Are Idaho’s rural hospitals on the brink of collapse? What medical leaders are saying

In a small farming community in North Idaho, Abner King leads a hospital that was originally built before World War II. The aging building comes with its own set of challenges and is overdue for a replacement.

But King, CEO of Syringa Hospital and Clinics, said the lone hospital in Grangeville doesn’t have the money.

The last major upgrade was the addition of a new patient wing in the late ‘80s. The building still relies on old boiler systems for heat. Some parts have been replaced over the years, but the infrastructure in is need of numerous costly projects, like replacing the piping throughout the structure.

“If you looked at our audited financials for the last 20 years, there has been a positive operating margin for only three of them,” King said. “Every year we’re operating at a loss.”

Syringa Hospital isn’t alone.

Over a dozen other rural hospitals in Idaho are in a precarious financial position, exacerbated by rising costs and workforce shortages.

Hospitals face slim operating margins

The Idaho Hospital Association represents 51 rural hospitals across the state. CEO Brian Whitlock said that half of those have less than 100 days of cash on hand. And half of county, district or nonprofit hospitals have operating margins of less than 1%.

In many of those communities, the hospitals are among the largest employers and economic drivers.

“The stability of health care in 2024 and beyond is tenuous at best,” Whitlock said in a presentation before Legislature’s Economic Outlook and Revenue Assessment Committee in January. “I have mountains of data, bar charts and line graphs that show alarming trends for the future of Idaho’s health care infrastructure and its contributions to the Idaho economy, but I didn’t want to be too depressing.”

So he likened it to a game of Jenga instead, where players remove blocks from a tower one at a time until the whole thing collapses. The blocks represent reimbursement challenges, cyber attacks, failed mergers, aging infrastructure, mortgage debt and negative margins year after year, he said.

“One wrong move with any of these Jenga blocks could potentially bring down any of our hospitals across the state,” he said.

Rising costs spur program closures

Idaho has welcomed record growth over the last 10 years, with the state’s population, or people, age 65 or older increasing by about 55%, Whitlock said. As hospitals see more patients, it’s costing them more to treat those patients when they come.

“Each of our hospitals and health systems has quality, access and affordability as their top priorities, but they are having to balance those health care priorities with skyrocketing costs and declining revenues,” he said. “We decided to ask Idahoans about health care affordability. Do they support controlling costs even if it means limiting services? Or should we maintain access to services even if it costs more?”

A growing number of hospitals in Idaho have made the decision to close certain units that bring in less money than they cost to operate.

Three labor and delivery units have closed in the last year, at West Bonner General Health, a critical access hospital in Sandpoint; Valor Health, a nonprofit hospital in Emmett; and West Valley Medical Center in Caldwell. The closures mean many pregnant Idahoans must travel further to receive care.

“If you’re going to run a labor and delivery program, you need to have a labor and delivery nurse in your hospital 24 hours a day, seven days a week, regardless of whether or not somebody is going into labor or plans to go into labor,” Whitlock told the Idaho Statesman. “They have to be there. And there’s a very high cost associated with that.”

CEO says Emmett hospital’s low cash ‘scary’

Brad Turpin, CEO of Valor Health, said his hospital has less than a few months worth of cash on hand.

“We’re under 100 days,” Turpin said. “We’ve been in the single digits in years past, which is a really scary situation.”

Turpin said sometimes it feels like there’s an underlying assumption that hospitals are rolling in cash. Instead, he said, it’s a constant battle to balance costs and revenues.

Turpin told the Statesman that Valor Health loses money on about three quarters of the patients it sees because of low reimbursements for Medicare, Medicaid and Medicare Advantage plans and drawn-out battles with private health insurers over how much the companies will cover.

The operating margins for health insurance companies and pharmaceutical companies far exceed those of hospitals and clinics — the actual organizations providing health care — he said, referencing a report in Becker’s Hospital Review, a publication specializing in health care news.

“We not arguing that health care is not expensive,” he said. “The layperson sees their bill and thinks, ‘Well, they’re charging this much, they must be doing really well. Either that or they’re bad at business.’ But I don’t think people really understand the difference between what it costs us and what we actually get reimbursed.”

He said one of the most significant costs is labor. In the last few years, the hospital has struggled to attract and retain employees and has had to rely more on traveling nurses who command much higher rates in the competitive market.

Many hospitals receive grants and local tax revenues that help offset losses on patient services. But those sources of funding are not enough to keep up with the rising cost of care.

Some hospitals at risk of closing, report says

A study released in 2021 by the Center for Healthcare Quality and Payment Reform, a national policy-research group, determined that seven hospitals in Idaho, including Syringa Hospital, were at risk of closing because of low financial reserves and losses on patient services. One hospital was at immediate risk of closing.

“Health insurance plans do not pay these hospitals enough to cover the cost of delivering services to patients,” the study said. “Their losses will likely be greater in the future due to the higher costs that all hospitals, particularly small rural hospitals, are experiencing because of inflation and workforce shortages.”

King, the CEO of Syringa Hospital, has worked in health care for nearly 40 years. He’s spent more than half that career in rural health care. And he said it only gets harder every year.

At Syringa Hospital, and other rural hospitals in Idaho, conversations about what services would be cut first in a financial crisis are not uncommon. King told the Statesman his hospital has not had to drop a service in the six years he’s been there.

“But those discussions happen all the time,” he said.

It’s not just Idaho, either. A study from health analytics and consulting firm Chartis found that the percentage of America’s rural hospitals operating “in the red” jumped from 43% to 50% in the last year, the largest change to the metric seen in a 12-month period.

In Idaho, 61% of rural hospitals have a negative operating margin, Billy Balfour, of the Chartis Center for Rural Health, told the Statesman.

Surgery tower breaks, but hospital can’t afford backup

The ramifications of hospitals’ financial challenges can manifest in a myriad of ways.

When a surgery tower broke mid-procedure at Clearwater Valley Hospital in Orofino last year, staff were able to bring in a backup to finish the surgery without harming the patient, according to Whitlock. A surgery tower is a piece of equipment that allows surgeons to see inside the area they’re operating on.

The hospital decided it wouldn’t perform any more surgeries until it had a new backup unit. But the financial condition of the hospital is so dire, he said, that it can’t afford another surgery tower, which he estimates costs around $200,000.

So the hospital began borrowing a backup surgery tower from its sister hospital, St. Mary’s Hospital in Cottonwood. Both hospitals are owned by Kootenai Health, a nonprofit health system based in Coeur d’Alene.

“They will schedule surgeries for two weeks and bring that surgery tower down,” Whitlock said. “Then they pack it up and take it back to Cottonwood. They’re finding a way to make it happen and pull that rabbit out of the hat, but it is having an impact on the community.”

King said many Idahoans live hours away from needed health care services. As a result, rural patients often delay seeking care, sometimes leading them to develop illnesses more complex than they otherwise might have, according to a study published in the National Library of Medicine.

In addition, federal data shows that nearly every county in Idaho does not have enough primary care physicians.

“If I have to drive four hours to Boise to get a primary care visit I might put that off year after year after year until that mole looks really ugly, and all of a sudden I’ve got a problem,” King said. “And for the things you can’t plan, like a car accident, you want a hospital to be there when you need it.”

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