Two health clinics are set to close in rural Nebraska. Others could follow.

Sidney clinic
Posted at 10:20 AM, Aug 26, 2023

For the past month, Phyllis and Chris Hammack have been crunching numbers and adjusting their budget to accommodate more frequent trips to Scottsbluff, a two-hour drive from their home in Chappell.

They don’t have much of a choice, said 55-year-old Phyllis Hammack. The medical clinic that Chris, 57, a diabetic, relied on is set to close, leaving him and others in this Panhandle town of 850 people without a local doctor’s office.

Regional West Health Services notified its Sidney and Chappell patients in July that it’s closing its family medicine clinics in both communities. The clinics are set to close Sept. 21 but patients are encouraged to check regarding the specific date their provider will no longer schedule visits.

The closures, like the closure of Lyons’ MercyOne clinic in June, are part of a decades-long decline in health care access in rural communities across the U.S. Now, with rising costs and the evaporation of federal COVID-19 money, some experts fear the trend could accelerate.

“Many people across the country could not receive hospital care in their community when the pandemic began because over 150 rural hospitals had closed between 2005 and 2019. … The pandemic aid has now ended, so closures are likely to increase,” cautioned a recent report from the Center for Healthcare Quality and Payment Reform.

In Sidney, which still has a hospital and associated physicians clinic, some residents may still have to travel 80 miles or more to other Regional West locations in Scottsbluff, Gering or Morrill.

People like Anne Sibell, who said her insurance isn’t accepted elsewhere in town, are forced to decide whether they’ll travel or change their health insurance.

Chappell residents like the Hammacks, who moved there from Colorado three years ago, face even fewer options, with the nearest clinic 30 miles away.

“We as a community were very disappointed not only how it came about but that there was no option but to close,” said Shaunna Mashek, director of Chappell Community Development.

With only two rural hospital closures since 2005, Nebraska has fared better than most other states — a fact that Jed Hansen, executive director of the Nebraska Rural Health Association, attributed to good leadership in rural communities. (Those numbers don’t include clinic closures like the ones in Chappell and Sidney.)

Still, Nebraska’s rural health care providers face many of the same challenges felt elsewhere.

Closures tend to happen in areas with small or declining populations, high unemployment rates and higher numbers of uninsured patients. They often struggle to attract and retain physicians.

All of these challenges can negatively impact a facility’s finances.

Typically, for hospitals in areas with a shrinking population and high unemployment, they lose money for at least three years before closing, said Dr. George Pink, senior research fellow at the Cecil G. Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill.

At any given time, Hansen said, 50%-60% of Nebraska’s critical access hospitals operate within a negative margin. Over half of the 104 hospitals in the state are critical access, meaning they’re smaller and meant to provide short-term acute care.

Faced with significant financial hurdles, Regional West struggled to sustain its Sidney and Chappell clinics, said Mel McNea, interim CEO. The nonprofit’s operating earnings in fiscal year 2022 were down 12.7%.

“These factors demanded a hard look at processes to improve efficiencies and reduce operating costs,” McNea said. “Health systems across the United States are being affected similarly, and Regional West is no different.”

There are three indicators, according to Hansen, that together signal a hospital is on the verge of closing: total revenue of less than $11 million, operational losses for three straight years, and a precipitous revenue drop between the second and third year.

Six rural hospitals in Nebraska meet two of three criteria and are considered vulnerable, Hansen said. Two hospitals meet all three and could close in the next few years. Hansen declined to identify the hospitals.

Nationally, the number of rural hospital closures has fluctuated in the past two decades, veering from a low of three in both 2010 and 2021 to a high of 18 in 2020. Seven closures were reported in 2022. The Sheps Center estimates 12 more rural hospitals will close by the end of this year.

The pandemic was not good for hospitals, Pink said, noting that the influx of federal COVID money created a blip in profitability.

The return to pre-pandemic revenue levels is happening amid a spike in operating costs.

“Labor costs are phenomenal now, supply chain costs are higher, drug costs are higher and it’s a difficult environment for any hospital, let alone our smaller ones,” Hansen said.

For health care organizations operating on a thin 1% or 2% profit margin, ensuring financial stability often leads to cutting or outsourcing services. In most cases, Hansen said, rural emergency medical services are the first to be contracted out.

Two months before announcing their clinic closures, Regional West halted ambulance services, Sibell said.

Since then, the City of Sidney entered into an agreement with Cheyenne County and Morrill County Community Hospital to provide ambulance services to Sidney.

Contracting services or staff is generally more expensive, which contributes to higher operating costs, said David Palm, director of the Center for Health Policy at the University of Nebraska Medical Center.

Over a longer period of time, that could affect a hospital's ability to invest in new technologies and services, he said. It would lead to higher premiums for patients.

While cuts to services may not make as big an impact as a hospital closure, Hansen said rural communities still take a big hit.

“When there’s financial pressure, there’s contraction of services. And those contraction of services mean altered health for a community or region,” he said.

Clinics in rural areas typically have a harder time because their profitability comes from referral of services to hospitals. Often there isn’t a hospital nearby to refer patients to.

In small towns like Chappell, which doesn’t have a hospital or other health care providers, a closure like Regional West’s clinic also greatly impacts the local economy, Mashek said. In total, nine employees worked at the Sidney and Chappell clinics.

Nationally, rural hospitals supported one in every 12 rural jobs in 2020, according to a 2022 report from the American Hospital Association.

Struggling hospitals or clinics often merge with another organization. When that’s not an option, those organizations are forced to declare bankruptcy and close.

After Oakland’s MercyOne Hospital shut down in 2021, its family clinics in Oakland and Lyons remained open.

Recently, as financial pressures persisted, the Oakland MercyOne clinic was acquired by Franciscan Healthcare of West Point. Franciscan Healthcare and MercyOne decided it was best to close the MercyOne Lyons clinic.

Although Oakland and Lyons are only 7 miles apart, Franciscan Healthcare CEO Tyler Toline said his organization may provide potential transportation assistance from Lyons to its Oakland clinic.

As Regional West shutters its clinics in Sidney and Chappell, it and city officials in both communities say they are working to fill the gap, though they declined to provide specifics since details have not been finalized.

In Chappell, Mashek said the city has been working with community members, employees of its West Regional clinic and the CEO of a different health care organization to fill the building. City officials declined to identify the organization.

In the meantime, Chris Hammack, who’s been diabetic since he was 8-years-old, will have to look for a new doctor.

He already drives to Scottsbluff every three months to meet with an endocrinologist. His best bet, Phyllis Hammack said, is setting aside about $250 a month for doctor visits in Scottsbluff.

Although the trips are an inconvenience, Phyllis said they’re fortunate – unlike some of their neighbors, the Hammacks can afford it.

“It’s odd that we can’t keep a clinic or assisted living facility … it’s unusual and a disservice to the community,” Phyllis Hammack said.

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