Tennessee’s Struggling Rural Hospitals Seek Outside Help To Restructure

Many rural hospitals across Tennessee are about to get some outside advice on how to restructure.

The state has launched a program to help rural hospitals hire outside consultants, after approving $1 million a year as part of the Rural Hospital Transformation Act.

The law passed in 2018 was a response to the 11 rural hospitals that have closed in recent years due to demographic shifts and policy decisions, such as rejecting Medicaid expansion. Nationally,
one in five rural hospitals is at risk of closure.

“Hospitals are a vital part of the economic fabric of rural Tennessee,” Tennessee Economic Development Commissioner Bob Rolfe says. “It’s critically important that we ensure they remain a viable source of both quality jobs for residents and essential care for patients.”

The state has now hired Navigant Consulting out of Chicago to craft restructuring plans that will provide a sustainable business model.

The company has
been working on the national level to influence telehealth reimbursement rates and Medicare payments that could support standalone emergency departments. Navigant has also encouraged partnerships with academic medical centers and regional health systems.

State officials say they hope to offer the consulting to at least 10 hospitals in the first two years. They have until May 10 to fill out a 
15-page application.

Lincoln Health System in Fayetteville is putting the finishing touches on its application. CEO Candie Starr says it may be easier for her board of local doctors and county commissioners to hear an outsider say they need to make tough decisions, like cutting their labor and delivery unit or reducing the hospital’s surgical offerings.

“It happens in my household, too,” she says. “I tell my husband something, he doesn’t listen. Then my sister-in-law tells him the same thing, then all of a sudden, it’s gospel. It’s kind of the same thing here.”

A
21-member state panel will decide which hospitals get consulting help, based on their need and whether they’re likely to implement the restructuring recommendations.

“It’s just very hard to come to grips with the fact that we may have to not perform certain services in order to save the things that you absolutely want to have,” Starr says.

In the case of Lincoln Health System, Starr says maintaining an emergency room is a must. But the nonprofit government hospital has already trimmed programs to cut costs.

“We have tried and we have done many things,” she says. “We’re going to have to make a commitment to take the help. Whatever they come up with, we’re going to sign the agreement, and we’re just going to have to make it happen.”