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Mississippi Delta hospitals battle financial factors to survive

Poverty, declining populations and dwindling inpatient revenue pose threats to the rural hospitals

A pediatric hospital room in Greenwood Leflore Hospital sits empty. The hospital closed down its pediatrics unit in Greenwood, Miss., when it closed the maternity ward last August. 

The 208-bed hospital has hemorrhaged services and staff in the last few years as it fought to stay open, shuttering its ICU, dialysis and rehab units and selling off other specialty services.
A pediatric hospital room in Greenwood Leflore Hospital sits empty. The hospital closed down its pediatrics unit in Greenwood, Miss., when it closed the maternity ward last August. The 208-bed hospital has hemorrhaged services and staff in the last few years as it fought to stay open, shuttering its ICU, dialysis and rehab units and selling off other specialty services. (Lauren Clason/ CQ Roll Call)

ROLLING FORK, Miss. — DeeAnn Brown was not scheduled to work the evening of Friday, March 24. But after a monster tornado leveled the Mississippi Delta town of Rolling Fork and damaged Sharkey-Issaquena Community Hospital, where she is a registered nurse, she and her family rushed to help. 

Storm chasers and high school students dressed for prom were digging out victims. Brown and her family, confused by the destruction and emergency lights, nearly got lost in the four blocks between their car and the hospital.

“When you rolled the windows down,” she said, “you could hear people hollering.” 

The EF4 tornado, one of several that swept through Mississippi and Alabama that night, damaged the hospital’s emergency room and took two of its three ambulances offline. Staff tended patients despite rain coming through the ceiling, working by flashlight when the generator went out. 

About an hour passed before any patients reached the hospital. The next option was 45 miles away. 

In all, 26 people died in the storms, including one of Sharkey-Issaquena’s employees. 

“Without the hospital being there that night, I think the death toll and suffering would have been much worse than what it was,” hospital administrator Jerry Keever said.

But rural hospitals like Sharkey-Issaquena are increasingly endangered, as poverty, declining populations and dwindling inpatient revenue chip away at profits. In 2020, a record 18 were either closed or converted to outpatient facilities, according to the University of North Carolina’s Cecil G. Sheps Center for Health Services Research. 

The federal aid that Congress appropriated during the COVID-19 pandemic seemed to slow the rate of closures, with just 10 hospitals closed or converted between 2021 and 2022. But now some are in worse shape than before, as they struggle with ongoing staff shortages and rising costs.

This is the first story in a series examining the financial state of rural hospitals in the wake of the pandemic, and how communities are grappling with the future now that federal aid is running dry. 

On March 24, Sharkey-Issaquena triaged and transferred around 30 critically injured patients and tended to around 100 more “walking wounded.” 

But today, just a couple patients reside in a field hospital down the road, created with help from the University of Mississippi Medical Center and the state health department. 

The main hospital and nursing home stand empty, sacrificing crucial revenue. The critical access hospital was teetering on the brink of closure before the tornado hit, operating on a negative 2 percent margin in 2020. 

Keever had hoped for a new “rural emergency hospital” designation that would strip the facility of nearly all inpatient care and offer some hope for survival, but the reboot was paused by the tornado. Keever can’t meet the application’s timeline, and he currently has no hospital for federal inspectors to inspect.

He’s still waiting to hear from the Federal Emergency Management Agency and the 10 insurance adjusters that were canvassing the property when CQ Roll Call visited in April. He expects to get around $5 million from insurance, but estimates he could need around $22 million if mold and asbestos force him to build a brand new facility.

For now, he’s focused on reopening the hospital’s mildly damaged nursing home and bringing back its 44 residents. Sharkey-Issaquena nurses have been traveling to check on them at the neighboring facilities where they are currently scattered.

“It’s a revenue thing,” Keever said, “but it’s also a humanity thing.”

Shutting down slowly

Cheerful birds and bumblebees hand-painted by Greenwood Leflore Hospital’s staff cover the walls of the darkened pediatrics unit in Greenwood, Miss. The hospital shuttered the unit when it closed the maternity ward last August. 

The 208-bed hospital has hemorrhaged services and staff in the last few years as it fought to stay open, shuttering its ICU, dialysis and rehab units and selling off other specialty services. 

Hospitals often halt unprofitable care lines before closing completely, and labor and delivery wards are usually the first to go. Now, Greenwood patients must travel 20 miles west or 35 miles northeast for the nearest maternity ward.

