Magna Carta News
Wednesday, November 19, 2003
Oklahoma House of Representatives
Media Division
November 19, 2003
OKLAHOMA CITY - The director of a state health agency contends that economic development cannot flourish in rural Oklahoma communities without adequate health care.
That was the message presented recently to the House Rural Area Development Task Force by Val Schott, director of the state Office of Rural Health. The legislative panel, led by Rep. Dale Turner, D-Holdenville, and Sen. Jay Paul Gumm, D-Durant, is studying incentives to attract economic development to rural Oklahoma.
"We've discovered that industry will not move to a community, and existing businesses have difficulty expanding, where people are unable to receive quality health care," Schott said. "Access to health care must be available if an industry is going to seriously consider moving to a rural city or town."
"My legislative district lost a hospital in Wetumka," Turner said. "I know how vital it is to have a health care facility that can treat the injured and the ill, help contribute to the financial base of a rural community and provide a means to attract economic development."
Gumm agreed. "As we work to improve the economic future of rural communities, health care is a vital part of the mix," he said. "That is why the Rural Area Development Task Force is looking at this important component of life in small-town Oklahoma, as well as every facet of economic growth in rural areas."
Schott, a former hospital administrator, said rural Oklahoma is comprised of a population that is older and poorer than people who live in metropolitan and suburban areas. Consequently, he said, Medicare and Medicaid are the primary pay sources for rural health care providers.
Medicare is a federal government program generally for those over 65 years of age and for certain permanently disabled people. Medicaid is a shared federal/state program for low-income citizens who have no health insurance.
The state Rural Health Office was established by federal legislation approximately 20 years ago due to the imminent closure of hospitals in rural America, Schott said.The agency is responsible for conducting advocacy, compiling information and offering referrals. He said for the last three years the office also has managed the Medicare Rural Hospital Flexibility Program.
Approximately four years ago, Schott said, Congress learned that rural hospitals were still having financial problems and established a method where the smallest hospitals could be paid on what is called reasonable-cost basis instead of a prospective payment system.
"A system of prospective payment means a health care provider would receive an essentially set rate, depending on the diagnosis for an admission to the hospital," he said. "Reasonable cost indicates a provider would be paid reasonably for an admission."
Schott told the task force that 70 hospitals in Oklahoma are considered 'critical access' facilities because they are crucial for the provision of health care to people in that community. A critical access hospital must be in a rural area and the average length of stay is limited to four days.
"One problem in my view is that rural hospitals don't receive the admissions for which a quality product is given," Schott said. Rural Oklahomans may say, "Our rural hospital is adequate, but it's my health and I'm going to a hospital in a larger city." He said that statement may be inacurate. "Rural hospitals are able to perform well, especially for primary health care when quality is an issue."
Although Schott said he was not criticizing urban hospitals, their size and staffing may not offer the ability to know patients' medical backgrounds compared to health care provided in rural hospitals.
"Statistics from the Rural Health Works program estimate 60-65 percent of people with medical needs can be treated adequately in rural community hospitals," Schott said. "That means we have to be able to invest in the system and have the experience to bring a quality product to rural hospital patients."
From an economic development perspective, Schott said that besides providing quality health care, a hospital generally is the second or third largest employer in a rural community.
For example, he recalled one hospital in a town of approximately 3,000 people in southeastern Oklahoma has generated approximately 600 jobs and a $12 million annual operating budget. "What would a chamber of commerce have to do to attract a multimillion-dollar industry to a rural town?" he asked.
Schott suggested legislators study means of providing more funding for the Medicaid system. "Over 600,000 people, one in six Oklahomans, receive some form of services from Medicaid," he said. "But not enough money is funneled into the program, and as a result some providers are not willing to accept what Medicaid pays."
Unlike health care providers in metropolitan Oklahoma, rural communities may have only one hospital willing to treat anyone who comes through the door without question. "So rural treatment facilities lose money because of a larger uninsured patient problem and they receive fewer reimbursements from the state Medicaid program," Schott related.
He said research indicates 20 percent of rural hospital patients are uninsured, because insurance generally is a function of a patient's employment earnings. By definition, most residents in rural communities are employees of small businesses, he said, which means they don't receive the salary that a larger employer can provide.
"I know of no other industry where we ask them to be high-tech and then not provide any capital funding structure to compete with the 'big city' bucks."
Schott said several hospitals may lose obstetricians and gynecologists because they cannot afford increasing malpractice insurance rates. Such was the case when a Tulsa doctor closed his doors recently rather than absorb a nearly 83 percent hike in medical professional liability or malpractice insurance.
Physicians Liability Insurance Company has requested that malpractice insurance be almost doubled in Oklahoma. State Insurance Commissioner Carroll Fisher has scheduled a hearing to consider whether the new rates would be excessive, inadequate or unfairly discriminatory.
The higher insurance rates would go into effect Jan. 1, if approved.
Schott said Oklahoma can't afford to follow in the footsteps of Nevada "where virtually every obstetrician has been eliminated due to rising malpractice insurance rates."
Nebraska provides another learning experience for the Sooner State.
"Hospital closings in that state about six or seven years ago resulted in dissolving of entire rural communities," Schott said. "We don't want that for Oklahoma."
