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Memorial Regional Health hospital registered nurse, Shar Rice, visits with a patient, Feb. 2, 2023, in Craig. (Hugh Carey, The Colorado Sun)

At the end of 2019, Memorial Regional Health reached a crisis.

The hospital in Craig is the sole hospital in Moffat County, a vital lifeline to health care services in a corner of the state that is nearly the size of Connecticut. But, as the year came to a close, the hospital was staring at a grim number in its bank account: It had zero days cash-on-hand left.

“We were figuring out what bills to pay so we would have money in the bank to pay our employees,” said Jennifer Riley, who was then the hospital’s chief operating officer and is now its CEO. “We never got to the point where we were saying we’re not going to make payroll. But it was close.”

The resulting cuts to ease the budget shortfall were beyond painful, Riley said. The hospital changed how it staffs its emergency department. It shut down its labor and delivery department, meaning patients would have to drive close to an hour or more to have their babies delivered, over sometimes snowpacked roads.

People in the community grieved — and seethed — at the cuts.

“When that safety net isn’t there, things are going to fall through, and unfortunately, people are going to get hurt,” one of the doctors who lost their job told The Colorado Sun in early 2020.

Even Riley, the CEO, felt the personal toll of the cuts. Her daughter had to go elsewhere to deliver her baby when she gave birth last year.

“That really was hard,” Riley said. “I was sad that we didn’t get to deliver her baby, so I know it’s a hard pill to swallow when you have to go 45 minutes away to have your baby.”

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But out of those painful choices came a financial revival for Memorial Regional Health, Riley said. The hospital now has nearly two months cash-on-hand. And it also has a blueprint — albeit one that comes with some pain — that may work for other rural hospitals as they try to dig themselves out of their own financial holes.

“In a small rural community, you have a finite amount of dollars,” Riley said. “And you have to decide how you’re going to spend them to meet the greater good.”

Trouble for rural hospitals

While large health systems primarily concentrated along the Front Range have turned record profits in recent years, rural hospitals in the state have long faced a crisis — one that only continues to deepen.

At the time of Memorial’s cuts in early 2020, there were 18 rural hospitals in the state that were operating in the red, according to the Colorado Rural Health Center. Today, there are 22 hospitals running deficits, said Michelle Mills, the Rural Health Center’s CEO. 

“We’re expecting the situation to get a little bit worse as we continue to go along,” Mills said. “Just with the cost of supplies and goods increasing but reimbursement not increasing.”

Staffing is also a perpetual challenge, with rural hospitals often having to rely on costly temp workers to fill personnel gaps.

Colorado has gone more than three decades without a hospital closure, making it somewhat of an outlier nationally. But a report last year by the Center for Healthcare Quality and Payment Reform found that 16 rural hospitals in the state have had to cut services and seven are at risk of closing. The report, though, found no rural hospitals in Colorado at immediate risk of closing, making Colorado one of only seven states in the country without any hospitals in that category.

Names of the contributors to the Memorial Regional Health hospital dot the wall near the lobby. (Hugh Carey, The Colorado Sun)

Still, the cracks are showing. One hospital, St. Vincent Health in Leadville, narrowly avoided not being able to make payroll late last year and only was able to do so after receiving a cash infusion from the state and the county governments.

Lawmakers and government officials have worked over the years to improve the situation — offering extra money to hospitals if they agree to drop inpatient care, establishing a rural support fund, and creating a grant program to promote modernization. But the efforts, while appreciated, are limited solutions.

The situation has hospital advocates calling for a broader discussion about how to sustain hospitals in parts of Colorado where there aren’t as many people — and especially not as many people covered by private insurance, which is more lucrative to hospitals.

“In years to come, we have to have a very real conversation in the state about: What does the sustainability of our rural health care system look like?” said Joshua Ewing, the vice president of legislative affairs at the Colorado Hospital Association.

“Now we have a tiered system of care in Colorado, and that isn’t right,” he added. “Your access to health care shouldn’t be determined by your ZIP code.”

An employee vacuums inside Memorial Regional Health hospital in Craig. The hospital served over 100,000 patient visits and diagnostic services in 2021, according to their website. (Hugh Carey, The Colorado Sun)

Memorial Regional Health’s blueprint

To turn its situation around, Riley said Memorial Regional Health started by looking at every service it provided and how it staffed that service. This is what put labor and delivery care in the crosshairs.

In a given year, the hospital delivered about 130 babies. To do that, it needed to keep two obstetricians on the payroll because someone needed to be on-call at all times. When one of those doctors took a vacation, the hospital filled the staffing gap with a temp who typically cost the hospital $13,000 a week. Making sure staff remained up to date on specialty obstetrics training added more costs.

