Bill Klaproth (Host): Welcome to the ASHRM podcast,
made possible by the American Society for Healthcare Risk Management to support
efforts to advance safe and trusted healthcare through enterprise risk
management. You can visit ashrm.org, that's A-S-H-R-M.org/membership to learn
more and to become an ASHRM member. I'm Bill Klaproth. This podcast is part of
ASHRM's Healthcare Risk Management Week. Learn more at
ashrm.org/resources/hrm-week.

Host: On this podcast, we're going to be taking a
look at risk management in a rural hospital as we talk with Toni Inserra,
administrator at South Lyon Medical Center. Toni, welcome.

Toni Inserra: Good morning, Bill. Thank you so much
for having me. It's a pleasure. And ASHRM has always been one of my loves, so
it's nice to be here.

Host: Well, I'm happy to hear that and we're happy
that you are here with us. Talking about risk management in rural hospitals is
very important. And I know a lot of people are going to enjoy this podcast. So,
thank you for your time. So, let's start with PPS. Can you tell us about the
prospective payment system?

Toni Inserra: Absolutely. So, the prospective payment
system, it was established by Medicare and Medicaid as a result of the Social
Security Amendment Act of 1983. The PPS, as we all know, we like to use
initials in healthcare, it's a method of reimbursement in which the Medicare
payment is based on a predetermined fixed amount. So, Medicare determined the
diagnosis-related group. They created that category and they decided that they
would look at that for payment. They were seeing a huge loss by paying by the
fee schedule as many commercial insurances did. And so, they created it in 1983
as an attempt to lower their costs.

Host: You mentioned, this is a diagnosis-related
group or a DRG. You're right, we do like to use initials. So, why are the
diagnosis-related groups or DRGs, why are those important in healthcare?

Toni Inserra: So, the DRG system, it provided a
framework for CMS to begin promoting in their view higher quality of care
standards, while being able to reduce reimbursement rates for them. DRGs were a
diagnosis and the payment would be structured using an average of a certain
area. So, it allowed CMS to understand what services would actually cost. So
for their budgeting purposes or their being able to determine what their costs
would be projected for the next year, they use that system for eliminating
wasteful practices and duplicate payment. So, it was their way to try to keep
the Medicare Medicaid system viable when they started seeing healthcare costs,
especially in the 80s, increasing.

Host: So, there are pluses and minuses to everything
as we know. So then, let's talk about that. First, let's talk about what are
the benefits of PPS in healthcare?

Toni Inserra: So, the biggest benefit is truly for
the insurance. So, it's for Medicare and Medicaid, and it allows them to
estimate the amount of reimbursement for every service line and admission. If a
patient was diagnosed with pneumonia, and they needed an admission, the DRG or
diagnosis-related group may say, "Okay, in the region that you are
located, we will provide a 3.8-day reimbursement." So if the patient was
well and was able to discharge home healed within three days, then hospitals
would really make a 0.8 benefit. But if the patient was sicker, then the
patient may stay for five days. And so, it was a good tool for Medicare
Medicaid, but it really wasn't a good tool for the smaller rural hospitals.

Host: So then, what are the main disadvantages of a
PPS?

Toni Inserra: So, rural hospitals, the costs naturally
trend higher. So often, the DRG is set at an average for the larger urban
facilities in the surrounding area. So, this system immediately caused most
rural hospitals to struggle.

Host: So, let me ask you this, you said in rural
hospitals' costs trend to be higher. Why is that?

Toni Inserra: As understandable, we don't have often
the commercial payer base, so a lot of times you're looking at retired or no
pay or low insured patients. And often in rural areas, you have a higher
complexity of a patient, so you're dealing with a sicker patient and at the
same time you're providing the same services to a lower number of patients. So
if you can spread the cost over a hundred patients, the cost is naturally going
to be less. But if you have to spread that same cost over 10 patients, the cost
is going to be higher and that's the way it's been done in rural hospitals.

Host: Overall, PPS, in your opinion, from where you
sit, is this really more of a plus or a negative?

