EMMETT, Idaho — Idaho has 27 rural hospitals like Valor Health in Emmett, and they're all feeling the impacts of budget cuts at the state and federal level.
These changes could significantly impact patients and the communities these hospitals serve.
Watch to learn more about the budget cuts rural Idaho hospitals are facing —
In September, Idaho cut Medicaid reimbursement rates by 4% for all providers who see Medicaid patients, taking money away from hospitals that already run on slim margins.
"That 4% cut for us is in the tune of hundreds of thousands of dollars over the course of the year. And when our margins are as close and tight as they are, it makes a pretty significant difference," Brad Turpen, CEO at Valor Health, said.
The cuts compound existing challenges with Medicaid reimbursement rates that don't cover the actual costs of care.
"Medicaid is not a great payer for us. Right now, it's a little over a quarter of what we call payer mix, so the percentage of patients that we see that have Medicaid," Turpen said.
"Medicaid, like I said, it's not a huge payer; they pay 57 cents on the dollar of cost. So they don't even really cover our costs, so we're kind of taking even a further hit than what we've been dealing with up to this point," Turpen said.
The Idaho Hospital Association provided comprehensive insight into how rural hospitals statewide are bracing for the impact of these budget cuts.
"We have 27 small rural hospitals. 26 of them are called critical access hospitals, and one is a rural emergency hospital," Toni Lawson, IHA Chief Advocacy Officer, said.
The financial situation for these hospitals is already precarious before additional cuts take effect.
"Half of our rural hospitals right now are already operating with a less than 1% margin. That means less than 1% between operating in the red and operating in the black," Lawson said.
The cash flow situation is equally concerning for many facilities.
"About 22% of our hospitals have less than 40 days cash on hand. I don't know how familiar you are with that financial indicator, but the recommended minimum standard is to have at least 100 days cash on hand, preferably 200 days. And we have a number of hospitals that have less than 40. We even have one hospital that's been in the negative and recently had to take out a line of credit to make payroll for their employees," Lawson said.
Eight hospitals are currently at risk of closure, according to recent reports.
"We have eight hospitals currently at risk of closure. It came out in a recent report. And, you know, the challenges of being last in the nation for physicians, workforce shortages, all of those things," Lawson said.
Federal cuts are next, scheduled for 2027 under "The Big Beautiful Bill." The law reduces Medicaid expansion, ends certain supplemental payments, and is expected to leave many more Idahoans without insurance.
"What we anticipate there is another hit probably in the hundreds of thousands of dollars annually, and really it takes patients who are now eligible under Medicaid and takes that benefit away from them and converts them to what we kind of call self-pay," Turpen said.
The association estimates significant numbers of Idahoans will lose coverage under the upcoming changes.
"We're estimating about 75,000 Idahoans will end up uninsured based on the provisions in the One Big Beautiful Bill Act," Lawson said.
The financial impact on hospitals could be devastating.
"The budget projections from the One Big Beautiful Bill Act estimate that hospitals could experience up to a 70% decrease in their operating margin. So keep in mind, half of them are already operating with less than 1% margin, and a significant portion of them will be hit up to 70% of that," Lawson said.
The federal legislation will also reduce state revenue, creating additional pressure on state-funded programs.
"Once we come into compliance with the tax cuts included in the One Big Beautiful Bill Act, that will impact our state budget with a decrease in revenue of about $435 million," Lawson said.
Lawson described the cumulative effect as a "perfect storm" of challenges.
"We had the current situation already difficult, One Big Beautiful Bill Act coming down the road, and it really is... we're kind of on our way to the perfect storm of all of these things coming together," Lawson said.
Valor Health's patient population relies heavily on government insurance programs, making the hospital particularly vulnerable to cuts.
"Medicaid is just about a quarter of our, what we call payer mix. Medicare and Medicare Advantage make up more than 50% of our payer mix. So that's all government sources," Turpen said.
"Between the Medicare Advantage and Medicaid, it's right around 75% of our revenue sources," Turpen said.
Lawson emphasized that the effects of budget cuts are not theoretical future concerns but current realities.
"The 4% cut is impacting folks right now. Hospital administrators are scrambling with, 'How are we going to adjust to this loss in revenue?' and 'Where are we going to make up the difference?'," Lawson said.
The costs are being shifted to other payers, affecting everyone's healthcare expenses.
"If you look at the estimates that have just come out on the increases in cost of health insurance for state employees and private insurance, those numbers are going up in double digits in some cases," Lawson said. "Some of that is cost shifting. When Medicaid pays less than cost, hospitals have to make up for it somewhere. If a doctor loses money on Medicaid, that means your private insurance costs are going to go up because they have to make up the difference there."
Hospital service reductions impact entire communities, not just Medicaid patients.
"We've already had a few hospitals close their labor and delivery services. We're seeing some behavioral health services on that threat of closure. That doesn't just impact Medicaid patients. That impacts all of us in access to care for all Idahoans," Lawson said.
While Idaho hospitals have been creative in maintaining services, Lawson warned that options are becoming limited.
"A lot of states have had hospital closures, and their small rural hospitals have been closing. Idaho hospital leaders have done a great job of keeping hospitals open, being innovative, using things like telemedicine to, you know, make sure that we have access to care. But we were talking, kind of saying it's getting harder and harder to pull a rabbit out of the hat. There are fewer rabbits, and the hat's getting pretty small," Lawson said.
Turpen's primary concern focuses on patient access to care rather than just financial impacts.
"The thing that I'm most worried about, you know, we've talked a lot about kind of the financial side, but it really comes down to people in our community. And if they don't have access to care, they're not keeping up with their primary care physician appointments. They're choosing to just not get care at all," Turpen said.
"That's really concerning for us because, like I said, they utilize our emergency departments. that's not really the place to get primary care," Turpen said.
Despite financial pressures, Valor Health continues expanding services to meet community needs. The hospital will hold a ribbon cutting for a new clinic on November 17 at noon.
"So that's Nov. 17 at noon. We just got certificate of occupancy. So it's pretty exciting," Turpen said.
The new facility will offer multiple services in one location.
"It's a freestanding clinic. We'll have urgent care, family practice, pediatrics, and we always have behavioral health kind of integrated into our clinics. And it'll just, it's an expansion for us because we're, you know, the demand for services continues to grow as people move here and continue to utilize ValorHealth," Turpen said.
For now, Turpen is asking lawmakers to spend time inside their local hospitals and see the impact firsthand to better understand the challenges facing rural healthcare.
"I've gotten involved recently with the state legislators and presenting," Turpen said. "I'd like our elected leaders to maybe spend some time in their critical access hospitals, in their areas, get to know their healthcare leaders, and just understand a little bit more about what we do, what we provide to the community, what our challenges are, because I think that would inform maybe some better decision-making. We've done a lot of work to try to educate those elected leaders."
A state map of critical access hospitals ranks Valor Health among some of the most vulnerable, based on patient demand, provider shortages, and its dependence on government funding.