Jennifer Riley is the CEO of Memorial Regional Health in Craig. (Provided by Memorial Regional Health)

“It really is still tough on our community, the fact that we don’t deliver babies,” Riley said. “But financially, and from a quality and safety standpoint, it doesn’t make sense to deliver babies when we were only delivering around 130 a year.”

The knife also fell on the hospital’s staff emergency room doctors, for many of the same reasons. Paying temp doctors — whom Riley said sometimes rubbed community members the wrong way because they carried a short-timer’s attitude — to cover for staff vacations was just too expensive.

The hospital switched to a contract with CarePoint Health, which provides doctors to staff emergency department shifts at several hospitals across the state. Riley said CarePoint has a regular team that covers shifts at Memorial Regional Health, some of whom live nearby and some of whom commute to Craig from the Front Range for a week at a time. (Many of the CarePoint doctors also used to be on staff at Memorial Regional Health before the hospital switched to the contract.)

Now, when one takes a vacation, the cost of sending someone else to fill in is included in the contract. The hospital hasn’t used a temp doctor in its emergency department since early 2020.

There have been other changes. The hospital has stopped any new building projects and it has moved out of some space it wasn’t using.

There also came an unexpected help during a period that was difficult for hospitals in an entirely different way. Riley said federal relief funds during the early months of the COVID pandemic helped stabilize the hospital’s finances and keep staff on the payroll. Rural hospitals successfully lobbied the governor to allow them to continue performing elective surgeries when such surgeries were put on hold at larger hospitals. And, because COVID cases spiked in Moffat County at different times than they did in more populated parts of the state, Riley said her hospital learned strategies to help better weather the rough patches.

“That helped us start to climb out of a financial hole that we had been in,” she said.

Visiting Siemens engineers Larry Wright, left, and Michael Szabo take part of a routine maintenance of a CT-scan machine inside the Memorial Regional Health hospital in February. (Hugh Carey, The Colorado Sun)

Planning for the future — while healing from the past

Still, Riley said she knows people in Moffat County are hurting over some of the cuts, and she understands why. The hospital is more than just a place to get health care. It’s also a symbol of the vitality of the community. When a service disappears, it can feel like a message that the community is fading, too.

Riley grew up in Craig. She says she works hard to be straight with people and explain why the hospital has made the decisions it has. But sometimes that’s not enough.

Memorial Regional Health hospital, based in Craig, serves people in Moffat, Routt and Rio Blanco counties in Northwest Colorado. (Hugh Carey, The Colorado Sun)

“If you’re mad about it, you might never get over being mad about it,” she said. “There is no answer that makes everybody just go ‘OK, I understand and we agree with you.’ But I think we’ve gotten past some of the anger to at least understanding or agreeing to disagree.”

Recently, the hospital looked at opening a crisis stabilization unit, a place where people suffering mental health or substance abuse crises could come after receiving emergency care but before they move to a longer-term treatment facility. It would have been a precious resource in a part of the state where behavioral health needs are severely underserved.

But, after looking at financial projections — including what the hospital could expect to be paid by insurance companies and government programs like Medicare and Medicaid — Riley and her team decided they couldn’t do it.

“The reimbursement is terrible,” she said. “It looked like it was going to be about a $600,000 a year loss, and not really improve year over year. So some of the things we thought might drive revenue, when we did the analysis, they just were not going to pencil.”

There’s pride in Riley’s voice when she talks about how the hospital has worked to pull itself up, but also a touch of sadness. Ultimately, she wishes this wasn’t the hospital’s situation, that it could provide the medical care the community needs, that her neighbors and family members wouldn’t be forced to drive elsewhere to receive services that it doesn’t make financial sense for her hospital to offer.

But she also knows that rural hospitals can’t take anything for granted in their financial situation. Three years ago, her hospital almost went broke. She needs to make sure it doesn’t come close again.

“I always remain cautiously optimistic,” she said. “But the money that we have in the bank is the only money that we have. We can’t rely on anybody else.”

UPDATE: This story was updated at 12:43 p.m. on Feb. 14, 2023, to clarify that Memorial Regional Health emergency department doctors who had been on staff at the hospital took jobs with CarePoint when the hospital eliminated the in-house positions and switched to a contract for its emergency physicians. The story was also updated to clarify how long it has been since a hospital has closed in Colorado.

John Ingold

John Ingold is a co-founder of The Colorado Sun and a reporter currently specializing in health care coverage. Born and raised in Colorado Springs, John spent 18 years working at The Denver Post. Prior to that, he held internships at the Rocky Ford Daily Gazette, the Colorado Springs...