AHLA's Speaking of Health Law

Rural Health Care and COVID-19, Part 2

August 10, 2020 AHLA Podcasts
AHLA's Speaking of Health Law
Rural Health Care and COVID-19, Part 2
Show Notes Transcript

In this follow-up to an earlier podcast discussing COVID-19’s impact on rural health care, attorney Ellie Bane speaks with Vonne Jacobs, Principal and Founder, Pharos Healthcare Consulting, Delphine O’Rourke, Partner, Goodwin Procter LLP, Andrea Ferrari, Partner, HealthCare Appraisers, Michael Watters, Chief Legal Officer and General Counsel, Essentia Health, and Steve Clapp, President and CEO, Strategic Healthcare Advisers, about the operational, financial, and regulatory issues that rural providers face as the coronavirus recedes in some communities and surges in others. The panelists discuss how the ongoing COVID-19 crisis affects immediate and long-term strategic planning for rural providers, including opportunities and challenges as models for delivering care shift. They also consider financial implications for facilities and communities, staffing issues, and areas of needed reform from a rural health care provider perspective. From the Public Health System Affinity Group of AHLA's Hospitals and Health Systems Practice Group.

To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.

Speaker 1:

Hello, and thank you for joining our second conversation on rural healthcare and the impact of covid-19 thus far. My name is Ellie Bae. I am the Vice President for education for the HLA Public Hospitals and Healthcare Systems Affinity Group, and have spent most of my 20 years in practice representing rural providers throughout the Southwestern United States. I will be moderating to that today's discussion. We have an amazing and diverse panel for you, with experience representing all types of providers and facilities across the United States, which means that they also have a range of experience in dealing with various stages of the Coronavirus Pandemic as it sleeps across the nation. Our panelists today are Steve Pla, who is the president of Strategic Healthcare Advisors. For the last 20 years, Steve has worked with distressed healthcare operations since it's primarily on rural hospitals, having started two rural hospital companies, totaling 325 million in net revenue and 10 hospitals. SS A is currently assisting rural communities and tertiary health systems with the redevelopment of healthcare services. Additionally, they provide transactional representation for both fires and sellers, having completed 49 transactions, ranging in value from a quarter million to 55 million. Andrea Ferrari, Andrea is the chair of the A H L A public Hospitals and Healthcare Systems Affinity Group, and is a partner at Healthcare Appraisers. Andrea regularly works with rural providers on issues such as recruitment, retention, compensation issues across the United States. And in her previous life, Andrea was counseled to rural providers, Vaughn Jacobs. Vaughn is an attorney based in North Carolina, where she is the principal at Far Consulting. Vaughn provides customized education advisory and business support services for individuals and organizations in the healthcare industry, including both urban and rural providers. Del is a partner in Goodwin, Proctor's life Sciences group and healthcare practice in New York City. She focuses her practice in three major areas, healthcare regulations and corporate compliance, strategic transactions, and crisis response, including Covid Del is a nationally recognized leader in the health industry who brings extensive and health experience to Goodwin's premier healthcare regulatory team and Mike Waters. Mike is the Chief Legal Officer in general Counsel at Essentia Health in Duluth, Minnesota. Essentia Health is a two and a half billion dollar health system that provides services in the northern half of Minnesota. As far west as Fargo and as far east as Ashland, e Essentia has 14 hospitals, including seven critical access facilities prior to joining as Essentia MIC practice with a large Catholic healthcare system and represented numerous rural facilities. As we know, COVID continues to impact our daily life. Its impact on rural communities and rural providers continues to develop. The panelists will address certain operational, financial and regulatory impacts of Covid thus far. We will begin with a discussion of covid surges in rural communities. Delphine, please take the floor.

Speaker 2:

