Rural Hospitals Struggle As Insurers Pull Up Stakes

Rural hospitals and clinics are being trampled along with their patients in the stampede of medical insurance companies seeking greener pastures.

Insurance companies must cut payments to medical-care providers to achieve the efficiencies that make managed care work. But rural doctors, clinics and hospitals have higher costs than their urban counterparts.

“Gas is more, phones are more. My phone lines are killing me up here,” said Michael Dunniway, health services director for N.E. Washington Health Programs.

Dunniway’s private, nonprofit organization operates medical clinics in six small towns in Stevens, Pend Oreille and Ferry counties. The clinics depend on federal subsidies that have shrunken from about 20 percent of their budget to about 11 percent.

“Being one of the poorest areas in the state as far as per-capita income, we have a lot of people on Medicaid and Basic Health,” both of which pay doctors relatively poorly, said Ron Rehn, chief administrator of the Northeast Washington Medical Group clinic in Colville. “That really puts a squeeze on us, and all rural areas are in the same boat.”

Charity cases also drive up rural medical costs because they’re less easily absorbed - or ignored - than in urban areas.

If you run the only clinic in town, you don’t have the luxury of abandoning unprofitable portions of your business, Rehn said.

“It would be pretty hard for us to say, `No, you can’t come in to see us,’ when we’re the only provider in town,” he said. “They’re our neighbors and people we see in the grocery store, and we can’t just turn them away.”

With 42 percent of the state’s small rural hospitals considered financially vulnerable, some administrators feel obliged to sign insurance contracts that reduce services to consumers - a political hot potato for a tiny hospital that needs voter-approved levies to stay open.

“We’re no longer doing lab tests here; instead we draw the blood and have a courier run it to another hospital,” said Carol Schott, administrator at Odessa Memorial Hospital, 62 miles west of Spokane. “But people in the community absolutely don’t see why.”

The stakes are high. Not signing such a contract could jeopardize the hospital’s financial stability if the insurance company sent its patients elsewhere, Schott said. Signing it runs the risk of alienating consumers enough that they vote down the next levy.

“And the big problem is, if a hospital folds, it’s only a matter of time before the doctors leave,” said Alice James, rural systems manager with the state’s Office of Community and Rural Health. “Then you have no access at all.

“In the demand for short-term lower prices we’re risking long-term stability,” she said.