By CRISTINA JANNEY
Hays Post
Rural hospitals are facing economic pressures that have them operating in the red.
HaysMed has not been immune to these pressures. HaysMed Chief Financial Officer Michelle Beckner said the hospital has been operating at a loss and has been relying on reserves to cover the shortfall.
Although the Center for Healthcare Quality & Payment Reform reported 68 rural Kansas hospitals are at risk of closing, Beckner claimed HaysMed is not in danger of closing, and the hospital has implemented a plan to be back in the black within two years.
HaysMed is a nonprofit hospital that must file a 990 tax form with the federal government.
According to its 2023 Form 990, available through ProPublica, HaysMed had revenues of about $231.6 million but was $10.1 million short of expenses. As of its 2024 990 filing, the most recent available report, revenue had increased to $259 million, and the hospital's deficit had fallen to just less than $115,000.
Those annual reports are usually filed in May.
"We are very blessed, because the board and the stewardship prior to COVID were able to generate a healthy balance sheet for us, so right now that is helping us get through this post-COVID financial landscape," Beckner said.
Medicare, Medicaid shortfalls
HaysMed's reimbursement from Medicare and Medicaid does not cover the costs of services, Beckner said.
Medicaid covers about 50% of service costs, and Medicare covers about 80%.
In addition, reimbursements from Medicare and Medicaid are not keeping pace with inflation, widening the cost-to-reimbursement gap. In the last four out of the five years, inflation has grown more than Medicare has increased hospital reimbursement rates.
"Not only are we in the hole, but the hole is getting deeper," Beckner said.
The hospital makes up the difference from private-pay insurance, such as United or Aetna.
Revising the reimbursement structure is a national legislative issue.
"I would love for our patients to understand the role they could play in supporting us with our legislators," Bekner said. "Are they at the table to say what we're doing in health care right now is not sustainable across the whole state of Kansas? So what can we do that's different? What can we do to increase reimbursements for the patients who need it?"
Uncompensated care
HaysMed faces $15 million in uncompensated or charity care annually.
Beckner said this is often care for individuals who lack insurance or are underinsured.
Because Kansas has not expanded Medicaid, there is a gap for people who don't qualify for Medicaid and can't afford to purchase insurance through the Affordable Care Act Marketplace, Beckner said.
On Thursday, President Trump proposed his own health care reform plan.
HaysMed CEO Edward Herrman has been an advocate for expanding Medicaid in Kansas.
Herrman welcomed Kelly to HaysMed in April 2024 as she toured the state, urging the Kansas Legislature to allow the issue to go to a vote in both houses.
Herrman said during the Kelly visit, “As the HaysMed President and CEO overseeing health care delivery, I can attest firsthand to the critical need for Medicaid expansion. Our hospitals are on the frontline, serving those in need regardless of their ability to pay.
"Medicaid expansion isn't just a policy. It's a lifeline for countless individuals and families, ensuring they receive the care they deserve.
Beckner said uninsured and underinsured residents result in economic and human costs.
Patients who do not have insurance tend to delay treatment, so when they are seen at the hospital, they are sicker, Beckner said. This often means their treatment is more complicated and expensive. Delayed treatment can also result in unfavorable patient outcomes, lost time from work and time away from family.
"By this time, their disease progression is further. It's harder for them to recover or maybe they never recover back to the state they could have had if the disease been caught earlier in its progression," Beckner said, "so I think there are several human implications to that."
Drug discounts
Herrman has also advocated for the expansion of the 340B drug program. This federal program allows hospitals to qualify for drug discounts.
Most small, rural hospitals automatically qualify for a tier of the program because they are designated as critical-access hospitals. To qualify for the deepest discounts, hospitals have to be a university hospital, teaching hospital or care for a high percentage of Medicaid patients.
Qualifying for drug discounts under the 340B program would mean about $10 million for HaysMed, Beckner said.
HaysMed does not accept Medicare Advantage plans because, Beckner said, the hospital administration does not think it is in patients' best interests. She said that often patients experience higher out-of-pocket costs compared to straight Medicare.
Nursing shortage
Since the pandemic, the health care industry has faced a shortage of nurses. The national average for nursing turnover is 16.4-18.4%, down from the COVID peak of 20.7%.
HaysMed is faring better than the national average with a turnover rate of 7.41% as of January 2026. However, the HaysMed turnover rate is higher than it was at this time last year, when it was 5.91%.
More nurses are choosing to become traveling nurses.
Covering the higher cost of traveling nurses takes a toll on the hospital's bottom line, but Beckner did not provide an exact number for that line item.
"It's a little bit of a vicious cycle," Beckner said. "With the nursing shortage, nurses get burnt out more easily because it's harder to get time off or they're asked to do more overtime to care for their patients. They're getting burnt out because we're working short. Then they leave."
If a staff nurse leaves, the hospital spends about $60,000 to replace them. Beckner said.
HaysMed has increased staff compensation by $8 million during the last two years, Beckner said.
"We want to make sure associates are paid competitively to respect their expertise, their skill and honor all the work that they're doing to provide care," she said.
How other hospital closures could affect HaysMed
Kansas has more hospitals at immediate risk of closure than any other state, according to the Center for Healthcare Quality & Payment Reform. Thirty are at immediate risk.
"The current financial forecast for health care, particularly in rural health care, is concerning," Beckner said. ..."I think we will continue to see hospital closures, particularly in Kansas.
"Unless we figure out a different way to figure out the reimbursement-to-cost ratio, I think we will see additional hospitals close."
The latest hospital closure in Kansas was Rock Regional Hospital in Derby earlier this month.
If smaller hospitals in the region close, one of two things could happen, Beckner said.
HaysMed could see an increase in volume as patients travel farther to receive care.
Patients could go to another critical-access hospital that is part of a referral system with another regional hospital. If a patient is accessing a critical-access hospital in northern Kansas, and it closes, those patients might be referred to a hospital in Nebraska rather than to HaysMed, Beckner said.
Plans to bring HaysMed back into the black
Beckner said HaysMed has several long-term strategies to bring the hospital back into the black.
One strategy is service line growth. The hospital is recruiting more providers, increasing access to care and trying to make it easier for patients to be seen for services, Beckner said.
The hospital is focusing on maximizing payments by properly managing prior authorizations and insurance denials, she said.
Beckner said the hospital is facing an administrative burden from insurance denials.
"Another thing we are seeing from payers is they are being more proactive in denying on the back end after the care has been provided," she said. "Payers are saying we don't think that was medically necessary or we don't think that was appropriate care instead of listening to what the provider thought."
Beckner said this practice is also difficult for patients who receive a bill for care they thought was covered.
The hospital has also tried to maximize labor efficiency and cut supply costs, she said.
"Despite all the financial pressures that we are navigating and all of the headwinds," Beckner said, "we are excited to be here and honored to be serving the patients here in our community.
"It's an exciting time to be coming up with innovative solutions to be able to care for our patients."