JIM LEHRER: Now another in our continuing series of reports on the changing face of American medicine. Tonight: the problems of rural hospitals. Betty Ann Bowser reports from Eastern Colorado.
BETTY ANN BOWSER: Burlington is a small farming and ranching community on the Eastern plains of Colorado near the Kansas border. It's so small that it has only one hospital to serve the entire county. Named for the famous trail-blazer, Kit Carson, the hospital has played a large part in people's lives and deaths, according to these folks who meet daily at the Daylight Donut Shop on the Main Street of town.
RUSS WILCOX, Retired Farm Supplier: I made a trip up there in the middle of the night one night to give his wife some blood--
OTHER GENTLEMAN: Right.
RUSS WILCOX: --after one of the births of one of their children. Two weeks ago my mother died in this same hospital. So our--our connections with our hospital run pretty--pretty deeply here and have for a long time.
BETTY ANN BOWSER: Bob McCelland, Russ Davis, Gene Penney, and Ben Parmer are retired farmers. Russ Wilcox is a retired farm supplier. Their children were all born at Kit Carson Memorial. Gene Penney's son's life was saved there after he lost his arm in a farming accident, and Ben Parmer's wife died there in 1987.
BEN PARMER, Retired Farmer: She had cancer. And while we went to Denver some for treatment, yet, the latter days, the few days she was in the hospital, and I stayed until the body was taken, and I got things together, and I started home, and I hadn't really thought of it until I started home, and all at once I just thanked God that I was driving home from the Burlington hospital and not Denver.
BETTY ANN BOWSER: Kit Carson Memorial has been a source of community pride since 1948. While most rural areas turned to the federal government for hospital funding, the county turned to its residents. Many farmers set aside 10 acres of land and pledged those crop sales to the new hospital.
RUSS WILCOX: You hauled a load of cattle to Denver. You brought back a load of bricks, if you were a high school student, you were down on the railroad unloading cement, as one young man just told us here a few moments ago. So everyone is involved. It was an absolute, 100 percent, unqualified community project.
BETTY ANN BOWSER: But times have changed. These days more and more of the rural county's residents have to go to Denver 60 miles away for their medical care.
BOB McCLELLAND: I have to get to Denver by 11.
BETTY ANN BOWSER: Bob McClelland left the cafe to take his wife to an orthopedic surgeon. He's also under the care of a cardiologist in the city.
SPOKESPERSON: Good morning, Kit Carson County Hospital. This is Marty Jo.
BETTY ANN BOWSER: Because of the enormous change in the nation's health system Kit Carson is struggling to survive. Technological advances and managed care plans have drawn patients to the cities and their big hospitals, leaving rural hospitals all over the country scrambling to stay economically healthy.
JEFF GOLDSMITH, Health Policy Analyst: The demand for hospital care has shrunk significantly in the last 20 years.
BETTY ANN BOWSER: Health care analyst Jeff Goldsmith says that's because the role of rural hospitals has changed.
JEFF GOLDSMITH: Well, a lot of things that you needed to be hospitalized for thirty or forty years ago can now be managed by prescription drugs or through a procedure that doesn't take very long to recover. You've got a lot of facilities that were built for a different purpose than they today serve that are mostly empty.
BETTY ANN BOWSER: In the space of 15 years, the bed count at Kit Carson went from forty-nine to twenty-four, and when the NewsHour paid a visit recently, only four beds were occupied. The hospital occupancy rate usually runs at about 20 percent.
DR. YOUNGER: (with patients) How are you doing today? Don't have any swelling?
BETTY ANN BOWSER: More efficient medicine and a shrinking population are not Kit Carson's only problems. Over the years, the hospital has also suffered from lower payments from insurers. Managed care programs pay less per patient than traditional insurance plans and Medicare--the government program for the elderly--has been cutting costs in order to keep itself financially viable. Since three quarters of this hospital's inpatients are on Medicare, the belt-tightening has been particularly bad news for the hospital's bottom line. Dee Cure is a county native and the hospital's CEO.
DEE CURE, Hospital Administrator: Every year Medicare reconciles what they pay us with what it costs us. In 1996 we got 78 cents of every dollar we expensed--what it actually cost us--so we lost money on every dollar. In 1995 we were paid 81 cents for every dollar, so is declining already based on cuts that have gone into over time. And we join--we're in a pretty good following. There are 700 hospitals--I'm told--in the whole nation that don't make their expenses on Medicare.
BETTY ANN BOWSER: With Medicare in danger of going broke early in the next century, former three term Governor of Colorado Richard Lamm thinks one solution is obvious--close the hospitals that aren't needed.