Thank you. Thank you for that introduction and for, uh, to the HLA for hosting this important podcast. And this is a second part in our conversation. The first part of our conversation occurred in April, and I think you stated it. Um, you know, right on in saying we were various stages of the Covid pandemic and how it's particularly affecting rural hospitals. And, you know, I've been describing it as a, as a continuum. And in April, the, the hospitals in the Northeast were really in the middle of the Covid pandemic and, and just, uh, you know, patient surges struggling with shortages of P P E and all the other issues that we saw, um, while other parts of the country, including where, where Mike is in Duluth, we had these conversations where, you know, they were shut down, yet they hadn't seen really any patients at that point. Now, fast forward, Andrea, for example, is in Florida, and Florida now is being devastated by the Covid pandemic. While in the Northeast, we've seen patient levels generally not, not, um, across the board, but generally decreased. So it is a continuum, and I would argue that we are not looking at a end of this, this surge and then a complete, um, you know, eradication of the Covid pandemic, but rather that we should be anticipating a second wave. There's, um, still some disagreement as to whether that second wave will occur, and if so, whether it would be stronger than the first wave. Historically, second wave in pandemics have been stronger than first waves. And what, what many in the industry are anticipating is a collision between a second wave and seasonal flu in the fall, um, in the Northeast that would then wave into other parts of the country. So what does that look like? This, you know, there've been delayed surges of covid patients for those rural hospitals that weren't part of, let's say the, the initial surge. And they faced the, you know, difficult situation. As we know, you know, rural hospitals must provide a range of services to fulfill requirements established at both the federal and state level for accrediting agencies, and therefore, they always have even pre covid significant standby costs and, and generally lower occupancy rates. So rural hospitals in, you know, the sort of second wave of of hos or areas, geographic areas to be hit, we're already struggling with those standby costs. Then they were shut down. Um, and now we're getting the, the, uh, the, the covid wave. Well, you know, arguably the rural hospitals and the second wave can learn from what rural hospitals and let's say upstate New York or rural Pennsylvania learned from. Um, there's still this, um, I would argue, you know, not just do we have a, a, um, freeze on elective procedures. We continue to have a backlog in P P E, there's a general exhaustion, you know, at least in the Northeast, everyone was anticipating that we would be over by June. Well, now we're facing a very different reality. So this is not just a three month issue, but these rural hospitals have been struggling with increasing standby cost, then the rise in cost relating to covid, and then having to anticipate for a future wave. Um, and then we're also seeing particular in, in rural hospitals that didn't experience that first wave, is that, you know, their, um, you know, in, in normal course of business have very few ventilator patients, and now you're seeing increases of, you know, one to 24 ventilator patients. I was just talking to a client about this significant increase, uh, significant increase at a time when many of their, of their providers may have already left the area, um, to care for patients in other geographic areas, or they're providing telemedicine services in other geographic areas. So, again, yet another hit on these rural facilities, um, that are coming at the back end. Um, so, and we'll touch on more, touch more on this later in this podcast, but the rural communities we've seen are, have been harder hit by covid, um, higher mortality rates. Generally. There are higher rates of cigarette smoking of obesity, and that it's really been devastating for these rural facilities. Um, so, you know, getting back to the financial and the clinical impacts, the financial impacts are devastating. And, um, we'll also touch on the federal and state relief. I would argue that it's not gonna be, it's not gonna be sufficient cause rural hospitals were ready in such a difficult financial state prior to covid. And then the clinical impacts, again, if the physicians, if you don't have physicians in the area to, to care for the surgeon patients, you don't have the physicians who have the extensive experience to deal with these complex cases. Um, and you have patients who are presenting not with, not just with covid, but more acute, um, comorbidities. It's really creating the perfect storm. Um, so really I don't think that the use of the section 1135 waivers are going to be sufficient to get these hospitals back to normal once the pandemic ends. Um, and, and arguably it might not even be, they might not even be sufficient to survive the hump. What we really need is a focused concerted effort to say, what do we need right now from a regulatory standpoint, from a regulatory relaxation standpoint, to make sure that these hospitals don't fold to make sure that there aren't significant communities. 30% of, of, um, hospitals in the US are rural to make sure that these critical hospitals survive through the fall, through the winter. Um, so, you know, uh, Mike, love to hear from you on how you're seeing Covid waivers across state borders, because I know it's a, it's a challenge. Um, there was confusion even when the waivers first went into place at the federal level. Then states have, um, specific waivers and for facilities and clients that have, um, have providers and hospitals in different states, it's creating a level of operational, uh, chaos, which will add to not only the financial impact, but also the regulatory risk at the back end. So Mike, if you could tell us more about what you're experiencing in your part of the country, that would be fabulous.

Speaker 3:

Sure. Thanks, dine. Yeah. Um, you know, listening to you and your experience, um, primarily up, um, in, uh, the northeast part of the country, I think we are a little bit different, at least here in northern Minnesota. Um, just for context, um, you know, we have not really seen, we we're seeing a little bit of a surge maybe, um, in the number of cases, but not really a, um, a, you know, we're just talking about a handful and, and the number of those, uh, patients who are actually hospitalized is, is, is really very small compared to, to what, uh, other parts of the country have seen. Um, what we have seen in Minnesota though is, um, a very high percentage, I think the highest in the country of our covid deaths are, or, uh, um, in nursing, have been in nursing homes. So I want to say like 75% of our deaths have been in nursing homes, which, which, um, um, has hit, um, our upper, uh, the upper part of Minnesota. Um, and the thing that comes to mind for me, when you, you start talking about providers and the care, you know, we're, I think most of us are, are, uh, connected with hospital systems, but, um, we really have been called on in, uh, at least three cases I'm aware of to sort of come to the aid of these standalone nursing homes where they're having outbreaks. Um, we are in the, um, position of having, um, um, most of our providers employed, um, but we are also in the position of having, I think, being fairly far along in the virtual care, uh, tele, um, health world, um, within our system. And that has, I think, helped, um, us deliver care that, um, in our, in our neck of the woods that maybe isn't available in other parts where, where healthcare systems maybe aren't as consolidated in a rural area, uh, um, a specific geographic area. So, um, so that's helped us, I think, um, kind of coordinate our care and, and put us in a, allowed us to be in the position of deliver, continuing to deliver care virtually. Now, to, I guess to your question though, where that has caused, um, a fair amount of, um, work and scrambling at times, um, we're covering three states, um, Northeastern, uh, uh, or eastern, uh, North Dakota, all of across upper Minnesota, and then Northwestern, uh, Wisconsin. And we have patients who on, you know, in normal times would come to us from, uh, Wisconsin or, or come from North Dakota to clinics that are located in Minnesota. And all of a sudden we've told them, no, we want you to stay home, stay in your house, your home in North Dakota and Wisconsin. Our providers might be in Minnesota. There's covid waivers that immediately relaxed licensure, um, uh, requirements. And so that worked fine. The, the part that we're scrambling with now is, um, trying to make sure that we have, um, when, when, when, uh, the waivers go away, um, and in Wisconsin, um, they've gone away. Now, just last week, the governor declared a public health emergency. So we're trying to sort through, do they come spring back to life, or what, what's the situation? Um, you know, we're trying to make sure that we have, from a telemedicine perspective and a provider licensure perspective, all of our, uh, I dotted and RTS crossed, um, and, um, you know, our working under an old system where, you know, just to apply for a license in, in a state may take up to four or five months to get processed. So the timing and the, the expectations of reacting to a pandemic and making sure that you've crossed, uh, all the checked all the boxes and the regulatory, um, front is, is, um, it's fairly challenging. And it's one that I think we are, um, certainly aware of, and are devo devoting more recess resources to, um, just longer terms, looking at all the waivers and say, okay, if they disappear tomorrow, what do we need to have in place? What do we need to pull back from? Um, that sort of thing. So, um, that's kind of what, what the situation is up here, um, relative to the regulatory, uh, uh, requirements and, and some of the cover covid waivers in, in the various states we're in,