Interim CEO Gary Marchand said Greenwood was doing well before the pandemic upended its financial footing. The hospital burned through its $21 million cash reserve by the end of the delta variant wave in summer 2021 on inflated supply and labor costs. The hospital was banking on the promise of another federal aid deal that ultimately never materialized.

“If we knew the spigot was going to be cut off cold June 30,” he said, “we might have acted differently.”

The hospital’s operating margin now stands at negative 30 percent.

Both Greenwood and Sharkey-Issaquena were in talks to merge with the University of Mississippi Medical Center, but discussions ultimately collapsed.

Greenwood’s talks broke down after roughly a year for reasons unknown to Marchand, even after he secured a $10 million line of credit to allay UMMC’s financial concerns. 

“I think they were a little surprised we pulled it together, honestly,” he said.

UMMC declined to comment for this story. The health system laid off 250 employees and implemented temporary pay cuts in 2020, citing a $100 million budget deficit. 

Keever is still discussing other potential partnerships with both UMMC and Delta Health System. Part of the concern, he believed, was the fear of the potential domino effect a merger could trigger with other struggling hospitals looking for help.

“They can’t save everyone,” he said.

Greenwood’s credit line, plus supplemental Medicaid funding and a state grant, should get the hospital through the end of the year, when Marchand expects to hear back on whether the Centers for Medicare and Medicaid Services will okay a waiver to let the hospital convert to a critical access model, a designation reserved for rural hospitals. Medicare pays a 1 percent bonus on the theoretical cost of care for critical access hospitals.

Greenwood is under the distance threshold for critical access designation. But Marchand argued a waiver is justified under President Joe Biden’s equity initiatives, since more than 12 percent of the county’s population lacks access to a car. 

If the waiver is approved, Greenwood will have to close 163 of its remaining inpatient beds to meet the designation’s 25-bed limit. And if it isn’t?

“We go away,” Marchand said.

Pandemic spending

Congress poured money into the national economy as the virus spread. Greenwood and Sharkey-Issaquena received roughly $30.6 million and $4.7 million, respectively, from a $178 billion emergency fund for health care providers. 

Both hospitals also received tens of millions more from two landmark COVID-19 aid laws passed in 2020 and 2021. In April, Mississippi Gov. Tate Reeves, a Republican, also signed into law a $103 million program for hospitals. 

But a series of one-off cash infusions is not a sustainable solution. While inflation and labor shortages are easing, a Kaufman Hall report commissioned by the American Hospital Association last year estimated that contract labor rates were 500 percent more expensive than pre-pandemic levels. Drug and supply costs remained 20 to 25 percent higher. 

Greenwood was paying contract nurses around $70 an hour, Marchand said, up from the usual $30 for in-house staff.

The bigger fight, they believe, is increasing reimbursements. Rural areas have higher rates of patients on Medicare and Medicaid — which pay less than commercial insurance — as well as uninsured patients, and federal rates are trailing inflation.

“Everything is costing us more, but the reimbursements are not keeping up,” Keever said.

The federal government operates more than 20 aid programs for rural hospitals, yet evidence of their success is “pretty equivocal,” said Paula Chatterjee, director of health equity research at the University of Pennsylvania Leonard Davis Institute of Health Economics.

“If we really want to support their viability, we might have to think a little bit bigger in terms of how do we support the overall health and structure of rural communities in order to keep these hospitals afloat,” she said, suggesting economic development tools like “opportunity zones” that encourage investment in rural areas.

Mississippi is also one of 10 states that have not expanded Medicaid in the wake of the 2010 health care law, though the state opted in March to expand postpartum coverage to 12 months  — a partial win for Medicaid advocates.

The governor has dismissed Medicaid expansion as a left-wing talking point, but the state economist determined in 2021 that the savings would cover the roughly $200 million annual cost. Mississippi could even potentially stand to profit, and multiple studies have shown that fewer hospitals close in Medicaid expansion states.

The Mississippi Department of Health declined to comment for this story after initially offering an interview. 

A hospital is also an economic engine for a community and a critical anchor in the Delta, where between 26 percent and 33 percent of people live below the poverty line. Sharkey-Issaquena employs 120 people, the county’s second-largest employer behind the school district. 

Nursing Director Brantley Pearson skipped out on a beach vacation when the tornado hit, and was shuttling equipment between the hospital’s resource center and the field hospital in his Jeep when CQ Roll Call visited. 

If the hospital closes, he said, it’s likely to have broader economic consequences. 

“There wouldn’t be much of a community left,” he said.

This reporting is supported by a fellowship through the Association of Health Care Journalists and funding by the Commonwealth Fund.

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