Holy Cross Medical Center in Taos is one of many rural community hospitals around the state that advocates say will benefit from the Health Care Delivery and Access Act, passed by lawmakers in 2024 and awaiting the governor’s signature.
The rehabilitation center at Sierra Vista Hospital in Truth or Consequences is housed in the chapel of the hospital’s original building. The facility’s HVAC system isn’t functional, so mini split air conditioning units line the walls of the room. The hospital plans to use some funding from the Health Care Delivery and Access Act program to help move the service into a newer building.
Holy Cross Medical Center in Taos is one of many rural community hospitals around the state that advocates say will benefit from the Health Care Delivery and Access Act, passed by lawmakers in 2024 and awaiting the governor’s signature.
The old chapel that houses Sierra Vista Hospital‘s rehabilitation center is quaint, with light streaming through stained glass windows dating back to the Truth or Consequences facility’s parochial roots.
Less charming are the mini split air conditioning units that line the walls of the room, and the window units that cool the emergency medical services department in an old convent — both evidence the HVAC system in the building is shot, along with much of its other infrastructure.
“I’m basically one sewer line break away from shutting the whole building down,” said hospital CEO Frank Corcoran.
While much of the hospital has already migrated to a far newer building, Corcoran said getting the rehab and EMS services into newer digs will be one of his first orders of business once funding promised under the state’s new Health Care Delivery and Access Act hits the hospital’s coffers.
The legislation, passed by lawmakers this year and currently awaiting Gov. Michelle Lujan Grisham’s signature, establishes a program that will pool contributions from most New Mexico hospitals, leverage them for a federal Medicaid match, then pump that all the money — possibly as much as $1.6 billion combined in a single year — back into the contributing health care organizations.
The program is designed to benefit all its contributors but especially rural hospitals and could be set up as early as next spring, said New Mexico Hospital Association President and CEO Troy Clark.
In the meantime, rural hospitals already are coming with ideas of what they’ll do first when that ship comes in. New buildings, updated infrastructure, hiring new staff, giving raises and replacing equipment all are on the table for different hospital leaders.
“I just think it’s a big win for all the hospitals in New Mexico, large or small,” Corcoran said. “We’re all struggling. ... This is going to help us improve health care and sustain hospitals.”
Skewing rural
Hospitals, lawmakers and advocates have hailed the Health Care Delivery and Access Act as a lifeline for health care organizations, especially in rural areas, during a time when inflation, insufficient Medicaid reimbursements, higher caps for medical malpractice insurance and a tough hiring market have taken their toll.
During a legislative session in which lawmakers heard dramatic testimony from leaders of small rural hospitals about their dire financial straits, the bill picked up widespread support, with House Minority Leader Ryan Lane, R-Aztec, casting the only nay vote from either the House or the Senate floor.
Clark said about two-thirds of all New Mexico hospitals lost money in their last 12-month budget cycle.
“We’ve got to change that,” he said. “They’ve got to be sustainable.”
The program, which Clark said has buy-in from both urban and rural hospitals around the state, asks for a contribution from participating facilities up front.
Hospitals around the state will chip in to the program via an assessment based on revenue. That’s expected to generate about $325 million next year, Clark said. That amount, once matched by federal Medicaid dollars and money from existing state Medicaid programs, should bring all that money back to the state, along with an estimated $1.1 billion in new net income for a total of $1.6 billion.
The program skews in favor of rural hospitals by design, Clark said. Rural hospitals get a 50% reduction in the amount they pay up front. And the assessments hospitals pay do not include Medicare revenue, since rural hospitals tend to have a higher percentage of Medicare patients.
“It’s very intentional and ... that is agreed to by the urban hospitals,” said Clark, adding the entire hospital ecosystem benefits by rural hospitals being able to keep and care for more of their patients, rather than having to transport them to urban centers.
“Our urban hospitals are busting at the seams because they have too much demand,” he said.
Clark said hospitals are restricted from passing along the assessments to either patients or insurers. They also will have to show state government evidence every year that at least 75% of the program’s net proceeds were spent inside New Mexico.
“We did not want to increase the cost of health care,” Clark said. “... [And] the intent of this is not to have these dollars go outside the state.”
As a university-affiliated hospital that already has a similar program, University of New Mexico Hospital is ineligible to participate. So are state and federally operated hospitals — including facilities run by the U.S. Department of Veterans Affairs and Indian Health Services. The only exception is Miners Colfax Medical Center in Raton, Clark said, because it’s an acute care hospital.
Clark said two major changes paved the way for the program. First, the federal government changed the way it caps one type of Medicaid contributions to hospitals and health care providers, which “raised significantly” the amount those organizations can receive, Clark said.
Second was the clarification of a federal rule that allows hospitals to be assessed for fees to come up with the state’s portion of that funding, Clark said.
From beds to raises
Hospital leaders said they’re grateful for the flexibility that will come with the money.
In Truth or Consequences, Corcoran said he expects his hospital to receive about $7 million annually. The hospital’s gross average monthly budget might be as high as $5.5 million.
The rehabilitation center at Sierra Vista Hospital in Truth or Consequences is housed in the chapel of the hospital’s original building. The facility’s HVAC system isn’t functional, so mini split air conditioning units line the walls of the room. The hospital plans to use some funding from the Health Care Delivery and Access Act program to help move the service into a newer building.
Courtesy photo
“For us, that is huge,” Corcoran said.
In addition to moving the EMS and rehab center out of Sierra Vista Hospital’s old, 1950s-era building, Corcoran said he’d like to build new services at the facility, possibly including pulmonology, dermatology and infectious diseases.
James Kiser, CEO of Holy Cross Medical Center in Taos, said preliminary estimates have shown the hospital there might get as much as $13 million back annually. That will help give raises and hire new employees, both of which should help the hospital wean itself off its lingering dependency on expensive traveling staff like nurses and physician specialists. Kiser said the hospital hasn’t kept up with market rate salaries, and it’s time to make things right for his staff.
“Even to have a chance [to retain them], we have to pay them justly, fairly and equitably,” he said. “We’ve just got to keep pace with the market.”
Tammie Chavez, CEO of Union County General Hospital in Clayton, and Roosevelt General Hospital CEO Kaye Green, said they, too plan to invest in staff. Green said the estimated $5.8 million her facility expects to receive — which coincidentally is the same amount the Portales hospital lost last year — will go a long way.
“Our medical assistants are basically making the same as somebody who works at Taco Box down the street,” she said.
And the Portales hospital also has some major equipment needs. A cardiac monitoring telemetry system, which retails for about $600,000, needs to be replaced before it breaks down. The facility needs to replace all its hospital beds, to the tune of $450,000, while the same amount is needed for other infrastructure projects, like replacing the 30-year-old boilers.
What’s next?
While Lujan Grisham has yet to sign the measure into law, she celebrated its passage through both chambers earlier this month, saying the bill and another health care measure will help improve health care quality and accessibility.
After the bill is signed, Clark said the state Human Services Department will submit an application to the federal government to get approval for the details of how the program is designed. Finishing the application could take several months, and then another six months or longer to get approval from the Centers for Medicare and Medicaid Services, he said.
The state Human Services Department did not respond to a request for comment.
Clark said modeling the program after others that have already been approved in eight other states — including Kentucky, Florida and Oklahoma — should make the process go faster.
“We’re really looking at next March or April for the initiation of this program,” Clark said.
He added the program, once up and running, could make a real difference for New Mexico’s struggling medical system.
“This is a landmark event,” Clark said. “These dollars ... have the potential to change the landscape of health in New Mexico.”