Speaker 2:

Mike. So one follow up before we move to the relaxed regulatory requirements, we, so last week, the national, uh, emergency was extended another, uh, 90 days. Is is that something that your team or that in your, your region, you're seeing folks focus on, uh, the expiration or potential expiration end of October? Or is that, um, not necessarily an immediate concern at this point?

Speaker 3:

Well, we, yeah, we are focused on it. Um, but at least relative to some of the provider licensure issues, those are, um, as far as I know, almost always tied to, uh, a state declaration of a public health emergency. So, so the federal health emergency doesn't help so much. It does help with the reimbursement issues, um, associated with, um, virtual visits, for instance, or tele tele health visits. But from a licensure perspective, it's really more of a state, uh, state issue. And, uh, you know, just my own personal commentary, I know, uh, uh, as long as I've been practicing law, um, there has been talk about trying to get more cohesiveness and uniformity amongst the states around licensure in the he telehealth, um, space. And if there is ever, um, a need for it, it's now, um, because this is, uh, the, the, the model, the paradigm for delivering health, I think has been fundamentally changed. Um, and it will be a good thing from a financial perspective in a lot of ways. But the regulatory, um, structure that we're stuck with right now, particularly relative to provider, individual provider licensure, I think is adequate and needs to be, uh, updated in a hurry in. Of course, I'm not gonna hold my breath on that,

Speaker 2:

Um, but I'd love your plug, and I'm sure, uh, most of us on this call would, would vote for, uh, your proposed bill<laugh>, um, on, on telemedicine. Right. So, um, Steve, I'm gonna turn it over, over to you on relaxed regulatory requirements, um, your thoughts including on telemedicine and non-physician provider options. Um, thanks so much, Mike.

Speaker 4:

Yeah, I, I, I foresee and, and have been in some conversations recently with folks that are pushing a lot of investment and exploration into, you know, the continuation of the telemedicine, um, options and pursuits. Interesting enough, it's, uh, folks that are, um, not, not hospital based, obviously more of the group practice situation, um, and, and foresee that they're, they are exploring heavy investments, uh, into those, into the telemedicine expansion, thinking that it's gonna be here, uh, for the long term. Um, yeah, I think it, it's interesting. It depends on which side you're on. You have some, some companies that have hunkered down and just decided not to do anything and just kind of keep an eye on what they're trying to do and keep their process to keep their patients up. But the other, other folks that are seeking to expand into aggressively and invest into those areas,

Speaker 2:

You know, it's a, it's, it was a boom, you know, it was an area of regulatory, um, you know, lack of alignment before. I think so many people have seen the possibilities. There'll be an interesting area, um, to, to watch, uh, many are watching both on the patient side, the provider's side, and the investor, uh, side with, with great anticipation.

Speaker 5:

So this is Andrea. I have a, a kind of quick question for the rest of the panelists. With a relaxed regulatory re requirements, uh, the new role of mid-levels out-of-state providers, uh, that, um, may be able to work in settings where they couldn't before and, and telemedicine as we've talked about. Um, do you think that there will be a positive, uh, and or negative impact on rural physician practices in rural hospitals and their financial outlook because of the, the changing paradigms? Um, I, I think about telemedicine and non-physician provider options affecting the local physician and hospital services by affecting potentially the long-term viability and stability of care in the community. I mean, I think telemedicine has been a tremendous asset during covid, and it will be in general. Um, but as that paradigm shifts, it might get harder to, uh, ensure that, uh, providers want to and are able to stay physically in the community, which I think will always be some need. So I'm, I'm just interested to hear what folks' perspective is on the workforce that's local, in rural communities and local to rural hospitals with these shifts that have come as, or was a, as a result of covid. I think once, uh, Pandora is out of the box, it's hard to put Pandora back in the box, um, with, with the changing rules, um, and changing outlook on, on delivery models for care. Um, and so I wonder what the impact of that will be.