Toni Inserra: For rural hospitals, it is a negative.

Host: Okay. For the reasons you just stated. Okay.

Toni Inserra: Correct.

Host: So, tell us a little bit about South Lyon
Medical Center.

Toni Inserra: So, we are an absolutely 14-bed
critical access hospital located in a beautiful agricultural valley. Our valley
is known as Mason. We are located in the town of Yerington. Interestingly,
we're one of the nation's largest onion producers. And agriculture is our
greatest product. We are one of the larger employers, but the farms actually
during harvest have more than 3000 workers. So, our population in our hospital
district is about 17,000. And the hospital actually was built in the early
1950s using Hill-Burton funds. The area was found to have a large copper
deposit. And the Anaconda Copper Company located here to mine that, when they
came, they had more than a thousand workers. Healthcare became one of their
priorities to ensure that their workers were covered. And so, the copper
company actually helped create this facility in the early 1950s. Prior to that,
our care was provided by a few independents, but most notably by Dr. Mary
Fulstone. And Dr. Mary was one of the beloved and cherished providers, and she
provided healthcare in our area until her early 90s.

Host: So, you're in an area, the closest hospital to
you is how far away?

Toni Inserra: So, the largest urban hospital for us
is probably like the Reno, Carson area where they have full service, and
they're going to probably travel road and not air, about 80 miles.

Host: You really are, for your region, really an
important health center.

Toni Inserra: We truly are. I can't imagine not
having the facility. We think about if every single emergency resulted at an
ambulance ride for 80 miles. We are the only healthcare provider for outpatient
services as well.

Host: Okay. So, let's talk about then how a hospital
becomes a critical access hospital. How does that happen?

Toni Inserra: So in the 1990s, the hospitals
continued to kind of struggle. And in the late 1980s, early 1990s, as a result
of the PPS or prospective payment model, the nation started seeing hundreds of
rural hospitals closing. So in response to more than 400 rural hospital
closures, Congress created the critical access hospital designation to the
Balanced Budget Act of 1997. It was given its own provider type by Medicare.
And we have our own conditions of participation as well. The program directly
aimed to maintain small rural hospitals that serve residents who, as we kind of
discussed, would otherwise have to drive a long distance for healthcare. The
designation changed reimbursement from the DRG model to cost-based. So, each
facility now is required to complete a detailed cost report annually and then,
Medicare trues it up.

The requirements of critical access, you have to have been
established with Medicare before the law became. You have to be in a state that
has actually allowed the designation of a critical access hospital. You have to
be located more than 35 miles from the nearest hospital or, interestingly, 15
miles in areas where you have mountainous terrain, there are only secondary
roads. So, 15 miles if you're on a dirt road and we have a lot of those here.
So, we are only allowed up to 25 inpatient beds. And we can only have our
patients here on an average throughout the year of not more than 96 hours per
visit. That's one of the difficult provisions of being a CAH, is making sure
that if you admit a patient, they are there for 96 hours or less. And we have
to guarantee that we will always furnish 24-hour emergency care.

Host: So, your emergency department is open 24/7.

Toni Inserra: Yes, correct.

Host: And that I'm sure is a large expense as well.

Toni Inserra: Absolutely. We average 10 patients a
day through our emergency room, but we have to maintain the same staffing, the
same supplies, and equipment as if we saw a hundred patients a day. So again,
we're kind of looking at that cost spread over 10 patients instead of hundred
patients. But the hospitals, we have to have a physician on call and within 30
minutes. In our instance, our physician has an apartment or a little apartment
inside the hospital, so they are always on site. We have to always have a registered
nurse on site. The good thing is that the nurse can work both the ER and the
hospital site. So if she's not busy, she can help in the hospital. Laboratory
and radiology have a 30-minute response time. So, our lab and x-ray are on call
from 7:00 at night until 7:00 in the morning. They are required to be here
within 30 minutes.

