Rural hospitals in Tennessee, Mississippi and Arkansas were struggling before the pandemic. COVID-19 could push some of them over the financial cliff. Wochit

MAGEE As Gregg Gibbes walked through the doors of his new hospital in April 2019, he faced a frightening yet all-too-possible future: The facility he had been tasked with leading was at risk of shutting down and taking hundreds of jobs with it, and leaving Simpson County without an essential source of medical care.

Magee General Hospital, a nonprofit, 44-bed acute-care facility located midway between Jackson and Hattiesburg, had filed for bankruptcy eight months earlier in a bid by former owners to save the community facility from financial death. The hospital is an economic hub in the area, and an essential source of care both for elderly Simpson County residents who cant make the drive to Jackson and for victims of car accidents on U.S. 49 South.

Gibbes new job was to bring it back to life.

More: Rural hospitals in Mississippi were already on a cliff. Coronavirus could push them over.

Entering as the hospitals new CEO, he was part of a restructured board of directors and a shrewd plan to beat the bankruptcy through sharing staff with a critical-access hospital in Covington County 20 miles to the south.

Opened in 1935, and incorporated in 1942, Magee General Hospital faced bankruptcy in recent years, and pulled itself out of the debt, under the supervision of CEO Greg Gibbes and a Board of Directors, but currently functions with day-to-day cash on-hand during the COVID-19 pandemic.(Photo: Sarah Warnock, Mississippi Center for Investigative Reporting)

This May a little over a year after Gibbes first day at the hospital, and less than two years after the bankruptcy declaration in August 2018Magee General exited its bankruptcy, achieving a feat the likes of which youd be hard pressed to find another rural hospital completing successfully, said Gibbes, who is also CEO of Covington County Hospital.

But now a second storm is ravaging the land. After the pandemic forced Magee General to cut elective care, which six months ago accounted for two-thirds of its revenue, the hospital must confront a pandemic that has been the latest battle for survival for rural hospitals around the country.

To date, Magee General has received the lowest amount of coronavirus-related stimulus money of any acute-care facility in the state, according to the Mississippi Hospital Association and the Department of Health and Human Services.

There have been some days that you cross your fingers, and hope that nobody else declines, said Dr. George Gillespie, Magee Generals head physician.

To navigate Chapter 11 bankruptcy over the past two years, Magee General had to be guided out of a storm of uncompensated care costs, increasingly expensive equipment and shrinking elective care visits common challenges for rural hospitals in the South.

There was a lot to cover in those first few days and weeks, particularly meeting staff and learning their needs, Gibbes said. But I never second-guessed the decision to take over Magee General, nor have I ever second-guessed this hospitals great potential.

Learning to operate on lean budgets is a necessity for rural hospitals survival. Since 2014, five rural hospitals in the state have shut down. A study earlier this year by the Chartis Center for Rural Health named 41 more 64% of Mississippis remaining rural hospitals as either vulnerable or most vulnerable to closure.

Nearly two-thirds of the Mississippi hospitals classified as rural, including Magee General, didnt make a profit in 2017, according to data from the Center for Medicaid and Medicaid Services (CMS), compared to just over a third of urban hospitals.

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At the heart of rural hospitals financial struggles are uncompensated care costs amounting to hundreds of millions annually. Those woes could have been aided through Medicaid expansion, an option state lawmakers have rejected, despite Mississippi having some of the nations highest death rates for chronic illnesses like diabetes and heart disease.

It was already a challenging time for hospitals before COVID, said Richard Roberson, vice president of Policy and State Advocacy for the Mississippi Hospital Association. Now we've gone from a challenging time to a critical juncture for hospitals in the state of Mississippi, particularly in your rural areas.

After the bankruptcy, we thought we would be able to breathe a little bit

Built during the Great Depression, Magee General Hospital now has 310 staffers, making it Simpson Countys third-largest employer behind Walmart and the Simpson County School District. It annually distributes over $31 million in wages, salaries and benefits, according to Hospital Association data, and has been a favored workplace for generations of residents in the small city.

Pam Wallace manages community relations for Magee General, a role in which she said shes become a go-to person for all kinds of tasks because like anybody in a small rural hospital knows, you wear many hats. One of those tasks is reporting the hospitals positive tests from the day prior to the state health department each morning.

Pam Wallace, an employee of Magee General Hospital in Magee for 20 years and head of Community Relations said of enduring bankruptcy, "When we have had rough times before we always worked together." Opened in 1935 and incorporated in 1942, Magee General Hospital faced bankruptcy in recent years, and pulled itself out of the debt, but currently functions with day-to-day cash on-hand during the COVID-19 pandemic.(Photo: Sarah Warnock, Mississippi Center for Investigative Reporting)

Wallace grew up in Magee and has worked at the hospital since 1997, when she took her first high school job there as a file clerk. Shes a third-generation employee: Her mother was an emergency room technician from 1975 to 2014, and her grandmother was a nursing aid. For Wallace, Magees staff are extended family.

I spend more time here than I do with my real family, she said. Our work environment is a family one, and we just come here to help our community.

While Magee General had faced its share of challenges through her years on staff, Wallace said the bankruptcy, which allowed the hospital to forego debt-service payments as it operated off of elective-care revenue, was particularly hard.

I had people come up to me at church, for example, saying, Oh I heard the hospital is filing bankruptcy and that you're not going to have a job tomorrow, she said. I never batted an eye.

Magee General's successful exit from bankruptcy, which Gibbes and the hospitals board credit to sharing staff with Covington County Hospital, was a victory, but the virus has dimmed what should have been a time of triumph.

