Like many other rural hospitals across the country, Taylor Regional in the small town of Hawkinsville, Georgia, had gone through years of financial troubles.
When it approached retired Dr. Skip McDannald for help in 2015, he said he quickly spotted problems.
“They were not judicious in the way they were spending money nor were they knowledgeable about the things they were not collecting,” said McDannald, who had served as the CEO of another hospital system. “I don’t want to run down previous management, but the hospital was struggling.”
Alarmed by a rash of recent hospital closings, Georgia lawmakers are now requiring executives and board members at almost all the state’s rural hospitals to receive training on subjects like financial management and strategic planning to improve their decision making and avoid missteps that can precipitate their hospitals’ decline.
Nearly 60 rural Georgia hospitals must ensure their board members, CEOs and chief financial officers complete at least eight hours of classes by the end of next year or risk being fined and losing a valuable state tax credit.
Health care experts say they are not aware of any other state that requires training exclusively for rural hospital officials.
“You need to understand how Medicare flows, Medicaid flows, why it’s important to have a good patient payer mix,” said state Rep. Terry England, an Auburn Republican, who co-sponsored the 2018 bill that mandated the training. “When they say, ‘Yes, I’ll serve on a hospital board,’ they need to understand what they’re getting into.”
Many rural hospitals in the U.S. are struggling to stay open amid changes in their patient populations and how health care is provided. Rural areas also tend to have higher rates of poverty and the uninsured.
More than 100 rural hospitals have closed since 2010 — seven of them in Georgia, according to researchers at the University of North Carolina’s Sheps Center. States that expanded Medicaid under the Affordable Care Act had fewer closures, a 2018 U.S. Government Accountability Office study found. Georgia was not one of those states.
A training program for executives will help, but poor decision making is hardly the main driver of rural hospitals’ woes, said Jimmy Lewis, CEO of HomeTown Health, a network of rural hospitals that includes Taylor Regional.
“Seven hospitals did not close because of this,” he said. “They closed because they simply ran out of money, and the system got too complex for small community hospitals like that.”
Still, maybe some of those hospitals could have seen where they were headed years earlier and “avoided it or downsized and provided a different mix of services to the community,” said Robert Thornton, CEO of SunLink Health Systems, an Atlanta-based company that used to run several rural hospitals in Georgia.
Only about a third of rural hospital CEOs and board chairs surveyed in a 2010 study strongly agreed that their board members understood financial reports or had the ability to spot poor financial performance early.
Rural hospital boards often draw on local business leaders and professionals who may not have expertise in health care. Many of one struggling hospital’s board members were farmers who refused educational opportunities offered by state officials because they didn’t have time, the executive director of Georgia’s State Office of Rural Health, Patsy Whaley, said during a meeting two years ago, according to meeting minutes.
“You’ve got well-intentioned people who are very knowledgeable about their own industries, but the health care field is complicated and not intuitively obvious to someone in another type of business,” said Janice Probst, an expert in rural health at the University of South Carolina who co-authored the 2010 study.
Georgia’s training program aims to ensure hospital executives and board members understand balance sheets and other financial reports, the hospital’s revenue sources and how to budget for long-term projects, according to curriculum standards created by the Georgia Rural Health Innovation Center at Mercer University School of Medicine, which will oversee the program. Participants must pass a test or repeat the course.
The hospitals will be responsible for paying for the training. Mercer does not yet have cost figures from vendors interested in providing it, innovation center Executive Director Debra Stokes said.
Taylor Hospital’s current CEO, Jonathon Green, said he worries the training could expose board members to liability for the hospital’s financial decisions. That could dissuade people in the community from volunteering for the position in the future, he said. Green declined to talk about the hospital’s financial history or how it’s doing today.
McDannald served as Taylor Regional’s CEO until October 2018, when the hospital announced that it was healthy and ready to “shift gears from the recovery phase.”
McDannald said his key achievements include getting the community involved in the hospital’s well-being and raising money to help open an urgent care center. A state tax credit that went into effect in 2017 brought in more than $3 million in donations to Taylor last year, most of which was used for operating expenses, according to state records.
“You have to understand how to run a hospital,” McDannald said. “You have to know the business, but you have to also know the community.”