After bitter closure, rural Texas hospital defies the norm and reopens

Five months ago, the 6,500 residents of Crockett, Texas, witnessed a bit of a resurrection—at least in rural hospital terms.

A little more than a year after the local hospital shut its doors, the 25-bed facility reopened its emergency department, inpatient beds and some related services, albeit on a smaller scale.

Without a hospital, residents of Crockett, located 120 miles north of Houston, were 35 miles away along rural roads from the next closest hospital when a medical crisis struck, said Dr. Bob Grier, board president of the Houston County Hospital District, which is the governmental authority that oversees Crockett, a public hospital. "Someone falls off the roof. A heart attack. A stroke. A diabetic coma. Start naming these rather serious things, and healthcare is known for its golden hour," he said.

The late-July reopening of what's now named Crockett Medical Center makes it a bit of a unicorn in a state that has led the nation in rural hospital closures. Since January 2010, 17 of the 94 shuttered hospitals have been in Texas, or 18%, including two that closed in December, according to data from the University of North Carolina's Sheps Center for Health Services Research.

Crockett's story also reflects some of the challenges faced by rural hospitals everywhere. Board members frequently have limited background in healthcare management and yet are responsible for making financial decisions. Add to that mix a Lone Star State resistance to raising local property taxes. An effort to increase the county's tax of 15 cents per $100 property valuation for the hospital district has been defeated twice since the hospital closed.

And a small rural hospital like Crockett's has "no leverage" when negotiating reimbursement rates with insurers, Grier repeatedly pointed out.

The tough reality is that too many rural hospitals in Texas and elsewhere, when negotiating with insurers and other financial players, "are almost always negotiating from weakness and sometimes from literally leaning out over the edge of the (survival) cliff," said Dr. Nancy Dickey, executive director of the A&M Rural and Community Health Institute at the Texas A&M Health Science Center.

Rural communities must think more creatively about how to meet at least some of their health needs without a traditional hospital, whether it's forming partnerships with nearby towns or expanding telemedicine, Dickey said. "There is little doubt in my mind that many of these communities are going to see their hospitals close and are not going to be able to make an economic case to reopen them," she said.

The A&M institute, which this month published a report looking at these challenges for three Texas communities, recently landed a $4 million, five-year federal grant to help rural hospitals nationwide keep their doors open or find other ways to maintain local healthcare.

The financial headwinds have been particularly fierce in Texas, one of 14 states that has not expanded Medicaid eligibility after the enactment of the Affordable Care Act. "That makes a huge difference," said John Henderson, CEO of the Texas Organization of Rural & Community Hospitals, known as TORCH. "But that doesn't change the reality that we aren't going to do it."

Leading up to the state's biennial legislative session, which begins in January, rural leaders are making the case that state legislators need to take steps to bolster the state's 161 rural hospitals, starting with rectifying underpayments for Medicaid patients. As the state's program has transitioned to managed care, reimbursements have shrunk over time to the point that rural hospitals are losing as much as $60 million annually, according to TORCH officials, who cite state data.

They also support a congressional bill, HR 5678, that would make it easier for rural hospitals to close their inpatient beds but retain some services, such as an emergency room and primary-care clinic. Under current federal regulations, facilities that make such a move are no longer considered a hospital and can't be reimbursed by Medicare and Medicaid at hospital rates, which are often higher than payments to clinics or individual doctors. Those lower rates make it harder for stripped-down facilities to keep up their operations, said Don McBeath, TORCH's director of government relations.

Crockett's hospital, then called Timberlands Healthcare, abruptly closed in the summer of 2017 after just a few weeks' notice from its management company, Texas-based Little River Healthcare. Little River, which was the subject of an analysis by Modern Healthcare that showed several of its hospitals engaged in unusually high laboratory billing for out-of-state patients, has since filed for bankruptcy. Two other rural hospitals affiliated with Little River closed their doors this month.

As it struggled to stay open, Crockett's hospital was treating a population that was increasingly poor and aging, according to Texas A&M's report. In the report—Crockett is "Community 1" among three communities featured—the researchers describe the hospital as overstaffed with more than 200 employees given its daily average census of three hospitalized patients. Also, they wrote, board members should have more closely questioned the management company. Board members said they were given data at each meeting, "but that data did not suggest the imminent demise of the hospital," the report's authors wrote.