Host: So Toni, I know a lot of CAHs converted in the
early 2000s and you converted in 2016. So first of all, why did you convert and
why didn't the hospital convert sooner?

Toni Inserra: So interestingly enough, the Electronic
Healthcare Record Incentive Program in 2011, again, Medicare and Medicaid was
part of the program to encourage facilities to convert to electronic records.
The program, referred to as Meaningful Use, provided financial incentives to
eligible professionals and hospitals. They wanted to implement, upgrade and
demonstrate meaningful use of the the EHR technology. So, just converting
wasn't good enough, there were very high standards. The incentive payments provided
for prospective payment hospitals and critical access hospitals were
significantly different.

So, the critical access hospital designations allowed
smaller hospitals to receive, again, cost-based reimbursement. So, they would
reimburse a hospital that converted to critical access the cost of the EHR
system. It did not include the whole implementation and training costs. So, we
were really struggling with how to pay that, that's millions of dollars. The
incentive program for prospective payment system hospitals, included a ladder
structure for a three-year period that if you met Meaningful Use. So, that
ended up resulting in payments to us of over $5 million, a difference of
probably $2.5 million. The system costs about 2.5 million, and we were able to
see another 2.5 million that we could use for training and other implementation
as well as operations. So, we made the decision to stay PPS as long as we were
still seeing a higher benefit from the Meaningful Use program, the incentive
payment program, than we would see from being cost reimbursed in our inpatient
hospital. So, it was definitely a deliberate decision and was done every six
months to review once the incentives were paid. Then, we looked in 2016 and we
converted to a critical access hospital.

Host: Okay. Got it. So then, looking back over these
past years since becoming a CAH, how has it helped the facility?

Toni Inserra: Without a doubt, it has kept us viable.
We struggled in the 2011 to '14, that was one of the most financially difficult
times for the facility. We had a change of administrator. We had a change of
our billing practices and we converted to critical access. So, there were all
these changes that definitely affected our reimbursement and just even our
billing practices. So, critical access now, we have seen the benefit of
probably 40% higher revenue by being community-based. And we are now struggling
to come out of the pandemic, but we now are able to not make a profit, but at
least remain viable for our community.

Host: So, can you talk more about the challenges of
operating a CAH? And you also mentioned the pandemic. Can you also talk about
the effect the pandemic had on your hospital?

Toni Inserra: Absolutely. So, challenges of operating
a CAH being located in rural areas, I mean education, race and reality have a
dramatic impact on patients with healthcare needs. And rural populations often
have older patient populations. We have typically a higher rate of substance
abuse and mental health needs, and a greater burden of chronic diseases.
Patient adherence and compliance is often very poor. Coordinating specialty
care is very difficult. And, a lot of times, even if you can get a patient
referred and established with a specialist, cardiologist or urology in one of
the larger urban areas, a lot of times the patient has great difficulty even
getting there.

So, low patient volumes, many residents now travel outside
of our area for employment, education and healthcare. So according to analysis
in 2019, the year before the beginning of the COVID pandemic, medium operating
margins were only 1.5% in rural hospitals compared to more than three times
that rate 5.2% among the larger hospitals.

Host: That's a big difference. And then, the
pandemic, as I said, you've mentioned before, it sounds like that really had an
impact on you.

Toni Inserra: We struggled I think as any hospital,
because a lot of the times older hospitals, we have older staff, we saw an
immediate retirement by some of our older, more tenured staff. There was so
much unknown and there was a lot of fear and trepidation with it. But we saw a
dramatic, over a 60% drop in our utilization beginning in the March and April
when the nation saw the lockdown. Critically ill patients coming to the
emergency department were, for the most part, transferred to the larger
hospitals. So, keeping patients in our hospital, we are not designed to have
true isolation rooms. And again, there was so much unknown about the disease in
the beginning that they were immediately transferred to a hospital that had
more treatment options.