After the bankruptcy, we thought we would be able to breathe a little bit, she said. Now, were working in a whole new world.

Coronavirus cases in Simpson County for a while remained low, with 230 cases recorded there as of July 1 a figure that placed its per-capita death and case rates well below the states average for many weeks.

And the viruss early days were quiet at Magee General, Gillespie said. The hospital had begun discussing how to prepare as early as January, and braced itself in March by suspending its radiology, surgery, sleep lab and other outpatient services and converting 30 inpatient rooms to a negative pressure environment for COVID-19 patients.

But its been a different situation since July began, when cases soared in Simpson County and around the state.

Magee General, which as an acute care facility typically sends patients in need of urgent care to Jackson or Hattiesburg, has filled its available beds with COVID patients. In recent days, the count of patients in its coronavirus isolation ward has hovered around 25 (its average daily patient census before the virus was 19).

The Magee, Miss., water tower stands not far from the parking lot at the main entrance to Magee General Hospital. The hospital was incorporated in 1942 and primarily serves Simpson County's rural population.(Photo: Sarah Warnock/Mississippi Center for Investigative Reporting)

I have seen more COVID-positive people coming into the ER with symptoms over the last week or two than I have during the whole pandemic, Gillespie, the doctor, said in an interview during the last week of June.

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Low staff numbers were an issue from the virus onset, Wallace said, particularly among the nursing staff, as some had departed during the bankruptcy in search of what they saw as more stable job opportunities.

"Our staff is tired, and everyone is doing double the work," she said.

The hospital struggled to acquire medical equipment in the virus early days amid a logjam for everyone competing to secure stock from the same national suppliers, Gibbes said. Now, the state has provided Magee General six ventilators, giving doctors extra time to find care in Jackson or Hattiesburg for sicker patients.

"If we happened to have more than one patient start to go south with respiratory difficulties, we can take care of that one patient, Gillespie said. But if another patient starts going down...we're limited in our resources.

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Even as it emerged from bankruptcy on May 29, Magee General was denied a financial lifeline that went to many other rural hospitals as the virus spread.

In April, rural hospitals around Mississippi received $317 million in CARES act rural distribution funds, money that salvaged many hospitals precarious cash-on-hand situations. By the end of May, hospitals statewide had lost $450 million in revenue for the fiscal year due to uncompensated care a figure that doesnt include another $81 million in COVID expenses since the pandemic began, Roberson said.

CARES funding hospitals received in April went towards plugging the drain of already lost revenue before the pandemic struck, he said.

But the federal government considers Magee General part of the Jackson metropolitan area, despite the fact that its almost an hours drive from the capital city. That decision made Magee ineligible for rural hospital funds.

A separate $350,000 CARES payment it received doubled its number of days cash-on-hand, which had wavered between eight and 10 days before the virus hit and elective care was cut. After that cash ran out, Magee was back to operating with single-digit days cash on hand.

How you die in rural Mississippi: The ER was closed. The ambulance wasn't close.

"I think most rural hospitals operate with at least four to five times the amount of cash on hand we did [before COVID-19]," Gibbes said. Our hospital depends on elective care...Weve had no choice but to be lean.

"Being lean involves careful decisions over the years around which equipment gets upgraded: Much of Magee Generals technology infrastructure is 10 years old or older and no longer supported by manufacturers, Gibbes said, and requires diligent maintenance.

A quarter of the 9,000 patients Magee Generals emergency department served last year were uninsured and nearly half its patients were on Medicare numbers nearly three times the national averages, according to census data.

If Mississippi accepted federal offers of Medicaid expansion, Gibbes estimated, Magee General could have $1 million more on hand each year.

"We do not have shareholders or dividends, Gibbes said. Every penny we earn gets reinvested in facilities, equipment and our people.

Opened in 1935 and incorporated in 1942, nonprofit Magee General Hospital faced bankruptcy in recent years, and pulled itself out of debt just to function with day-to-day cash on-hand during the COVID-19 pandemic.(Photo: Sarah Warnock/Mississippi Center for Investigative Reporting)

Gibbes and Bennett Hubbard, the chairman of the hospitals board of directors and a longtime nursing home executive in the town, see Magee Generals partnership with Covington County Hospital as the basis of its emergence from bankruptcy, and a potential way forward for other rural health providers. The two hospitals sharing of administrative staff has helped them keep costs low, and Magee General even upgraded facilities during the bankruptcy, expanding its emergency room last July with the help of donations.

"We wanted desperately to maintain a community hospital that works at a local level, Hubbard said.

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Gibbes agreed. I think that a lot of people will look at a rural hospital and say it's a matter of time, he said. But if you can be innovative, you can find a way to not just survive but to thrive.

For Magees nurses, doctors and other staff, he said, an ability to weather challenges has kept the hospital afloat, first through bankruptcy, and now through the virus. His staff agree if we can do this, anyone can, Wallace said and add that Gibbes leadership has been another key factor.

"Closing the hospital or losing the hospital in bankruptcy was never an option, Gibbes said. The hospital represents too much to the community to fail, not just in terms of health care but also in terms of economic development. Plain and simple, failure is not an option.

Pulitzer Center(Photo: Submitted/Special to Clarion Ledger)

The Poverty & the Pandemic is a continuing series from the Mississippi Center for Investigative Reporting and the Pulitzer Center that captures the stories of people and places hit hardest by the nations worst pandemic in a century.

James Finn is an investigative reporter for MCIR, a nonprofit news organization. Email him at James.Finn.MCIR@gmail.com.

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This rural Mississippi hospital beat bankruptcy. Can it survive the pandemic? - Clarion Ledger