Murphy, NC -- June 23, 2020 David Badger, the director of the Cherokee County Health Department, works in his office in Murphy, North Carolina on Tuesday, June 23, 2020. CREDIT: Jacob Biba for Carolina Public Press

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Editor’s note: COVID-19 poses an increased risk for severe illness or death in people over 65 years of age. Carolina Public Press previously identified 20 North Carolina counties that have the highest percentage of their population in the high-risk age range for COVID, nearly all of them rural. This is the first installment in a six-part series looking at the health care systems in those counties. This article focuses on Cherokee, Graham and Clay counties.

Running a hospital or medical practice in rural North Carolina has always posed challenges.

Now, with the arrival of COVID-19, the disease caused by the new coronavirus, some medical facilities are facing serious financial problems just as the public is counting on them most.

In the nearly four months since the first positive case of COVID-19 was reported in North Carolina, the number of cases has doubled and the virus’s spread has continued to set ominous state records, both in terms of total count and hospitalizations.

[The latest: North Carolina coronavirus daily updates]

A concerned public has looked to physicians, nurses, county health departments and hospital administrators to help bring the viral juggernaut under control.

In Cherokee, Clay and Graham counties in the state’s far southwest, where about 1-in-4 residents are over 65 years old, public testing and contact tracing for COVID-19 have helped keep the disease at bay so far. The U.S. Centers for Disease Control and Prevention deems the over-65 cohort at heightened risk for contracting the potentially deadly illness.

The first case in Cherokee County hit in March. “That helped create more of an awareness in our community in the early stages,” said David Badger, the county’s health director.

On June 16, the N.C. Department of Health and Human Services announced that the three counties will receive a combined $335,534 in federal funding to support their response to the health emergency, with $35 million given to all 100 health departments across the state.

Badger said the funding will help his existing staff continue testing.

The pace of public testing remains “above average” compared to comparably sized communities, he said, and his department has not had to request staffing from DHHS for contact tracing. The state agency has over 1,500 staff members available to support contact tracing at the local department level.

“We haven’t had a need yet,” Badger said.

Contact tracing allows health workers to identify individuals who have come in contact with an infected person so they can get tested for their own safety and minimize community spread of the disease.

Both initial testing and contact tracing have also been conducted within tribal lands belonging to the Eastern Band of Cherokee Indians, which operates the 20-bed Cherokee Indian Hospital in nearby Swain County.

In Graham County, officials set up checkpoints on roadways in late March and allowed only residents, property owners and employees of businesses to enter. Those checkpoints, removed several weeks later, also helped slow the spread of the disease, local health officials say.

At the end of last week, Cherokee County had 32 cases of COVID-19 and one death, Clay had nine cases and no deaths, and Graham had six cases and no deaths.

One reason for imposing the travel restrictions, authorities said, was that Graham County, like Clay, has no hospital, so residents seeking care must drive to Erlanger Western Carolina Hospital in Murphy.

A car is parked at the main entrance of Erlanger Western Carolina Hospital in Murphy on Tuesday. The Tennessee-based company has had financial challenges and turnover in leadership positions of late. No one from the only hospital in the three southwestern North Carolina counties was willing to talk to CPP for this article. Jacob Biba / Carolina Public Press

Financial stress on hospitals

On Feb. 11, nearly a month before the state’s first positive case of COVID-19, the Chicago-based Chartis Center for Rural Health unveiled a study that cited 453 rural hospitals across the country as being “vulnerable” to closing, including 15 in North Carolina. The center did not disclose their identities.

Any additional closures would come on top of the seven rural hospitals in the state that closed over the past 10 years, as tracked by The Sheps Center for Health Services Research based at UNC Chapel Hill.

Erlanger Western Carolina Hospital is a 25-bed critical access facility that offers emergency room, urgent care and rehabilitation center services.

It is part of the 930-licensed-bed Chattanooga-Hamilton County Hospital Authority in Tennessee, which operates hospitals under the Erlanger Health System moniker. Erlanger entered North Carolina in 2018 with the acquisition of Murphy Medical Center.

Last August, Erlanger added a new office in Hayesville in Clay County, which provides primary care and express care services.

Erlanger also continued to station a Life Force helicopter at Western Carolina Regional Airport that is available to whisk trauma and other high-acuity care patients to Erlanger’s main campus in Chattanooga.

But last year, Erlanger Health System began slipping financially. In November, Erlanger announced it was eliminating a range of women’s health services in Murphy, including labor and delivery.

In January, it reported a total net quarterly loss of $6.8 million compared with a $2.8 million budgeted net loss and a prior-year net loss of $1.09 million.

Last fall, in an initial effort to stanch losses, Dr. Will Jackson, president and CEO of Erlanger Health System, announced the elimination and restructuring of 30 management positions.

Then came the coronavirus.

Shelter-in-place orders, the reluctance of patients to visit their doctor and curtailment of elective and nonessential medical procedures have taken a financial toll on Erlanger and hospitals in general.

“Recent moderation in revenue growth following the departure of key physicians and expense challenges will create greater hurdles to reaching fiscal 2020 targets,” Moody’s Investors Service said of Erlanger.

“We have received multiple deposits of stimulus funds,” the Chattanooga Times Free Press quoted Jackson as telling Erlanger’s board of trustees last month. “They are not remotely close to the point of overcoming the financial losses our organization has experienced due to COVID-19.”

Mark Kimball, CEO of Erlanger Western Carolina Hospital, stepped down during the first half of June.

On June 12, the Times Free Press reported that Erlanger had eliminated 11 administrative leadership positions across its system. Soon after, Erlanger announced that Stephanie Boynton, CEO at Erlanger Bledsoe Hospital in Tennessee, will also assume CEO duties at Western Carolina.

Multiple requests by Carolina Public Press to speak with Erlanger officials about the ongoing restructuring, the hospital’s coronavirus readiness and plans for the use of stimulus funds have gone unanswered.

Erlanger Western Carolina Hospital remains in business, and despite the parent entity’s problems, Charles Watras, a primary care physician in Murphy, said he still intends to refer patients there.

But he’s less likely to continue referring them to Fannin Regional Hospital in Blue Ridge, Ga., just across the border. That’s because Fannin’s parent company, Quorum Health, has filed for Chapter 11 bankruptcy protection in hopes of reducing its $1.3 billion of debt.

While the reasons for rural hospital closures vary and include factors such as population loss, patient occupancy, and revenue and overall management, both the Chartis Center and Sheps Center believe a state’s decision not to expand its Medicaid program plays a significant role in weakening rural hospitals.

“Our analysis shows that hospitals located in states that have not adopted Medicaid expansion have lower median operating margin and have a higher percentage of rural hospitals operating with a negative operating margin,” the Chartis study said.

North Carolina is one of 14 states that has not expanded Medicaid.

As for his own family medicine practice, Watras currently sees an average of 16-18 patients a day. He said his practice needs to see 25 a day for “long-term survival.”

Hopefully, things will pick up as the pandemic settles down, he said.

With a manageable COVID count in the far southwestern region, “A lot of people are less fearful,” Watras said.

Neil Cotiaux

Neil Cotiaux is a contributing writer for Carolina Public Press. He is based in Wilmington. Send an email to info@carolinapublicpress.org to contact him.

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