Marcia O'Connor remembers when her hospital was in survival mode.
Choctaw Memorial Hospital had just severed ties with Quorum Health Resources, and O'Connor, who has worked at the hospital for 27 years, entered the position of chief executive officer.
O'Connor is contractually bound not to discuss the details of why Quorum no longer manages the hospital.
“I will tell you that, when I took over the office, we went from $1.5 million in the hole, and we're about at a break-even point now at a three-year period,” she said.
Choctaw Memorial Hospital is a rural hospital in Hugo, a southeast Oklahoma town of about 5,300 people near the state's border with Texas. The hospital serves Choctaw County, population 15,250, and the surrounding area.
The facility is part of a shrinking number of Oklahoma's rural hospitals that's managed locally. As health care grows more complicated and expensive, more and more of Oklahoma's rural hospitals are joining large health systems, which some say offer stability and resources to suffering institutions.
In early 2012, Integris Health entered into a joint venture with Florida-based Health Management Associates to operate five of its regional hospitals in Blackwell, Clinton, Madill, Pryor and Seminole.
SSM Health Care of Oklahoma, which operates St. Anthony Hospital, has a variety of business relationships with 19 hospitals in Oklahoma. Its affiliate hospitals include Newman Memorial Hospital in Shattuck, Purcell Municipal Hospital, Holdenville General Hospital and Share Medical Center in Alva.
Quorum Health Resources, Solara Healthcare and Capella Healthcare also own or manage hospitals throughout the state.
Over the past three years, Mercy, the eighth-largest Catholic health care system in the U.S., has seen its rural presence in Oklahoma grow from two rural hospitals to eight, with varying levels of partnership.
This past week, Mercy hosted a community round table in Watonga to discuss Mercy Hospital Watonga, a hospital it was managing and is now leasing.
For Fred Lucas, Mercy's presence is welcome news. Lucas remembers a time when Watonga had five doctors. Today, the town of 5,111 in northwest Oklahoma has two primary care doctors.
About 33 percent of Oklahoma's primary care physicians practice in rural Oklahoma, even though about 45.7 percent live in rural areas, according to OSU's Office of Rural Health.
Lucas moved to Watonga in 1965 to open his dentist office. Lucas came to rural Oklahoma because he knew the potential a rural community held for a new dentist.
Over the years, Watonga's hospital has struggled. In 2004, Watonga Hospital Trust Authority filed for Chapter 9 bankruptcy after facing several financial crises. About seven years ago, the hospital owed Medicare about $1.3 million for overpayments and reached an agreement to pay $250,000 to settle the matter, according to The Oklahoman archives.
Lucas is comforted by the stability Mercy offers his community, which has seen its population fluctuate over time.
“If there's not a hospital, why would you want to live here?” Lucas said. “Would you want to raise a family here and take the risk of not having doctors? No.”
Role of critical access
Watonga is one of about 32 critical-access hospitals in Oklahoma. A critical-access hospital has 25 or fewer beds and an average length of stay of four days or less.
The classification was created in 1997 after the nation saw a wave of hospital closures.
Between 1983 and 1991, 360 rural hospitals nationwide closed, said Brock Slabach, senior vice president for member services at the National Rural Health Association.
In the 1980s, the way hospitals were reimbursed through Medicare changed. Before the early 1980s, hospitals were reimbursed dollar for dollar, Slabach said. If a service cost $100, the hospital got $100.
But in the 1980s, health care costs started to increase rapidly. In an attempt to cut costs, policymakers revised the Medicare reimbursement system, and hospitals started to be paid on a diagnosis basis.
If a patient came in with an illness that had a $5,000 reimbursement, and it cost the hospital $2,000 to treat the patient, the hospital made money. But if it cost $10,000, the hospital lost money, Slabach said.
“It is not meant for a small-volume facility ... to succeed under that system,” Slabach said. “It's based on the law of averages. If you don't have very many patients to spread your losses and gains on, then over time, you're going to always lose.”
The critical-access hospital program allowed small hospitals to go back to the dollar-for-dollar reimbursement system, he said. This slowed the closure rate and kept many facilities from closing.
It remains unclear what impact the 2010 Affordable Care Act, also known as Obamacare, will have on rural hospitals, he said.
Health care continues to become more and more complex, and as health care reaches that level of complexity, it's almost impossible for a rural community to have the resources available to meet the demands and requirements on its own, said Di Smalley, the regional president of Mercy's west communities.
“Joining a system makes sense for a rural community,” she said. “It provides access to a number of areas that a small community might not otherwise have access to or couldn't afford to have on its own.”
Matt Robison, the vice president of government affairs for the State Chamber of Oklahoma, said businesses look at two main things when choosing a location: access to health care and access to education.
If a community loses its hospital, it loses a major resource for economic development. And when a health system locates within a community, it adds stability to the future of that hospital, he said.
“It's not just one hospital relying on the health care of simply that one community,” Robinson said. “It's an entire network throughout the state helping to stabilize the hospital in any one community.”
In the 27 years that O'Connor has worked at Choctaw Memorial Hospital, two health networks, Integris and Quorum, have managed Choctaw County's hospital.
O'Connor said outside networks are not geared to a rural hospital's needs. Although Choctaw Memorial doesn't have a neurosurgeon or heart surgeon regularly at the hospital, its focus is keeping care within the community.
It recently joined the Southeast Oklahoma Rural Health Network, a collaboration of several rural hospitals in that area of Oklahoma. The network started as a health information exchange and developed into a way these hospitals can work together to provide resources that they might not be able to afford on their own.
O'Connor said she sees this type of collaboration as the future of rural health care in her community. Having a board and administrators who live in the community is important for the sustainability of a rural hospital, she said.
“We're not always about making $3 million or $4 million on a service,” she said. “I'm about building the business. Yes, we've got to eventually make a profit, but you build the business first, you offer the services, you provide good services, and you take care of your people.