Gillette-based Campbell County Health’s revenue began to slip after a 2016 coal downturn prompted hundreds of layoffs at Powder River Basin mines in northeast Wyoming. The sprawling complex of surface mines produce nearly 40% of the nation’s coal.
A series of coal-company bankruptcies followed, along with more layoffs. CCH Chief Operating Officer Colleen Heeter said the community began losing healthcare workers because they moved away with spouses who were let go from the mines.
A ransomware cyber attack hit the hospital in September 2019, arresting its operations for two weeks — costing it an estimated $2 million to $3 million. Then COVID-19 struck, causing patients to put off visits and elective procedures, sapping 50% of the hospital’s revenue.
More layoffs and furloughs at the mines followed, on top of hundreds of jobs that suddenly disappeared in Powder River Basin oil fields. Energy analysts warn the worst is yet to come; they predict some mines in the region might close within the year.
“We know we have to make some changes as it relates to the new normal,” Heeter said.
The coal industry’s outsized influence on local healthcare plays out in coal communities across the nation, which tend to be located in rural areas where providing a full slate of healthcare services was a struggle long before coal’s backslide and the COVID-19 pandemic.
While healthcare providers are struggling in rural communities across the country, the situation at Campbell County Health illustrates the compounding economic crises of the coronavirus pandemic and a historic downturn in coal — forces that strike particularly hard for coal communities in both central Appalachia and Wyoming.
Hospitals in both regions have long struggled with aspects of their rural circumstances: chronic health conditions, aging populations and too few people to pay for the increasing costs of healthcare. Rural coal communities that had enjoyed a patient base with a moderate level of private insurance are seeing more patients rely on Medicaid and Medicare. They’re also seeing an alarming increase in uncompensated care.
Nationally, “the average rural hospital has a 4% operating margin, and most of that margin comes from services provided to people with private insurance,” said Beth O’Connor, executive director of the Virginia Rural Health Association. “If you take those services away, nothing else is paying the bills. I would be amazed if everybody survives.”
There have been 12 closures among rural American hospitals so far this year, according to the NC Rural Health Research Program at the Cecil G. Sheps Center for Health Services Research, and the number is likely to grow substantially before year’s end.
“Everybody is scrambling,” said Debrin Jenkins, executive director of the West Virginia Rural Health Association. “These hospitals were already running in the red even before this.”
Hospitals in coal country at the breaking point
Two hospitals have closed this year in West Virginia, and a third is set to shutter by the end of July, all in coal-producing counties. Fairmont Regional Medical Center in Marion County closed in mid-March, and Williamson Memorial Hospital in Mingo County closed in April. More hospital closures are likely to follow.
Hospitals in coal country were structured to rely on a steady tax base from the industry, as well as good paying jobs that provide health benefits to employees and their families. The permanent losses in coal, along with its effects on ancillary businesses, have destabilized the existing system of how healthcare is paid for and delivered. It’s a monumental challenge for rural coal communities, and an essential factor in a community’s chances of survival beyond coal.
Many believe robust healthcare services are as crucial as housing, roads, water and schools if any rural community is to survive, let alone reinvent itself after the loss of a legacy industry that paid most of the bills. Yet coal’s decline has undercut the ability of local businesses and governments to invest in maintaining those assets.
“It’s the perfect storm for those communities,” said Eric Boley, president of the Wyoming Hospital Association and previously administrator at South Lincoln Medical Center in Kemmerer. “Even prior to COVID-19, the downturn in coal had a really detrimental impact on the communities in a lot of different ways.”
For decades, the coal town of Kemmerer has relied on the Naughton power plant, an associated coal mine and a pair of natural gas processing plants to boost local revenue and help financially support healthcare. One of the three coal-burning units at Naughton powered down in 2019, another will go offline in 2025 while the third is converted to natural gas — actions that will cost hundreds of jobs at the power plant and the Kemmerer Mine.
Rock Springs, Glenrock, Gillette and other Wyoming energy towns faced similar circumstances before the COVID-19 pandemic hammered coal and the oil and gas industries.
“Now, you’ve got hospitals that are literally hemorrhaging [money] because they’ve stopped all of the [elective] procedures and all of the things that actually bring revenue into their hospitals,” Boley said in April. “COVID-19 has just had a total catastrophic impact on healthcare in our state.”
Even as medical providers lean on tele-health technology, many of their patients have poor cell service and worse internet. O’Connor said that one southwestern Virginia hospital still relies on film mammography because it doesn’t have the broadband capacity for a digital machine.