Speaker 3:

So this is Mike. I have, uh, just two thoughts on that, and I'm, I know there are, uh, a whole lot of thoughts that folks will have, but the first thought is, um, I think the virtual, um, delivery of healthcare is gonna drive, um, independent hospitals and, and maybe, um, some physician groups into health systems. I, I just, I don't, I don't, I think it's too gonna be too difficult, um, to maintain a small footprint virtually, if that's the model. Um, and, and, and you're just gonna have to have more scale and, and capability. So I think that's going to continue the, the movement toward, um, consolidation into health systems. And then secondly, I think, um, there is an opportunity, it seems to me, for healthcare for rural providers to, um, uh, and, and, and probably for urban providers as well. But, um, you know, if, if, um, a provider doesn't have to be physically any place, they could be in Florida, they could be in southern Minnesota, they can be in New York City, and they can be providing care to patients in northern Minnesota, for instance. Um, that's a, that's an opportunity for us, um, to, to tap into, um, um, resources and skills and expertise that we might not otherwise be able to tap into. Because in normal times, um, we would have more difficulty attracting somebody to move to northern Minnesota, let's say. But now we can say, you can stay where you are and work for us. That's, that's an opportunity. I think that's also an opportunity, um, for rural communities perhaps. Um, again, Duluth is a, uh, uh, lies heavily on tourism in the, in this, in the summertime, in Minnesota. Um, there are a lot of folks, um, um, who would love to live up here, but can't for job reasons. And a virtual, um, practice would allow, um, rural communities perhaps to, uh, to attract, um, people to their communities. And they don't, they can provide services, again, remotely to any place in the country. So I think those are kind of interesting dynamics. Um, uh, it'll be, uh, worth watching, seeing how that plays out.

Speaker 4:

Yeah. Just to just stay, just tag along to what Mike said, I think it, it's interesting. We had, we have difficulties in recruiting at times into rural communities, particularly, let's say under 30,000. And if you're an independent facility, it's even harder. Um, so what's, what's gonna happen, I think with the telemedicine availability, one, it's gonna, in some ways help strengthen hospitals because it does, will give you access to certain specialists, like in the behavioral health areas that maybe we didn't have access to before. But in the flip side of that, you're now of a sudden competing with, um, another employment lane for these providers or doctors, et cetera. So when you've already got, you're challenged as a rural provider to try in a rural hospital to get folks to come in, now all of a sudden you have the ability for these folks to also, uh, maybe do telemedicine as an alternative full-time employment or part-time, uh, employment opportunity. And so it's gonna create more competition for a scarcity resource, uh, scarcity employee that, that we were trying to recruit into these smaller towns. Telemedicine may be an angle to help offset that, but, um, for the hands-on services, surgery, uh, et cetera, er, you know, hospitalists, some of those are gonna be more challenging to, to get mm-hmm.<affirmative> to, uh, into the local communities.

Speaker 3:

Yeah. And one of the side issues that we're wrestling with or started to wrestle with right now, we have, uh, non-competes with our employee providers, but, um, that's based on, largely based on a model of, um, being physically sitting in a, in a geographical, you know, location, a clinic or whatever. And under a virtual model where we're saying, okay, you're gonna provide care to fo to patients all across our footprint, North Dakota, Wisconsin, Northern Minnesota, wherever we, uh, we're, uh, wrestling with how best to adjust our non-compete in a way that's, um, helpful to the organization and protects, you know, legitimate interest, but is also fair to the providers. So that's a side issue, but, uh, a little bit complicated.

Speaker 1:

Mike, I think that brings up a really good point about how, you know, telemedicine has certainly facilitated care, but how it also is going to impact, um, you know, not only contractual arrangements, but also services and facilities and how, you know, that operating model may change. Um, so I, I think that's a really good segue, and I know that, um, Steve has some thoughts on that as well.

Speaker 4:

Right now, I'm look working with some clients that are both tertiary hospital systems, uh, local communities, et cetera, that are exploring ways to redevelop services or expand services from the community perspective. We have, we have communities that have recently lost their hospitals all, uh, lost services. Those stories are all out there now. And so they're in the process of redeveloping and all, you know, particularly when this covid situation hit, that has heightened the local community, local residents, uh, desire to expand services into these communities. Um, the, and so as we've gone through RFPs and so forth, you end up in two buckets. You have those tertiary systems that maybe want to lean in and kind of help, uh, expand the footprint, expand the service offering, and take, meet the patients back in the communities where they may reside. And then you have some tertiary systems that have said, no, I'm not interested in coming out right now. I've got too much on my plate to focus on here. Um, and so combining that with the fact that the patients, there's a recent MGMA study that was published that said 50% of the people really do not want to go to a hospital campus at all if they can avoid it. And so they're trying to avoid any, any, you know, anything they can to do to get to a, to a hospital except for emergencies, non-elective surgeries, catastrophic situations, and so forth. And so what, what it's done is it's, it's forced, you know, systems to rethink what they're doing. Uh, you have some systems that, and I think there are several markets that were already looking at distributed clinics distributed, uh, outpatient services on, on campuses in smaller towns, um, smaller, I call'em urban settings, let's call it, uh, you know, they, there may not be as much distribution and so that that distribution channel, outpoint or outpatient service may be, uh, now gonna get distributed out, or they are now even looking into further expanding into, into maybe a rural community that does not have services to, to provide services locally so they can keep patients a, a away from the campus as much as they can and not, not have patients and visitors coming that could bring Covid. So it's an interesting, um, situation that's being created that the model's gonna change, uh, in terms of delivery, we'll continue to see the increased pressure for outpatient services being delivered locally, but it's also gonna have potentially some impact on the regulatory side eventually, where there's gonna be some tough decisions that the lawmakers are gonna have to address in terms of, um, you know, do we, do we modify the existing regulations that are there that have prevented maybe the expansion of certain outpatient services in communities where there are no services? Vaughn, I don't know what you're seeing on, on your side and with your, with your clients as well.

