Rural Hospitals, Mike Bell v. CMR’s non-analysis

Dear Group,

Mike Bell is the Democratic candidate for Washington State Representative (Position 2) against Joel Kretz in Legislative District 7, a huge rural district covering the northeast corner of Washington State and extending into the northern Spokane County.. Mike Bell is a retired Certified Public Accountant with a deep understanding of the finances of rural healthcare. He operated a CPA practice working with healthcare organizations for about 20 years with 20 employees in 14 states working “with about 100 hospitals, clinics, and nursing homes.”

I’ve heard him speak on the topic of rural hospitals twice in person. On July 20 he was interviewed by Doug Nadvornick on Spokane Public Radio. I’ve transcribed below the part of the interview in which Mike Bell speaks on the plight of rural hospitals. (You can listen to this very interesting interview here.) The closing of a rural hospital is often the beginning of a death spiral for a rural community. These hospitals are important linchpins. 

BELL: Let me just say that though the biggest concern I’ve got in healthcare right now is in rural areas (I’ve worked with every one of the hospitals and clinics in the 7th District.) I was up in Republic recently talking with them and they said the most important asset they had in their community was the hospital. I explained to them that seven years ago bad debts and charity care had just about killed off all the hospitals in rural America. They were growing to the tune of 25% a year. So a million dollars in bad debts and then several years later it’s $2 million and they were out of cash. Liabilities were high. They had already tapped the community for everything they could get and a lot of them were on the brink of going under.  Then all the sudden the bad debts declined. In the example, down from 2 million to 1 million and then declined again to 650,000 and suddenly they were back in the black. Their cash reserves were going back up and and that was what saved them. That was seven years ago.

NADVORNICK: Can I ask why did their debts declined so drastically?

BELL: Well, it was because of the Affordable Care Act. The Affordable Care Act required  people to get insurance and expanded Medicaid, so it reduces the uncompensated care, bad debts and charity care that were causing them such financial problems. So in my opinion it is this: that if you voted against the Affordable Care Act for those folks in Republic and Chewelah and in Newport you were voting against your local hospital because the Affordable Care Act was the one thing that saved them. There was one legislator that voted 50 times against the Affordable Care Act and that was Cathy McMorris-Rodgers. So she effectively voted 50 times to close the hospital that you consider the most important asset. That to me suggests that a lot of people are uninformed about the benefits of the Affordable Care Act. The concern I’ve got now is that of the bad debts are starting to creep up again because the current administration is undermining the Affordable Care Act. The Individual Mandate is not required. Insurance companies are not getting the subsidies that they require. Insurance rates are skyrocketing and it wouldn’t surprise me at this time next year if those bad debts are back up to where they were seven years ago and were then jeopardizing the rural hospital systems.

NADVORNICK: So let me go one step deeper. How did the Affordable Care Act help those hospitals reduce their debts?

BELL: Well, the Affordable Care Act…actually the bad debts and charity care were primarily caused by uninsured patients and of course the rural hospitals accept one and all regardless of ability to pay. The Affordable Care Act expanded Medicaid which covered, I think, 700,000 people here in Washington. It also required individuals to buy insurance, and some of them, many of them, were subsidized so they could afford it. It required employers to provide insurance so the uninsured rates declined significantly and of course the inverse of that is that bad debts and charity care also declined. But now we’re seeing that trend reverse, and it concerns me a lot. I worked very hard for 25 years to make sure those hospitals stayed open, and we didn’t lose any during my time, but I’m afraid that we’re on the verge of seeing a significant change in rural healthcare and that bothers me. It appears that a lot of people are voting against their own interest.

NADVORNICK: So as the state legislator what would you do in Olympia because you don’t have authority over the Affordable Care Act. The Affordable Care Act could be nullified, reversed by Congress. What do you do in Olympia to counteract that?

BELL: I think in Olympia what we have to do is is take a look at the rural hospital systems and if the federal government is not going to step in and make sure that they have the resources they need then I think the state needs to step in and take its place. So what I can do is make sure that people are aware of the danger. We don’t want to wait until after hospitals are closing because once they close they don’t open up again very easily. The professionals in the community move out. Frankly, if I have rural hospitals close that community probably will probably shrink dramatically. For every hospital job that’s lost there’s one or two or maybe even three jobs lost in the community because employers don’t want to move into a community that does not have a hospital. Retired people don’t want to live in a community without a hospital. It could be catastrophic for rural Washington and other rural places around the country. I can be the voice of those rural communities and make sure they get the attention they need.

I have no reason to doubt Mike Bell’s analysis of the situation with rural hospitals. I think sending such a man to Olympia to replace the incumbent is a great idea. (Along with Karen Hardy and Randy Michaelis the other two Democratic District 7 candidates.)

How does McMorris Rodgers assess the plight of rural hospitals? She tried to tackle the question in Green Bluff on May 29. I detailed and critiqued her answer in a post entitled CMR’s Non-Solution to the Health Care Dilemma, but I offer her words below to contrast with Mike Bell’s understanding. She does not grasp the economic difference between the cost to provide a medical service and the grossly distorted and inflated amount that is typically charged for the service in our bizarre health care system. Read and see if you agree:

One thing about Medicare and Medicaid. The government doesn’t pay the full cost of actually providing Medicare and Medicaid. So…ah…any provider, any doctor, any hospital, any physical therapist…anybody who takes Medicare or Medicaid will lose money every time someone comes in with their Medicare card or a Medicaid card. Medicaid is..I believe, 30, 35% of the actual cost and Medicare is 60, 70% of the actual cost…so the providers…how do the providers actually…how do the hospitals stay in business? How does a doctor stay in business? They’re making….so they charge the private health insurance higher so that they can keep their doors open. So…so that’s where we need to be honest about the actual cost…and I believe that the government needs…I have supported for our rural communities…so we’re losing our hospitals in rural areas right now because 70, 80% of their patients are on Medicare or Medicaid and they’re losing so much money every time somebody comes in with Medicare/Medicaid….They can’t keep their doors open!  So…. We’re not being honest about actual cost of, of a what the…way it currently works.. And that’s where I think Medicare is an important program and I, I believe we’ve got to make sure it is secure but it is on a path…right now it is not on a stable path and we’re signing up twenty thousand people a day.

Summary of CMR’s argument: Rural health care providers are in danger of going out of business because Medicare and Medicaid don’t pay enough. This is like the blind man examining an elephant. Holding firmly to the tip of the tail she declares her understanding of the essence of the elephant. Let’s elect a Representative with the bandwidth to perceive the whole animal. 

Keep to the high ground,