- 30 -
Scott Hancock
Media Specialist
Oklahoma House of Representatives
1-800-522-8502 ext 422
Media Division
November 19, 2003
OKLAHOMA CITY - The director of a state health agency contends that economic development cannot flourish in rural Oklahoma communities without adequate health care.
That was the message presented recently to the House Rural Area Development Task Force by Val Schott, director of the state Office of Rural Health. The legislative panel, led by Rep. Dale Turner, D-Holdenville, and Sen. Jay Paul Gumm, D-Durant, is studying incentives to attract economic development to rural Oklahoma.
"We've discovered that industry will not move to a community, and existing businesses have difficulty expanding, where people are unable to receive quality health care," Schott said. "Access to health care must be available if an industry is going to seriously consider moving to a rural city or town."
"My legislative district lost a hospital in Wetumka," Turner said. "I know how vital it is to have a health care facility that can treat the injured and the ill, help contribute to the financial base of a rural community and provide a means to attract economic development."
Gumm agreed. "As we work to improve the economic future of rural communities, health care is a vital part of the mix," he said. "That is why the Rural Area Development Task Force is looking at this important component of life in small-town Oklahoma, as well as every facet of economic growth in rural areas."
Schott, a former hospital administrator, said rural Oklahoma is comprised of a population that is older and poorer than people who live in metropolitan and suburban areas. Consequently, he said, Medicare and Medicaid are the primary pay sources for rural health care providers.
Medicare is a federal government program generally for those over 65 years of age and for certain permanently disabled people. Medicaid is a shared federal/state program for low-income citizens who have no health insurance.
The state Rural Health Office was established by federal legislation approximately 20 years ago due to the imminent closure of hospitals in rural America, Schott said.The agency is responsible for conducting advocacy, compiling information and offering referrals. He said for the last three years the office also has managed the Medicare Rural Hospital Flexibility Program.
Approximately four years ago, Schott said, Congress learned that rural hospitals were still having financial problems and established a method where the smallest hospitals could be paid on what is called reasonable-cost basis instead of a prospective payment system.
"A system of prospective payment means a health care provider would receive an essentially set rate, depending on the diagnosis for an admission to the hospital," he said. "Reasonable cost indicates a provider would be paid reasonably for an admission."
Schott told the task force that 70 hospitals in Oklahoma are considered 'critical access' facilities because they are crucial for the provision of health care to people in that community. A critical access hospital must be in a rural area and the average length of stay is limited to four days.
"One problem in my view is that rural hospitals don't receive the admissions for which a quality product is given," Schott said. Rural Oklahomans may say, "Our rural hospital is adequate, but it's my health and I'm going to a hospital in a larger city." He said that statement may be inacurate. "Rural hospitals are able to perform well, especially for primary health care when quality is an issue."
Although Schott said he was not criticizing urban hospitals, their size and staffing may not offer the ability to know patients' medical backgrounds compared to health care provided in rural hospitals.
"Statistics from the Rural Health Works program estimate 60-65 percent of people with medical needs can be treated adequately in rural community hospitals," Schott said. "That means we have to be able to invest in the system and have the experience to bring a quality product to rural hospital patients."
From an economic development perspective, Schott said that besides providing quality health care, a hospital generally is the second or third largest employer in a rural community.
For example, he recalled one hospital in a town of approximately 3,000 people in southeastern Oklahoma has generated approximately 600 jobs and a $12 million annual operating budget. "What would a chamber of commerce have to do to attract a multimillion-dollar industry to a rural town?" he asked.
Schott suggested legislators study means of providing more funding for the Medicaid system. "Over 600,000 people, one in six Oklahomans, receive some form of services from Medicaid," he said. "But not enough money is funneled into the program, and as a result some providers are not willing to accept what Medicaid pays."
Unlike health care providers in metropolitan Oklahoma, rural communities may have only one hospital willing to treat anyone who comes through the door without question. "So rural treatment facilities lose money because of a larger uninsured patient problem and they receive fewer reimbursements from the state Medicaid program," Schott related.
He said research indicates 20 percent of rural hospital patients are uninsured, because insurance generally is a function of a patient's employment earnings. By definition, most residents in rural communities are employees of small businesses, he said, which means they don't receive the salary that a larger employer can provide.
"I know of no other industry where we ask them to be high-tech and then not provide any capital funding structure to compete with the 'big city' bucks."
Schott said several hospitals may lose obstetricians and gynecologists because they cannot afford increasing malpractice insurance rates. Such was the case when a Tulsa doctor closed his doors recently rather than absorb a nearly 83 percent hike in medical professional liability or malpractice insurance.
Physicians Liability Insurance Company has requested that malpractice insurance be almost doubled in Oklahoma. State Insurance Commissioner Carroll Fisher has scheduled a hearing to consider whether the new rates would be excessive, inadequate or unfairly discriminatory.
The higher insurance rates would go into effect Jan. 1, if approved.
Schott said Oklahoma can't afford to follow in the footsteps of Nevada "where virtually every obstetrician has been eliminated due to rising malpractice insurance rates."
Nebraska provides another learning experience for the Sooner State.
"Hospital closings in that state about six or seven years ago resulted in dissolving of entire rural communities," Schott said. "We don't want that for Oklahoma."
- 30 -
Scott Hancock
Media Specialist
Oklahoma House of Representatives
1-800-522-8502 ext 422