Speaker 6:

Yeah, I'm seeing that very same conversation happen. I mean, you know, particularly when the provider base rules change, everybody started sort of rolling back this idea that everything was gonna be off campus in, in hopes of sort of maintaining or sustaining the reimbursement for on-campus activities. Well, COVID has now sort of changed the perspective on that, but they still have the revenue question of, yeah, we don't want people on campus. It's safer. And then at this point, since they don't wanna be on our campus anyway, it's probably better to have them in these sort of offsite off-campus facilities. But the revenue model for maintaining that is still pretty questionable in a lot of these communities. And so they're trying to get creative and the waivers have helped with some of that. But, um, like we've talked about, those are temporary and if those are gonna go away, how sustainable is this distributed model, particularly if you're an independent system? You know, I think a lot of people are questioning that. I, I do see the community being very, um, receptive to the idea of getting care in their neighborhoods and sort of in their, you know, especially as I've seen systems use places like the currently empty schools as, um, offsite clinics or locations to provide services or community centers and using more of that, that's been really, um, beneficial and really accepted, um, by the community. But again, the revenue models aren't sort of set up for long term sustainability with, with that. And if we don't see regulatory change that supports that, then I'm not sure those things will stick around very long.

Speaker 2:

But I'd love to add to that because I think we've been talking as an industry of patient centered care and bringing care, um, to, to where the need is. And what we've seen is Covid has accelerated that, um, that, that, um, people are looking for care that is safe, that they perceive as safe, that they trust that is convenient and are open to many more delivery models than maybe we previously anticipated. Um, you know, there's been a historically a lot of conversation around the fact that that patients wouldn't trust telehealth, that, et cetera, et cetera. And that's proven in large part not to be the case. And I think as we've seen that COVID has already disproportionately impacted, um, rural communities, um, minorities, women, um, we need to be, when I say we, uh, this is a call for legislative reform along with, with the earlier call for telehealth relief is, is really to push policies and reimbursement structures, um, that address the communities that are hardest hit will continue to be hardest hit.

Speaker 6:

Yeah, I would agree with that. I mean, we've been seeing a lot of, covid has really highlighted where we've failed to invest in infrastructure, particularly in rural communities and communities of color. And so we're seeing these communities who have been often neglected, um, in terms of infrastructure development, um, housing security, food security, all of the things that contribute to, you know, good health or poor health being now highlighted because those infection rates in those communities, would that have been neglected or have not had access to those resources for decades, are now being highlighted by higher infection rates, more severe infections, um, higher death rates. And all of that is sort of the, the, the compiled, um, impacts of all of those failures to invest that happens decades earlier. And so I think that calls for legislative reform in terms of not just access to healthcare, but access to housing, access to food security, all of the things that support health in a community that is otherwise sort of separated or somehow put apart from some of the larger society investment, I think is starting to be highlighted here. And, and I think that this is the time now that we have everyone's attention and we see how it really shows up in real life to focus on fixing some of those things while we have the wherewithal to do so.

Speaker 5:

Well, this is Andrea. I think that's kind of an interesting point, um, that you're making about the opportunity that we have. Um, it is, I think, a really significant opportunity to make some changes. Um, I see it as a challenging opportunity for all the reasons that you mentioned, and then also for the fact that, uh, COVID has actually exacerbated some of the issues that contributed to that, um, situation to begin with. Uh, I think as we all know, there's an economic impact to covid, uh, that economic impact is substantial with respect to hospitals, but just in general. Um, and so there are large numbers of furloughed and laid off workers in many communities, including rural communities. Uh, and that may potentially impact care seeking behavior. Uh, it may impact patient payer mix, uh, which would impact the facility viability, uh, or the provider viability into the future, um, and may affect, uh, facility planning. I mean, we're talking about all the opportunities that we have from a regulatory perspective, but from a financial perspective, um, if there is not, uh, an ability for patients to pay for the services in some manner, um, I wonder whether they're sustainable. And so that I think is something that's gonna have to be addressed as a dilemma. I'd be interested to hear what other folks think about, uh, the potential issues there.

Speaker 6:

Uh, Andrew, I think you're right about that. I think that, again, this is all connected, right? So we've got communities particularly in rural areas and, and communities of color or other underserved urban areas where a large pace, large portion of the patient population are frontline workers. Maybe they're healthcare workers, but they're also working in grocery stores and they're also working, um, in postal service and they're taking public transportation. And so all of these things, you know, these are not necessarily high wage jobs to begin with. Um, some of these things are disappearing. And, and now we've got patients who are at high risk and don't have, like you said, the financial means to pay for services. And the assistance that was previously available in terms of extended benefits or expanded benefits is now disappearing. You know, the eviction protections are, are going away in a lot of states. And so now we've got people who don't know if they're gonna need to pay rent or be able to pay rent. And all of these things are just sort of feeding into the fact that the patient population isn't capable of paying for the healthcare services, even if they are available in the community.