As the pandemic developed, I think that then we became more
comfortable being able to treat and keep our patients here. But the environment
of our hospital not having negative air rooms affected our ability to keep inpatients
in our hospital. And there was a large panic in the population as well. And so,
as the pandemic kind of progressed, we started seeing more and more patients.
And I think it was typical of the time, sadly we were actually seeing and
screening patients in the parking lot, which now seems so sad.

Host: So, coming out of it, Toni, now that it's, you
know, been deemed officially over, are there lingering effects or do you see
kind of a light at the end of the tunnel now that we're out of it?

Toni Inserra: I think that probably both of those
might be true. I think the light at the end of the tunnel is that people are
kind of getting back to normal. But one of the dramatic changes we have not
been able to overcome yet is utilization. So utilization, I think that it
became easier for patients to either drive 80 miles to healthcare. You know, if
we became more accustomed that we didn't keep patients in our hospital, you
know, it became more of a known fact and so they would just drive themselves to
the larger urban hospitals. And so, overcoming that and then returning to
utilization, that will help us support the viability of the facility.

Host: Yeah. So, let's talk about that viability of
the facility. You said earlier your operating margins were, you know, 1.5% in
rural hospitals compared to more than three times that rate for larger urban
hospitals, that's really got to be tough. That doesn't give you a lot of room
for improvements or upgrades or recruiting. Can you talk about the challenges
that South Lyon Medical Center faces today?

Toni Inserra: Staffing. Staffing is truly one of our
biggest challenges. Nurses. I mean, we all have heard for many, many years that
we are in a nursing shortage. And as the shortage has become more complicated
during the pandemic, we now rely more on traveling nurses at a cost of three
times what we would normally pay. So, that has had a dramatic effect on my
annual budget, is well now over almost three-quarters of a million dollars just
for nursing, so to sustain all of our facilities. And being able to recruit
healthcare providers, if you aren't really interested in this way of life, it's
kind of a special person that wants to live in a rural area. We think it's
beautiful and amazing. But when you recruit a physician, and they think it's
wonderful, there's wonderful hunting and hiking and fishing and beautiful that,
and then the family becomes involved and the wife will say, "Well, where's
the shopping?" So, challenges, especially recruiting the younger. And for
the most part, even if you look at physicians, going into family practice or
even rural emergency, they're definitely looking at more specialized careers,
not just the family practice, take care of everybody from birth to death.

Host: So now, that we've talked about the challenges
and other things, can we kind of switch gears? What are the benefits of
providing rural healthcare from what you see?

Toni Inserra: Generally, rural communities, we have
lower stress, we have cleaner air, and more privacy as far as sense of space within
your community. I think that we offer a more relaxed pace of life for many of
us. Real providers, they have the ability here to care for families that
they've known forever. And the providers then in turn actually become an
important family member of the patients. That's not out of line at all to have
a gift given to the physician, you know, whether it's eggs or produce or a
card. Here in rural, there's definitely a sense of worth that's exhibited many
times a day being in unique rural.

One of the challenges kind of that we have, but advance of
working in rural, in October of 2007, we actually had the migrant farm that was
exposed to chloropicrin, and it's a nerve agent. It's an organic compound and
it's used to fumigate and fungiside soil. And so, we actually had the planets
all aligned correctly and there was an inversion in the weather and the gas
actually did not dissipate into the atmosphere as it had predicted, and it
actually exposed 156 workers in a field nearby. And we saw them all. And it was
amazing that the staff, we could do it. And within two hours, we had treated
and ended up only hospitalizing a small handful. So, kind of the rural area
that we're proud of being able to do that. The community is supportive of us
for that. We're, I think, in touch with our community a lot more than a rural
facility. We had a farm worker recently that died from a bee sting and they
were working in a field. And as a result of knowing that and having firsthand
knowledge, we were actually able to train the safety officers in those farms
and have them now so they carry EpiPens. So, I really believe that we're a
closer family. We truly are family here, not just a healthcare provider.

Host: I would imagine there's more of a sense of
community.

Toni Inserra: Very much so. As small rural, a lot of
times we offer definitely a higher medical staff-to-patient ratio, so there's a
personalized care.

