Kansas’ Medicaid opt-out partly to blame for Independence hospital’s closure

Kansas will lose its first hospital in nine years when Mercy Hospital in Independence begins a phased closure starting Oct. 10 – a victim of changes in hospital reimbursement and slow depopulation.

The hospital has struggled financially for a few years and officials tried for months to negotiate agreements with other hospitals in the region. In late July, they signed a preliminary agreement to sell its assets to Coffeyville Regional Medical Center, but last week officials said they were calling a halt the talks without an agreement.

About 190 jobs are affected.

There are hospitals in Neodesha, about 16 miles away, and Coffeyville, about 20 miles away.

On Tuesday, Lynn Britton, president and CEO of the Mercy Hospital system, which is based in St. Louis, was in Independence to thank the staff and answer questions.

Britton said in an interview afterward that the hospital will close for several reasons, including the slow depopulation of southeast Kansas and the difficulty in attracting doctors and skilled professionals. He also mentioned that Kansas’ decision not to expand Medicaid was part of it as well.

The Affordable Care Act, often called Obamacare, reduced reimbursement to hospitals in exchange for expanding the number of people covered under Medicaid. The idea was that the greater volume of patients would make up for the thinner margins.

But the U.S. Supreme Court in 2012 allowed states to opt out of Medicaid expansion. Kansas and 19 other states have not expanded it.

Britton said the hospital’s financial situation would have improved significantly if Kansas had expanded Medicaid.

“I’m not sure it would be enough,” Britton said. “But the evidence is clear that the reimbursement would have helped, no question.”

It may not be the last hospital closure in Kansas. Mercy Hospital in Fort Scott is in a similar situation.

It is studying its options, which Mercy calls a “process of discernment,” which includes talking to Via Christi’s hospital in Pittsburg.

The Kansas Hospital Association on it website this week says the state has lost out on almost $725 million in federal dollars from Medicaid, called KanCare in Kansas, since Jan. 1, 2014. Tom Bell, president of the KHA, said that all Kansas hospitals are feeling more stressed than they used to, not just rural ones.

He cited the dramatic changes in how health care is reimbursed: based on quality rather than quantity, which means having to deal with a host of new regulations under ACA, only some of which make sense. Insurance companies and the government have both pushed financial risk onto the hospitals, and the financial strain has been made much worse by Kansas’ decision not to expand Medicaid, he said.

Bell said he couldn’t specify the number of hospitals in danger of closing. Many times, local governments or communities will raise a tax or pass a bond to support their hospital, instead of letting it close.

“That’s a tax shift from Washington and Topeka to the local units of government to foot the bill,” Bell said.

Reach Dan Voorhis at 316-268-6577 or Follow him on Twitter: @danvoorhis.