Speaker 4:

Yeah, I think it, I think it's interesting too, Steve, that over the last, you know, three to four years, I think that the rural markets have made some traction, um, because everything else had been kind of stabilized. We had the tertiary hospitals were, were doing pretty well, they were making money. Um, we weren't, we didn't have the issue with Covid inside the nursing homes. It, you know, we did have, you know, the payment models changing for home health nursing homes and so forth. But, and so I thought the rural hospitals were gaining some steam and some, and some recognition around the issues of closures, distressed assets and so forth in these rural markets. But now, my, my concern with the rural hospital specifically is gonna be, you know, when you have large tertiary systems that are teetering because they can't keep their doors open cuz they're overwhelmed with 10, 14, 20 day length of stay, you know, is that voice gonna then drown out again, you know, the rural hospital plight that's out there, the rural services plight, when we've gotta fix, you know, maybe the entire healthcare system and not just a rural hospital, but maybe we gotta go help address the tertiary hospitals, or we've gotta address the, the, uh, nursing home industry or, you know, the insurance industry pops up and goes, Hey, we're not, we don't have enough funds here to help us and we're gonna need a bailout. And so the main thing is trying to figure out how, how, and I'd be curious how rural hospitals can get that elevation. And right now it's just gonna be very tough with all the, you know, the various parts and pieces taking, you know, taking a chunk out of, of the federal budget and the federal regulatory focus, um, right now with this covid situation.

Speaker 1:

Yes, Steve, this is Ali. I think it'll also be interesting to see the extent to which, uh, rural health clinics and federally qualified health clinics can be voices in this and be partners for rural facilities, as well as those social services organizations that exist in those communities that we know are often the lunch pens, um, and are often able to get the, uh, the aid to people that need it. So, um, it'll be interesting to see if, if those communities are able to create, uh, partnerships, um, to, to really help stabilize both healthcare as well as social services in that area. Um, be interesting. Another area that I know has impacted a lot of rural providers is, is the staffing and, and return to work and, and those issues that rural and urban providers are facing. And I know Mike has some thoughts on that, so I'm gonna throw it to Mike.

Speaker 3:

Sure. Um, yeah, we, um, uh, the situation I think in, again, I'm speaking from, from our experience here in northern Minnesota, so a little different than, than, um, some other parts of the country. But, you know, our, um, um, ex um, ex experience, uh, over the past four months has been pandemic, pandemic's declared everybody stays home, uh, hospital, um, um, sort of ramps down, elective procedures go away, finances tank. Um, we did a large, um, administrative, um, leave program put focused on temporary leave that morphed into a reduction of staffing, a permanent reduction of staffing, couple months, um, maybe two months later, um, along with still some, some, uh, administrative leave. Um, and then we've been pulling those folks back as we've been able to ramp up. But it's been, um, a, a a little bit of a dance of trying to, um, anticipate and react quickly, um, to, to staff, to the level that we need to get ready for, uh, pandemic that at least right now, has not really, um, come here in full force to train our staff and spend the time and, and costs associated with, with that training to make sure that they can, um, go from one unit to another unit or, or wherever, um, to, to give us flexibility and, uh, and, uh, and, and do all this in a, in a way that gives them the right p p e, um, today and is prepared for the right p e tomorrow and, and, uh, uh, keeps them healthy. Um, so it has been a, uh, I'd say a, a wild ride for us here, I'm sure other places, but that's been our experience. Uh, again, we haven't had the, the, the pandemic hit us really hard yet. Um, but it's been, it's been, uh, challenging I think to, to try to staff and, and retain staff, the right staff for the positions that, uh, we think we're gonna need. You know, in the process, we have gotten rid of, uh, I think pretty much all locums, uh, and agency staffing. I think we probably still have some, but, um, uh, we've gotten rid of all that. A lot of that we've also had to address, um, questions from, um, uh, frontline staff and, and, um, our, uh, docs and, and, uh, APCs about, uh, those, those who have been, um, shut down a little bit or had their, had their, uh, work reduced in some fashion. Can they go, can those folks go elsewhere, um, to provide care, uh, you know, whether that's to a clinic or another health system down the road. And, and we've had to, um, we've had numerous discussions about how that plays out. Um, do we send our staff to New York City, for instance, where they've got a lot of cases, and then if we, we get hit, call'em back and, and if we, and, and can we call'em back if they've been in New York City? You know, um, how does that work? And so lots of different interests, uh, different issues around staffing and making sure that we aren't, um, sort of caught with, with some, um, some, some gaps in our, in our ability to care for our communities, um, when the time comes. So,

Speaker 2:

And what's fascinating about that is that it's the same story with obviously some variations over and over again across the country. And I think that's where there's an opportunity to either partner with our, our state hospital associations or industry associations or others to tell that story. And going back to the earlier point around, you know, making sure that rural hospitals aren't 10th on the list, um, is to share the story of rural hospitals and what is the impact of not just covid, but beyond covid. If the rural hospitals can't survive financially, you know, what will that look like for so many other service lines and, and millions of America of Americans. Um, you know, I would add to the point of, you know, do you send your providers, for example, to another state, whether it's gonna be Florida or New York? Um, I think that's why a federal also immunity, uh, federal immunity protection will be critical mm-hmm.<affirmative>, Um, for all of us because, and whether it provides just individuals or the entities, we wanna encourage the support of patient care across the country, and we already have the regulatory relaxation around out-of-state providers, but also to make sure that if you're sending your providers to New York to help, um, and also benefiting, to make sure that you can pull them back, that they're not at greater risk, um, from a medical malpractice or other type of claim. So I think that'll, that's definitely an area to, to continue to focus on, to have a federal at least baseline.

