After Bitter Closure, Rural Texas Hospital Defies Norm and Reopens

Led by physicians, the small public facility is operating in a limited capacity for an increasingly poor and aging population.

In July 2018, 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 physician Bob Grier, board president of the Houston County Hospital District, which is the county’s 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 health care is known for its golden hour,” he said.

The reopening of the newly named Crockett Medical Center makes it a bit of a unicorn in a state that has led nationally in rural hospital closures. Since January 2010, 17 of the 94 shuttered hospitals have been in Texas, including two that closed in December, according to data from the University of North Carolina’s Cecil G. Sheps Center for Health Services Research.

But Crockett’s story also reflects some of the challenges faced by rural hospitals everywhere. Board members frequently have limited background in health care 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 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 points 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,” agreed Nancy Dickey, MD, executive director of the A&M Rural and Community Health Institute at 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,” she said, “and are not going to be able to make an economic case to reopen them.”

The A&M institute, which in December 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 health care.

Demographics AND Decisions

The financial headwinds have been particularly fierce in Texas, one of 14 states that have not expanded Medicaid eligibility after the passage of the Affordable Care Act. “That makes a huge difference,” said John Henderson, chief executive officer of the Texas Organization of Rural & Community Hospitals, known in Texas rural circles as TORCH. “But that doesn’t change the reality that we aren’t going to do it.”

Leading up to Texas’ biennial legislative session 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, over time reimbursements have shrunk 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 shut down in summer 2017 after just a few weeks’ notice from its management company, Texas-based Little River Healthcare. Little River, which was also 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 in December

As it struggled to stay open, Crockett’s hospital had been treating a population that was increasingly poor and aging, according to Texas A&M’s report. The researchers describe in the report — Crockett is “community 1” among three communities featured — that the hospital was 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. The board 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.

Fighting the Closure Tide

Leaders in Crockett tried to capture the interest of other hospital systems to reopen and manage the facility, without success, Grier said. Along with staffers losing their jobs, the community knew it would be more difficult to persuade people to relocate or retire to the area without a hospital nearby, he said.

Every weekday at noon for weeks on end, a small group of two to 20 people gathered beneath the hospital’s front portico to pray for some avenue to reopen, Grier said. Then, as the odds looked increasingly long, they got a call out of the blue from two Austin-based doctors. “I feel God was involved,” Grier said. “They have told us that they were looking for some kind of a larger investment.”

Those initial conversations resulted in a five-year lease arrangement between the hospital district and the management company, operating as Crockett Medical Center.

The two physicians, Kelly Tjelmeland, MD, and Subir Chhikara, MD, are listed on Crockett Medical Center’s as chairman and president, respectively. They failed to respond to requests for comment about their plans for the hospital. But in a presentation to the board before the lease was signed, they said that one of their goals was to get the facility classified as a critical access hospital, which enables a higher reimbursement for Medicare patients.

Along with operating a primary care clinic and 24/7 emergency room, Crockett Medical Center staffs a handful of hospital beds for patients who need more limited medical treatment, such as heart monitoring or intravenous antibiotics, Grier said. But when the Crockett hospital reopened, it didn’t resume delivering babies. Only 66 of Texas rural hospitals still provide obstetrics services, according to TORCH’s McBeath.

Eliminating baby deliveries was one possibility on the table at another rural hospital if that hospital’s CEO hadn’t pulled off the sort of Texas miracle that Crockett has yet to achieve — persuading local voters to support a tax increase. Adam Willmann, CEO of 25-bed Goodall-Witcher Hospital Authority, northwest of Waco, said that he and others made the case in dozens of meetings that a hospital property tax was needed to support the financially struggling hospital.

In November, 58 percent of the county’s voters backed the new tax, despite the community’s political leanings. During that same election, 80 percent voted to re-elect Republican Sen. Ted Cruz.

“They want to be 5 minutes, 15 minutes from an ER and not 35 miles down the road,” Willmann said, referring to the nearest hospitals in Waco. “And they’re willing to pay a little more for it.”

This story originally was published on Jan. 7, 2019, by Kaiser Health News .