Host: So, let me ask you this, Toni. When you see or
hear of rural hospitals disappearing across the country, what do you think?
What are your thoughts when you hear that?

Toni Inserra: It's tragic because I think in the
larger urban areas, usually there's even options. Patients have options. In
rural areas, there aren't options. And a lot of times, people label us a
Band-Aid station, and I wear it proudly. We're able to stop the damage from a
heart attack and get a patient transferred to a large area within 22 minutes.
We can stop the devastating damage from a stroke. We can definitely stabilize a
hip fracture and get that patient safely and relatively pain-free to a surgical
center. If the rural facilities are no longer, then those patients, truly the
only option is for generally a volunteer ambulance service. And once an
ambulance has a call and they take that patient, they're out of the valley for
three hours. So now, you have this gap where there truly could be no
healthcare.

Host: Which is really scary.

Toni Inserra: Absolutely.

Host: So from your seat, you live and breathe this
every day. Is there a fix in your mind to help us sustain healthcare in rural
populations? Do you say, you know, "If we just did this, we could keep
these CAHs or have more around the country to provide better healthcare
access"? What are your thoughts on that?

Toni Inserra: I really think it keys to
reimbursement. I think that the critical access model of being cost reimbursed
is spot on. Now, that's Medicare and Medicaid. If you go to the Medicare
Advantage Insurance providers, they are definitely difficult to work with and
don't pay at the same rate as Medicare. So, Medicare is doing cost. They're
trying to make money being a contractor for Medicare. And so, we struggle to be
able to get cost from a lot of the Medicare Advantages. But it's reimbursement.
It's making sure that we aren't overregulated and overburdened. The unfunded
mandates that we see often, whether it be reporting or a mandate to upgrade our
1953 facilities to a higher level of building code, a lot of times, we can't do
that without a lot of money. And even though we're a hospital district and we
are supported by tax, the tax is basically enough to make sure we can keep our
ER open.

Host: Well, thank you for sharing that information.
It is an interesting look from your perspective on what we need to do to help
our critical access hospitals. As we wrap up, Toni, thank you so much for your
time, we appreciate it. When it comes to risk management, what it looks like in
rural hospitals, anything else you want to add?

Toni Inserra: It's interesting because I was actually
hired and became a CPHRM in 2006 after working many years as risk manager, as
the emphasis became more on risk management and the importance of risk
management, I think it took a few years longer to be really get becoming
meaningful in the rural areas. So in 2006, I was the CPHRM and have embraced
that education and we have seen dramatic improvement in risk reduction
activities by embracing enterprise risk management and ensuring that we can
reduce the risks before they ever become something that could be litigated or
could be harmful to patients. So, I became administrator in 2013 and I always
say it's proof that God has a sense of humor. Because I think if anyone working
in risk management, I think I said daily, there's not enough time or money to
do that thankless job. And so, I've been here since 2013. I am still the risk
manager. Hopefully, I have found a gal that I am training and she will be a
great access. But risk management is now, I would put it right under financial
viability, important different facets that it actually helps maintain the
healthcare viability as much as finance.

Host: Absolutely. It's a good way to put it and then
think about it. Well, Toni, thank you much for your time. We appreciate it.

Toni Inserra: You are very welcome, Bill. Thank you
for this opportunity.

Host: You bet. And join the American Society for
Healthcare Risk Management in celebrating HRM Week June 19th through the 23rd
of 2023. This annual event held in the third week of June is the time to show
your appreciation for healthcare risk professionals in your organization and
your community. For more information, visit ashrm.org/resources/hrm-week. You
can also visit South Lyon Medical Center at slmcnv.org. In addition, ASHRM is accepting
nominations for the ASHRM Healthcare Risk Management Professional of the Year
Award. Just go to ashrm.org/education/risk-management-award. And if you found
this podcast helpful, please share it on your social media channels and check
out the full podcast library for topics of interest to you. I'm Bill Klaproth.
Thanks for listening.