Rural Hospitals Get Some Relief, Other Financial Issues Remain

DENVER, Colo. (CBS4) – After weeks of waiting, Critical Access Hospitals and Rural Health Clinics can now apply for forgivable loans from the Small Business Administration. Originally, many of the facilities were left out of the Paycheck Protection Program because of how the guidelines were interpreted.

On Tuesday, Melissa Memorial Hospital's interim CEO, Cathy Harshbarger, learned the facility, located in Holyoke, was approved for a $1.4 million loan through the PPP. Before the long-awaited news, the hospital furloughed 20% of staff and executives estimated there was only enough cash on hand to last until the summer. Now furloughed staff will be able to return to work.

"It's a lifesaver, and without it, I don't know how we would have made the course forward," Harshbarger said. "(We're) very grateful for the work that was done by our senators and the fact that you guys had gotten the word out that this was a problem for us, because without that, I think we would really be in a big challenge as far as even bringing employees back at all."

Just last week, many rural hospitals couldn't access those forgivable loans because they receive public funding.

From the beginning, a bipartisan group of Colorado lawmakers, including Sens. Cory Gardner and Michael Bennet, as well as Reps. Joe Neguse, Scott Tipton, Ken Buck and Doug Lamborn, urged the Small Business Administration to ensure rural facilities aren't left out in the next round of forgivable loans. On Friday, the group announced it had helped secure an updated guidance with the SBA.

"Many times, these hospitals in rural communities are the largest employer in the area, and certainly the only health safety net that they have," said Gardner. "One hospital I spoke to has already received $3 million for the Paycheck Protection Program, so we're very excited that it's starting to work, to not only keep these jobs intact, but to keep these hospital doors open."

The Colorado Hospital Association expects a $3.1 billion impact to hospitals in the state because of COVID-19. Most hospitals, regardless of location or size, are facing massive shortfalls of revenue due to a several week pause on elective procedures.

For rural hospitals, access to forgivable loans will be a critical lifeline in covering payroll, but the shortage of revenue continues to be the biggest threat to their financial well being. CBS4 previously reported how the ability to generate revenue at Melissa Memorial Hospital was down 70%.

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"Certainly it's not just the rural hospitals, but because our rural hospitals are disproportionately vulnerable, we are most worried about their ability to keep their doors open," said Katherine Mulready, Senior VP and Chief Strategy Officer with the Colorado Hospital Association.

According to the Colorado Rural Health Association, 18 of 40 rural hospitals in Colorado were already operating in the red prior to the pandemic. Many situations have only been made worse by the temporary limits on elective surgeries, as well as a steep drop offs in visitors. An executive at a facility in Granby described the situation to CBS4 last week.

"Our ER visits are down by about 50%, OR volume is down by probably 70%, and our clinic, our outpatient volume is down by over 80%," said Jason Cleckler, CEO of Middle Park Health.

On top of the Paycheck Protection Program's forgivable loans, large sums of federal money have been made available to rural facilities through Medicare Advantage and the CARES Act, but the CHA says billions more will be needed to make up for revenue shortages.

"The federal assistance, which is coming through in a variety of forms, will help alleviate some of that, but we're anticipating that it would be less than 20-25% of the overall financial hit," said Mulready.

At Melissa Memorial Hospital, Harsbarger said revenue within the last month is about $1 million less than the same period last year. There's hope things will change with the start of some elective surgeries, but past losses and people's hesitation to visit the hospital during a pandemic threaten the hospital's ability to rebound.

"When we don't have income coming in, we actually don't have a lot of operating cash to weather that storm, so basically it can close your facility," Harshbarger said. "What's the community going to do for care if it's not available here and they have to go two hours away to get that care?"

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