RGH, other rural hospitals struggle with financial issues

Financial challenges continue at Roosevelt General Hospital, along with the other rural hospitals across the state.

RGH leaders and board members held a briefing Tuesday to provide an update on the state of the hospital and what the future holds.

The briefing came after the financial challenges were made apparent by the fact that RGH recently had to cut back on staff hours and even dismiss some employees. RGH Chief Executive Officer Kaye Green said in May the cutbacks affected every employee, even those in leadership positions. Instead of working 40 hours a week, staff were limited to 32 hours a week.

Green led Tuesday's presentation to an audience that included state Sens. Pat Woods and Stuart Ingle, along with Reps. Andrea Reeb and Martin Zamora. A legislative assistant for U.S. Sen. Martin Heinrich also sat in, along with several city and county officials.

Green began her presentation by saying that since COVID, cost across the board for hospitals have continued to rise.

"Our expenses are exceeding our revenue in this post-COVID environment," Green said.

Hospitals are not like other businesses, she said. As an example, Green said, while restaurants are able to raise their product prices to compensate for cost increases, hospitals cannot do the same.

She said "60% of our reimbursement comes from government payers, both Medicare and Medicaid, so it doesn't matter what we charge for our prices. If we increase them, we're still going to get paid the same amount by those payers."

Somewhere in the range of 10% to 15% of RGH's payers are either self-pay or don't pay at all, according to Green.

"That only leaves about 25% of payers that are commercial insurance carriers that, if we do increase our prices, they actually increase our reimbursement," she said.

RGH is one of 11 member hospitals in the New Mexico Rural Hospital Network. Green said the network holds monthly board meetings and this topic has been the central focus for the past several months. According to her presentation, one hospital had not experienced an operating loss in 19 years but had a loss of $1.4 million in Fiscal Year 2023 and is now converting to a Rural Emergency Hospital, which operates under different guidelines.

Another hospital is set to close by December if emergency funds aren't provided, and another is closing its labor and delivery unit. RGH is one of two hospitals in the group considering or initiating reductions in force.

RGH has implemented a first round of RIF by dismissing approximately 10 employees. Another round is anticipated in August upon reconciliation of all cost-saving actions. "These were employees that we felt like the positions could be eliminated without any impact to our operation," Green said.

"All of us frankly are on the same trajectory in terms of our expenses now outpacing our revenue," Green said.

Two main takeaways Green provided in terms of statics were:

• Operating costs pre-COVID in 2019 were about $31 million, while operating costs over the past year were $44 million; a 42% increase.

• Operating revenue in 2019 was about $31 million, and in the last year it was at $36.5 million; an 18% increase.

Green also discussed rising supply costs and how those costs have come back down and stabilized some. These costs are still 20% above what they were in 2019, she said.

RGH is also facing challenges with insurance carriers making payments. Green said.

"There's one carrier in particular that has not been paying us according to the contracted rates that we've agreed upon, and they owe us over $200,000," she said.

Increased labor costs were another aspect of post-pandemic expenses, Green said.

"We've got to stay competitive with the hospital up the road from us (in Clovis)," she said. "Otherwise, we can't recruit nurses and physicians."

In addition, she said, "We're still having to use very expensive traveling nurses because we just are having a hard time recruiting nurses here."

Regarding the nursing situation, Zamora said, "Part of the problem is the salary that we're paying the teachers at CCC (Clovis Community College)," he said. "A nurse can make more than the instructor. That's out of balance there. So, we as legislators need to work on that, too."

Green discussed the option of converting to the Rural Emergency Hospital designation, as she mentioned another hospital had done. Doing this would eliminate inpatient beds at RGH, but the conversion would bring the hospital a $3.2 million annual payment.

"This is a last resort for us because none of us think this is in the best interest for our community," Green said. She believes this would force patients to travel across the border to Texas and even the urban New Mexico hospitals.

Green said if RGH does end up converting, it does not have to be permanent, and that the hospital can change back if leadership chooses.

I think we can ride our ship without having to really go here," Green said. "We believe that just because we're small -- we're independent -- that's not a disadvantage. It's actually a great advantage to our favor because we can be flexible when we need to," Green said.

All non-leadership staff and directors have recently been returned to 40-hour work weeks. However, those in leadership positions remain at 32 hours a week, Green said.

She added that she does not know yet if another round of cuts will be necessary after the one in August.

"We've got to reconcile all of our cost-cutting actions with everything that we know," she said. "Once we get to that, we'll know what our supportable employment level is and whether it can be sustained at current levels or if another round of cuts is going to be necessary."

Green said hospital officials are still waiting for a response from the governor's staff about the financial challenges rural hospitals are facing after nine CEOs and chief financial officers met with them at the beginning of June.