Speaker 1:

So the, the big issue that everyone's touched upon, and, uh, we haven't gotten our arms around yet, are the financial impacts to facilities and the communities. And it's a big ask. Um, I'm gonna start by throwing it to Steve and see if you can help us just set some baseline on this.

Speaker 4:

Thank you. It's kind of interesting, um, in talking to some rural providers here in the last few weeks, uh, in some, in, in some of these markets, they had not been hit yet up until maybe the last couple weeks. And so the, the discontinuation of elective procedures, um, in a small rural hospital may not, may not had a tremendous impact. You know, it may have been a hundred, 200, 300 surgeries a month, which for us is a big number, but it obviously is nothing in, you know, compared to tertiary hospitals. Um, and so when you look at the money that may have been received anywhere from, and I'm talking PPS hospitals now, anywhere from one to maybe 3 million for hospitals that are 25 to$50 million, the margin that they would've made on these elective procedures is no, nowhere near probably the cash that they actually received from the federal government. And so what it's done is it's allowed them to, you know, to have this cash to figure out how best to spend it. In some cases, that's more cash than, than these hospitals have had in several years in their, in their coffers. And so trying to figure out how best to spend it appropriately make is, is, is very important to them, as well as maybe just keeping it back to kind of ride it through this next wave. Um, but a as you look at that then, is that what impact is that gonna have? Is that going to kick the can down the road a little bit for these rural communities, hospitals that now have, have maybe sitting on a million or$2 million now, they may be able to, they may get sucked out pretty quick in terms of, of, um, needing to cash flow, uh, you know, any other losses that may occur or, you know, the community may not be using the hospital as much, but there is this, this influx of cash that has occurred and therefore, uh, may end up delaying them in terms of, or at least taking the pressure off of this, this immediate immediate distress that they may be, that they may be feeling. I think the other thing is we're, and we've, and we've talked about it on the previous podcast, is what's the impact with the tertiary hospitals? Are the tertiary hospitals gonna continue to look for at these external access points, off-campus access points, not just now in maybe the urban or suburban markets, but also now in these rural communities where they really need to keep those patients from coming onto their campus, particularly with, you know, a, a pneumonia or a gallbladder and so forth. Maybe things that can be taken care of locally. And so are we gonna continue to see more interest in that in some form of relation, whatever that looks like, relationship going forward with that tertiary hospital and that, that rural community or rural hospital to keep those patients locally. Uh, Vaughn I don't know what you're seeing there as well with your cl with your folks.

Speaker 6:

Um, I am seeing, uh, a lot of what you've described. I mean, you know, my clients in particular are just now getting hit. So they, at the beginning of all of this, like everyone, they were scared. They were scrambling to get prepared. So they, you know, spent a lot of money and time and energy around gathering P P P and developing plans, I mean P P e and developing plans and all of that. And then the surge didn't hit well, now that the surges hit, thank goodness they did that because they're prepared, but they're also running through that cash that they had sort of tiled up pretty quickly. And they're starting to hit all of the hurdles that some of their, uh, compatriots in the northeast hit earlier on in the, in the cycle. And so now they're trying to figure out, okay, like you, you said, if we're going to be able to partner with some of our, you know, less enthusiastic, um, from Patriots in, in the area, um, now that they see that there's potentially a benefit to them as well as to us and having these, these sort of satellites locations in these rural communities, um, how do we wanna do that? What could that look like and how do we manage that while we're also trying to manage a patient surge? And while we're also trying to do the 50 other things that all of these rural providers do every day, um, you know, they're often more than hospitals. They're often the entire social safety net for a community. And so, um, we're seeing a lot of that happen, a lot of that conversation. I think that, that the partners are receptive and they're being more creative in the way that they're thinking about it, but no one's really making the move yet. So we're waiting and anticipating, but we haven't really seen anybody sort of put a contract down for anyone to scientist yet.

Speaker 4:

Ha ha. Have you noticed in your area that I, I'm seeing two camps. I'm seeing the folks that we're, we're all in, we're gonna go figure out how to get camp services off campus and, and, and take some pretty aggressive quick decisions around how to, how to deliver that service more locally. And then there's the other extreme, which seems to be, Hey, I'm just gonna pull back and sit and wait for a while and sort all this out. And it's interesting to watch the very aggressive and and offensive approach versus the hesitant defensive approach. I don't know if you're seeing that as well.

Speaker 6:

Yeah, I am seeing that, and it is kind of, it's interesting, you know, intellectually for me to watch and sort of see, well, what are, what are you waiting for and, and what might, you know, what are, what is that gonna look like? But I'm, I am seeing sort of like you said, that sort of dual approach. Some people are being very aggressive and saying, let's put tents on the fairgrounds and see if we can, you know, at least get people out there. It's out in the open. And that's a way for us to get out and be creative and provide care and, you know, support the community and others who are just like, like you said, sort of sitting back in the wings and waiting to see what's going to happen. Um, so it's been interesting to watch. Um, I don't know where we're gonna land though, because I'm not sure how long either one of those is sustainable on its own.

