By Lisa Lopez Snyder
Contributing Writer

The situation facing many South Carolina hospitals has all the signs of an unhealthy diagnosis: 6.6% of state residents are unemployed; more than 19% are uninsured; costs keep rising; nurses and physicians are in short supply; and state and federal dollars barely, if at all, cover the actual cost of care for Medicare and Medicaid patients.

“For small, rural hospitals, the picture is especially hostile,” said Lynn Bailey, a health economist in Columbia. “There’s nothing going in your favor.” Aging facilities, whether plumbing and heating ventilation systems or imaging equipment, create additional burdens.

But how are South Carolina hospitals faring overall? The answer depends on a number of factors: geography, local economic conditions, leverage through partnerships and innovative medical and financial management.

Economic woes cast shadow
Job layoffs and factory closings have had ripple effects on hospitals statewide, increasing the number of people who are uninsured and the number of people who cannot afford health insurance even if it is offered at their new jobs. The events have left hospitals to look for ways to improve their own financial health.

Rural Marion County, home to the 124-bed nonprofit Marion Regional Healthcare System, has 13.3% unemployment. Five factories closed in the last five years, among them a Russell Stover Candies factory, which employed some 800 people. Many of those workers had an impact on the hospital’s payor mix through commercial insurance, said Don Lloyd, Marion Regional’s vice president. The hospital reported financial losses of $1.9 million in 2005 and $6.5 million in 2006.

“The real challenge is next to us in Horry County,” Lloyd said. There, some 12 million annual tourists and a growing retiree population help boost the number of private-pay patients and overall market strength.

Some years ago Marion Regional carried out several initiatives. It developed a five-year strategic plan focused on market development, launched a wound management
program to address patients with advanced diabetes who’ve undergone surgery and tailored physician recruitment to doctors’ needs. The health system’s efforts are starting to pay off. Last year, the health system posted a $240,000 profit.

Anderson, the home of the 461-bed nonprofit AnMed Health, has also experienced the loss of long-established employers, among them Santens, a textile plant, and Vytek, a major manufacturer of vinyl siding.

“We’ve seen people lose their insurance coverage,” said Jerry Parrish, AnMed Health vice president for finance. “It’s a combination of folks losing their jobs, changing plans or having higher deductibles.”

Parrish counts its cardiac program as one of its successes to helping the bottom line. “Before we opened our cardiac program in early 2000, a lot of that business bypassed us and went to Greenville,” he said. The hospital also announced plans to invest $70 million over the next four years to renovate the hospital campus downtown, updating all its medical and surgical rooms to meet the needs of a growing and aging baby boomer community.

Hospitals in other parts of the state have tourism or a healthy urban concentration to their advantage. The Midlands is a strong base for nonprofit Palmetto Health. With 1,247 beds systemwide, Palmetto Health serves 70% of Richland County residents and almost 55% of Richland and Lexington counties in its three teaching hospitals, health centers and outreach programs.

In the hub of Columbia, Palmetto Health is positioned within the capital city’s growing communities and has strong affiliations with the University of South Carolina and its medical school, along with a host of other hospitals, institutions and centers. The soon-to-be developed Innovista research campus, a 500-acre USC development of retail, research, recreation and residences to be built near the Congaree River, promises to bring in hundreds of researchers, businesses and residents.

The Medical University of South Carolina, another teaching hospital in Charleston, has been trying to keep up with the growing number of aging baby boomers and the resulting demand for more intensive services. “We have record levels of capacity,” said Raymond S. Greenberg, MUSC president. “A fair amount of growth has to do with more retirees moving to coastal Carolina.”

Its new $275 million Ashley River Tower, a 641,000-square-foot facility, focused on cardiovascular and digestive disease care and scheduled to open in February, aims to address this issue.

Balancing payments, patient care
Declining Medicare and Medicaid reimbursements affect all hospitals, but hit small rural hospitals especially hard. Medicare margins are the lowest for rural hospitals, health economist Bailey said, due to their small size, modest assets and financial reserves. Rural hospitals tend to have a typically older population than urban areas, and because this population requires more intensive and costly services, these hospitals are especially vulnerable.

“Our challenge is trying out how to match the demands of Medicare and Medicaid to what we can afford to do,” said AnMed’s Parrish. “Medicare doesn’t even cover our costs, so that shortfall gets shifted” to private payors. The hospital targets a 4% to 5% operating margin every year, he said, and in managing costs, tries to keep staffing levels flexible.

“We use a lot of part-time employees, and so if we get busy, we flex up. If we’re not real busy, we can flex down,” he said.

“Statewide, you’re always looking at the impact of Medicare on facilities,” said Tommy Cockrell, chief operating officer of the South Carolina Hospital Association.

The solution? Improve efficiency and patient outcomes, say hospital leaders. Preventive health and specialty services are among the efforts that Marion Regional is focused on. It recently launched a Woman’s Place program, a Duke Endowment-funded initiative to improve women’s health.

Free diabetes screenings in the community and a new vascular lab to stem diabetes complications are efforts that hospital CEO and President Tom Dandridge expects to pay off for the Regional Medical Center of Orangeburg & Calhoun Counties, a 286-bed nonprofit.

The two-county area has one of the highest incidences of diabetes in the state. Its two-year-old digitized emergency room allows doctors to do less-invasive surgical procedures. “We’re doing bypasses of major veins and arteries and a variety of stents,” Dandridge said. The technology proves patients don’t have to go far for state-of-the-art care for treatment of chronic conditions, he said.

Other hospitals are looking at the electronic transfer of patient records to improve patient care and lower costs. The Lakelands Rural Health Network, a nonprofit network of hospitals and family practice centers across six counties, will test the exchange of health information. Developed with the guidance and funding from the S.C. Office of Rural Health, the network includes Abbeville, Edgefield, Greenwood, Laurens, McCormick and Saluda counties.

The participating hospitals include Savannah Lakes Medical Center, Abbeville County Memorial Hospital and Edgefield County Hospital. Abbeville County and Edgefield County are “critical access” hospitals, which means they receive, through certification, cost-based reimbursement from Medicare to help them improve financial performance.