Allen County Regional Hospital Administrator Pat Patton gave county commissioners a head-to-toe review of the hospital’s financial health, future challenges and the vital importance of renewing the county’s quarter-cent hospital sales tax at their meeting Tuesday.
Patton spoke candidly about the pressures facing small, rural hospitals like Allen County’s. Equipped with decades of experience in rural health systems, Patton explained how the critical access hospital designation — created in 1997 to support rural care — helps facilities like Allen County Regional stay afloat through cost-based Medicare reimbursement.
“You have to have 25 beds or fewer,” Patton said.
“You get paid a cost-based reimbursement for Medicare patients, which is supposed to be about 101%, but in reality it’s closer to 99%. It’s a way to recover costs and, hypothetically, break even.”
Even with that support, Patton said many hospitals are struggling. “There are about 83 critical access hospitals in Kansas, and over 66% of those are in the red — on the verge of closing,” he said. “So, it’s a very real issue.”
He warned of growing federal pressure to consolidate smaller hospitals under larger systems. “The idea would be that everybody goes to a larger, centrally located facility — say, in Ottawa,” Patton said. “That’s not something I want to see. I like living in a rural area. I don’t want those beds to go away.”
Patton said federal agencies such as the Health Resources and Services Administration (HRSA) have shown an inclination against small critical access hospitals, favoring “rural emergency medical facilities” that provide only emergency services and no overnight beds.
“If that happened here, patients who needed to stay two or three nights would have to go somewhere else,” he said. “We currently have up to 25 beds, but we run about 10 to 12 based on our volumes.”
PATTON GAVE credit to the stewardship of the Allen County Hospital Facilities Board and noted that the quarter-cent sales tax has been critical in maintaining the building.
“Since 2020, about $2.7 million has been invested in facility maintenance and upgrades,” he said. “This year alone, we’ve spent about $400,000 on things like surgical humidifiers and HVAC systems. If we don’t stay on top of those, that puts our surgery department at risk.”
Upcoming needs are significant, including a $1.7 million roof replacement and aging mechanical systems. “We built the hospital in 2013,” he said. “Those air conditioners and heaters are reaching their life expectancy. It’s expensive, but it’s necessary.”
Commissioner John Brocker noted that voting for the sales tax wouldn’t raise taxes but simply continue the existing one.
“People need to understand this isn’t an increase,” he said. “It’s renewing what we already have.” Brocker also serves as chair of the hospital’s facilities board. He added renewing the sales tax would help avoid raising property taxes.
Patton also discussed the hospital’s partnership with St. Luke’s Health System, which continues to play a vital financial role.
“St. Luke’s gives us the money to cover our bond payments,” for building the hospital, he said. “Those payments run through 2036, and that’s been a huge benefit to Allen County taxpayers. St. Luke’s pays that whether we make money or not.”
He added that BJC HealthCare, the parent organization of St. Luke’s, has reaffirmed its commitment to supporting rural hospitals. “We’re having the best financial year we’ve had in nearly a decade,” Patton said.
