nearly three times the national averages, according to census data.

If Mississippi accepted federal offers of Medicaid expansion, Gibbes estimated, Magee General could have $1 million more on hand each year.

Gibbes sees Magee General’s partnership with Covington County Hospital as the basis of its emergence from bankruptcy and a potential way forward for other rural health providers.

The two hospitals’ sharing of administrative staff has helped them keep costs low, and Magee General even upgraded facilities during the bankruptcy.

“Closing the hospital or losing the hospital in bankruptcy was never an option,” Gibbes said. “The hospital represents too much to the community to fail, not just in terms of health care but also in terms of economic development. Plain and simple, failure is not an option.”

 James Finn is an investigative intern for MCIR, a nonprofit news organization. Freelance data journalist Jayme Fraser contributed to this report.

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