At the same time, coal’s decline continues to sap revenue for hospitals. For example, a portion of Campbell County Health’s funding comes from a mill levy based on property taxes; the healthier the local economy, the more money it generates for the hospital. The county’s three mills dedicated to the hospital generated $18 million three years ago — barely enough to cover the hospital’s annual uncompensated care, CCH’s Heeter said. Now, thanks to the downturn in coal and oil, those same three mills will deliver about $11.2 million in 2020.
That budget-altering challenge is still trending downward.
A month into the pandemic, some Wyoming hospitals reported losing up to 70% of revenue, Boley said. Approximately 1,539 people had lost their jobs in the healthcare and social services sectors in Wyoming from mid-March to the end of April and were receiving unemployment benefits, according to the Wyoming Department of Workforce Services. That doesn’t account for healthcare staff who moved out of the community due to spouses being laid off in coal and oil.
Like many hospitals across the nation, Campbell County Health is desperately trying to stem the loss of healthcare professionals by imposing pay cuts and furloughs before turning to layoffs.
“Things are only going to get worse,” Boley said in April. “If things don’t turn around quickly, I have some serious concerns about whether or not a lot of our hospitals will even survive this. And I’m not being dramatic, I’m being realistic when I take a look at the amount of cash they’re burning to try to stay open and trying to keep their communities protected. We’ve got some tough times ahead of us.”
By mid-May, Wyoming hospitals and healthcare providers had received two injections of CARES Act relief funds, totalling about $139 million; a lifeline that likely prevented one or more hospital closures — for now, Boley said. Uncompensated care is accelerating and hospitals are simply trying to emerge from the pandemic intact.
Many Wyoming hospitals resumed non-emergency procedures after the Centers for Medicare and Medicaid Services revised its COVID-19 guidelines on April 19. Central Appalachian hospitals resumed in late April and early May. However, hospitals everywhere are still limited in the number of non-emergency procedures they can take on due to continuing protective measures for COVID-19 — and many people continue to put off seeking health care from fear they may be exposed to the virus.
Reacting to a pandemic in a coal crisis
Congress included $100 billion for hospitals in the $2 trillion CARES Act, which has staunched some of the fiscal bleeding. But rural hospital leaders say the relief was just a band-aid.
“There’s not enough money that Congress can print to underwrite the cost of all of this,” said Ballad Health CEO Alan Levine. “The faster we get our operations back up, the faster we get back to financial stability.”
Ballad Health is Southwest Virginia’s dominant hospital chain. The non-profit, which also covers northeast Tennessee, formed through the merger of two, previously competing non-profit chains that were both losing millions of dollars. Virginia did not expand Medicaid until 2019, after two hospitals had closed. Tennessee, which still hasn’t expanded Medicaid, has seen 13 hospital closures since 2000.
Ballad received $38 million from the CARES Act, but “$38 million doesn’t make up for more than $100 million in terms of cash flow that we’ve lost … from where we were a year ago,” Levine said. Additionally, Ballad received a $200 million advance on Medicare that it must pay back.
The hospital chain should manage through the fall, Levine said, but the future is still hazy because of uncertainty about how the pandemic will play out.
“Only 17% of our in-patient revenue is covered by commercial insurance, 60% Medicare and 15% is Medicaid,” Levine said. “If there’s a small reduction in the number of people covered by insurance, or an increase in the number of people who have high deductibles, all of that could have a major effect financially on the system. We’re watching all of that in terms of our cash flow.”
The closure of a clinic or hospital creates an economic ripple that has an outsized effect on rural places that already lack large pools of employers.
“For most rural communities, the hospital is one of the top three employers; usually the school district and hospital are one and two,” O’Connor said. “If you take that hospital away, not only are you losing individual jobs, but those are good paying jobs — doctors and nurses and respiratory therapists and whatnot — good jobs with good benefits paying a lot into the tax base of a community.”
Suppliers and other support businesses also take a hit, as well as restaurants and retail establishments that benefit from having doctors, nurses and other medical personnel as customers.
The problems afflicting coal country’s hospitals began well before the pandemic, and relief money from the CARES Act and other sources will, at best, keep them going only for the short-term. More comprehensive solutions remain elusive, especially given the political gridlock in Washington, D.C., and the limitations of state funding support.
Meanwhile, healthcare systems are bracing for more waves of COVID-19 infections — whether as states begin to reopen, or when cold weather returns.
“I don’t think we’ve hit that tipping point yet so far as seeing these infections,” said Jenkins of the West Virginia Rural Health Association. “We really don’t know how many people are sick, especially in these very rural communities that nobody is going to. I think the infection will really step up if people don’t social distance. When things open up, I think we’ll see a spike, but I think we’ll see a huge spike this fall.”
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