RICHARD LAMM, The Center for Public Policy, University of Denver: We have this 7-11 theory of hospitals where we want a hospital on every corner filled with every magic equipment. But we as a nation are spending so much money unnecessarily with--50 percent of the hospital beds in Colorado are empty, including 50 percent of our rural hospitals, so something has to close.
BETTY ANN BOWSER: For rural hospitals that aren't facing imminent closure , analyst Goldsmith thinks there's an alternative.
JEFF GOLDSMITH: For every rural institution that needs to close there may be four or five that need to change what they do. But the real issue is what does the hospital do; how does it define its business; and does it ask its communities in a thoughtful way what they need in the way of health services and then rearrange what they do to provide them? Dee Cure has worked hard for four years to rearrange what Kit Carson Memorial does to make sure it is not one of those forced to close.
DEE CURE: It has been a belief in rural that you're a service organization, you're almost a charity, and that you will always be there, and the communities have to come to an understanding of the costs of operation, of the risks involved, the vulnerability of both the institution and the population in the community.
BETTY ANN BOWSER: As part of Cure's reform, the hospital has moved outside of its walls. Almost every day, there's a mobile unit parked out back filled with equipment to perform a variety of tests: thallium, treadmill, CAT scans, MRIs. The hospital also offers home health services, hospice, and physical therapy. Recently the hospital recognized another acute need. The county was has the highest incidence of heart disease in the state, but no cardiac rehabilitation program. So Kit Carson started one, and it's making money.
BOB MC CLELLAND: If we didn't have this rehab, my legs wouldn't be solid like that, and my heart is much better than it was.
BETTY ANN BOWSER: CEO Cure also enlisted rural hospital consultant Tim Johnson to help cut costs.
TIM JOHNSON, Rural Hospital Consultant: They had lost over a million and a half dollars in operations, which is a lot of money for a hospital that size, actually for any hospital. Probably the number one thing we were able to accomplish there was education and working with the folks to overcome historical operational things that might have worked for 20 or 30 years before we got there, but now, with the advent of managed care and growing Medicare populations, and the changing demographics in the rural community, those things just simply don't work anymore.
BETTY ANN BOWSER: His solutions were as simple as keeping better track of supplies and billing, as allowing the supplier instead of staff to put labels on IV bags. These changes helped put Kit Carson into the black the last two years. But the hospital is still operating on the edge. Every additional cost--like the need to raise nurses's salaries to attract qualified applicants--hurts. That's why the hospital staff is nervously watching the debate now unfolding in Congress over cuts in Medicare.
BRUCE VLADECK, Medicare Administrator: About $33 billion in total savings over five years will come from reduction in payments to hospitals.
BETTY ANN BOWSER: Speaking for the administration, Medicare Chief Bruce Vladeck has proposed to cut out $100 billion from Medicare over the next five years, but Vladeck says rural hospitals shouldn't worry.
BRUCE VLADECK: The average rural hospital will be better off under the whole package of proposals than it would be without any changes in the law. And we want to err on the side of having more rural--too many rural hospitals rather than fewer. It's not maybe best for the Medicare program very narrowly defined, but from a social point of view, from a human point of view, that's probably a reasonable way to spend our money.
BETTY ANN BOWSER: For economic reasons Former Governor Lamm thinks the government is erring on the wrong side.
RICHARD LAMM: The dreams of the 60's cannot be accomplished by the economy of the 90's. We've got--I believe--some wonderful opportunities in America to create better health care through closing some facilities, and I would love to hear the President say that.
BETTY ANN BOWSER: It will be a while before Dee Cure knows how Kit Carson will be affected by the Medicare debate, so besides continuing the belt-tightening she's also reaching out beyond her small community for help. For sometime now she has been solidifying her relationship with a large Denver hospital, St. Anthony's. It's been a lifeline to her in the past when patients have needed specialists or been critically ill. The hospital has recently begun donating equipment to her that it no longer can use.
Cure's long-term survival strategy is to start a county-wide managed care program with St. Anthony's help. That could make Kit Carson Memorial the primary care center for the majority of the county's residents, who would then only have to go to Denver for highly specialized treatments. It would also bring in new patients and additional revenue the hospital needs to survive.
DEE CURE: My vision is to kind of put that together like the rural cooperatives are. There have been rural cooperatives to do electrification. There's been rural cooperatives for the farmers to band together. Why can't health care purchasers band together also?
BETTY ANN BOWSER: Whether Kit Carson can put that vision together in time remains questionable. Without substantial increases in Medicare payments the hospital is projecting tougher financial times ahead.