Speaker 4:

Hey, Andrea, from a, from a transaction perspective, and for you and Vaughan, are y'all seeing it impacting either volume of transactions or, you know, the, the valuation approach and so forth, or the long-term direction? Are you seeing more, more interest in transactions or less?

Speaker 5:

I think it varies. Um, it varies at, based on the specific circumstances of particular providers. There's a lot of uncertainty, uh, in general about what's gonna happen over the long term. And that uncertainty for sure is impacting strategic planning, uh, and partnerships and reopening of service lines, uh, recruitment of providers and so on. Uh, the way it's impacting, I think, depends parted on where folks are, uh, geographically as well as where they are with their financial situation. Uh, in places where there is this delayed surge, like where I am in Florida, in Texas and California, uh, the concerns right now are a little bit different than they are say in in Minnesota, uh, where Mike is located. Um, and there right now there's more of a focus on, um, how do we make sure that we have the appropriate staff and supplies, um, and how do we weather the storm and appropriately use our funds? Um, and then thinking about into the future, so how is this all gonna affect, uh, what we have available to us going forward? Um, Mike mentioned providers going elsewhere, uh, when there weren't covid cases. And now the question of how do you bring them back, um, and will they come back and is there the same, uh, situation that they had when they were there before? Or is this landscape totally different now because the economics in the community are totally different than they they were before? And for how long will that be the case? Um, we mentioned earlier in the call the potential impact of, of unemployment and changes in payer mix, uh, layered on top of changes in the care delivery models, uh, which could completely affect the paradigm of how care has been delivered in rural communities up to this point. Um, a lot of the clients, uh, that I deal with, uh, there are, um, support mechanisms in place for physicians who are in the community because there wasn't necessarily, um, enough of a volume to support the demand and or there wasn't enough of the appropriate payer mix to support, uh, the demand or the need to have somebody in the community. Um, and it, it's, it's remains to be seen whether that type of a model is sustainable, um, in the short term and or long term given the new financial paradigm. But I, I would be interested to see what other people are seeing. Cause um, I think experiences do vary tremendously. Um, and the thought process is varying from facility to facility, uh, depending on what their situation is.

Speaker 1:

And I think it would be also be interesting, Andrea, if any covid relief funding made any impact to a facility's decision to enter into a transaction or not.

Speaker 5:

I think the covid relief spend certainly does have an impact. Um, but again, I think it varies. As, as Steve mentioned, it, it created, um, cash flow for some facilities that they didn't have previously and actually help them to ride a ship that might not have been, uh, sailing so well even before covid. But, um, it was a one time thing. And there is again, this uncertainty about how long this covid crisis is gonna last and what its impact is going to be. There are these delayed surges. Um, some, some communities are experiencing them now. Some anticipate a surge in the fall, um, as Delphine mentioned. And so I think there's some reticent, uh, to go forward with some types of transactions. On the other hand, I think some, um, actually have a better outlook. Uh, and I know that, uh, that's something that we discussed before the call, um, that there are a few that have just recently closed. Um, and, uh, this, uh, covid funding helped to get everybody over the hump, uh, in a way that was very positive, uh, and will help the community over the long term.

Speaker 4:

I think, I think it's interesting if you look at, at say physician owned, uh, centers with no health system, uh, participation in them currently, I think this covid situation has really spooked some of the physicians and has them concerned around, oh my gosh, I might have to cash flow this, um, during a downtime cash on my staff or evaluate whether not I want to par it back or get rid of it. Now, you're right, the covid funding helped them bridge some gaps in there. P p money and so forth has helped. But so what's happened is it also has triggered on the, on the seller side that maybe non-hospital based that's triggered maybe some of these folks that are maybe one center, maybe a, a single specialty center, surgery center, whatever they're there, it, it is heightened their in increase interest in, hey, maybe doing something. And so back to Vaughn's point earlier, the, you know, the, the off-campus adjustment for reimbursement, um, it, in some of these cases that I'm seeing is not weighing into the decision or we're not, the health system wants to go ahead and buy in because the price may be right given the fact that the, uh, the, the physician group may be deciding, Hey, I, I just need to get, get myself off of this or reduce my exposure some. And so the covid funds has kind of helped'em weather the storm, but in the same, right. Um, it has, you know, they're, the, the health systems are not necessarily as concerned about the, um, you know, the off-campus adjustment for the reimbursement, which is just, it's an interesting deal, but it seems like they're, you got two parties trying to get together to, to, to help make some decisions and do a transaction. So,

Speaker 1:

Well, that is a lot to think about. And, um, there's certainly a lot of other questions that we did not have time to address today. Um, you know, covid is, is certainly affecting not only rural healthcare, our entire healthcare market. Um, I would echo the, the need for reform, um, in a number of different ways that our panelists have said today. Um, I wanna thank first the panelists for your time, for your experience, um, and, and for your knowledge. Uh, I am sure there that our listeners have found it invaluable and helpful, um, and hopefully have made those of you listening feel like you are not necessarily in this alone. Um, we would again, encourage you to use all of those HLA resources that have been made available, especially around dealing with the, um, COVID pandemic. And thank you for sharing part of your day with us.