The Challenge Facing Rural Hospitals

This article is in response to news reports that highlighted a report by Chartis, which said hundreds of rural hospitals are on the verge of closing. 

Valor Health has not been immune to any of the challenges outlined in the Chartis report. Our executive team, Board, and Idaho Hospital Association have regular discussions on the challenges of maintaining a positive margin for rural healthcare entities and the many changes in healthcare that continue to make it difficult. Valor Health hasn’t always had a history of a positive margin from operations when looking at historical financials, and it has had as little as one-half of a day of cash on hand in previous years. Like many rural hospitals, Valor Health has relied on non-operating grants and revenues to help offset financial losses and keep our doors open. This precarious cycle of trying to maintain financial solvency in a world of increasing difficulties in the healthcare industry, particularly rural health, has been an ongoing challenge for decades and is more of a concern now than ever.

As Valor Health navigated the COVID-19 Pandemic, there was a shift in our rigor around obtaining financial solvency because of all the financial support offered by the Pandemic response and the intense focus needed on just maintaining adequate staffing for the huge influx of healthcare needs during that time. After the Pandemic, the nursing shortages, high operating costs, and low utilization of services (“volumes”) were all exacerbated even more negatively as the COVID-19 funds dried up significantly. We worked hard and secured more non-operating revenue than typical hospitals, allowing us to endure some very trying times.

“….we are more stable than ever before and looking to the future with real, tangible optimism.”

Valor Health CEO, Brad Turpen

Like many other hospitals, Valor Health saw post-pandemic expenses staying high or increasing while volumes remained flat or decreased.
Shortages in staffing were not new for Valor Health or the industry, as there has been a shortage of healthcare staff for years. Valor Health tackled these difficulties with a rigorous look at our expenses, recruitment efforts, and service line offerings. It dramatically changed in FY23 to take on our financial challenges. We had a very rough start to FY23, financially speaking, and our staff and leadership team responded admirably. We took Valor Health from a state of financial uncertainty to a place where we are more stable than ever before and looking to the future with real, tangible optimism.

Valor Health Still Cares for ALL Patients, Regardless of Income

Image of a stethascope.

During this time, we had to make some tough decisions and consider whether converting from a Critical Access Hospital to a Rural Emergency Hospital was right for us. We evaluated the option through a national cohort collaboration, and the result was that the Valor Health Board voted to remain a Critical Access Hospital for the time being. Not only would we lose access to inpatient care in our community, but we would be worse off financially.

Valor Health accepts and cares for all patients and does not turn any patients away, no matter their insurance type. We have experienced the difficulties outlined in the article regarding Medicare Advantage plans. There has been a huge push by Medicare Advantage plans to increase their denial rates, making it exceedingly difficult to get reimbursed for the services we provide to patients. Right now, we are sitting around a 15% denial rate, with that varying by the payor, some higher, some lower; we have seen a 36% increase in the total number of denied claims from 2019 to 2023 and a 20% increase in the total dollars associated with those claims. This level of denials is a nationwide concern, causing Valor Health and other rural health systems like ours to begin to lose money on services we provide to those with Medicare Advantage health plans.

One way we are tackling this concern is by building a Revenue Cycle team dedicated to ensuring proper monitoring, workflows, and software tools are in place. We also need Medicare Advantage health plans that realize and address the real challenges they are causing to rural healthcare systems, impacting their ability to remain solvent. We continue to collaborate with other hospitals in Idaho, both independently and through our Idaho Hospital Association, to ensure we are united in confronting the challenges of Medicare Advantage practices we continue to see.

Valor Health Still Supports ALL Insurance Plans

Over 70% of Valor Health’s gross revenue comes from Government Payers such as Medicare, Medicaid, and Medicare Advantage. This means that, at best, we barely break even on those insurance plans, with most of those services provided at a financial loss. We rely heavily on the 26% of our patients with commercial insurance to help cover those losses and provide a positive margin for reinvestment into our employees, health system, and community.

We strive to provide an extremely high level of quality and customer service that is convenient and accessible for our community members. The more our neighbors, especially the almost 45% who have commercial insurance, utilize our services, the better off Valor Health will be in providing the amazing array of services for our citizens of Gem County.

We are continuing to adapt and looking for ways to bring even more services to our community that meet the population’s needs and allow for a better chance of a stable, positive margin for years to come. Some of these service growth areas include imaging, oncology/chemotherapy, telemedicine, lab outreach, pediatrics, and a brand-new urgent care, family medicine, and pediatrics clinic built out on the corner of Highway 16 and Substation Rd.

Running a rural health system is not an easy ship to navigate. It’s always a work in progress, but we keep taking these challenges head-on to improve the wellness of all generations in our community today and into the future. We are grateful to have such a supportive Board, leadership team, engaged staff, and great patients who are fighting hard to keep Valor Health vibrant and alive for years to come.