ATLANTA -- Steve Barber was worried enough about the hospital he runs in Fitzgerald, Ga., to drive to Atlanta in hopes of persuading Georgia legislators to save Dorminy Medical Center and others like it.
While there are hospitals in worse financial shape, Mr. Barber frets that proposed cuts in how the state pays for treating Medicaid patients could make his job tougher and sink as many as 29 of Georgia's rural hospitals during the next two years.
Plans to shift Medicaid patients to cost-cutting programs are moving too fast, he said.
"What we're trying to do is solve in a short period of time about a decade of sins," Mr. Barber said.
Screven County Hospital in Sylvania, Ga., and 20 other rural Georgia hospitals lost money each year from 1995 to 1998.
Burke County Hospital in Waynesboro, Ga., and Jefferson Hospital in Jefferson County, just south of Augusta, are among 17 medical centers that lost money in two of those years, according to an analysis of state figures by HomeTown Health, a consortium of rural Georgia hospitals.
"Our hospitals and our health care system in rural Georgia is in crisis," said Lt. Gov. Mark Taylor, who announced legislation last week to assist financially strapped rural hospitals with state money to help them modernize aging facilities, buy new equipment and get out of debt.
The bill would create a $10 million grant program for the 58 hospitals in Georgia counties with fewer than 35,000 people.
Ailing hospitals could apply for one-time grants that also could be used for strategic planning and implementing new technology such as telemedicine, which allows doctors in cities to connect with rural patients by television.
Jefferson Hospital, with 37 beds, could use a grant to upgrade old lab equipment and bring in new technology, said Rita Culvern, the hospital's chief executive officer and administrator.
"We have done everything we could do to break even," she said. "There are the kinds of things that take that extra cash."
The state, like the federal government, is following private industry in cutting costs to combat medical inflation.
Private insurers' switch to managed care has driven most of their patients to larger regional hospitals, leaving rural facilities with a disproportionate share of patients covered by Medicare, Medicaid or no coverage at all.
At the same time, medical advances have shortened hospital stays, which also cuts into hospital incomes. Most surgery now is done on an outpatient basis, so many rural hospitals use less than 30 percent of their beds.
Rural-hospital administrators argue the state should make it a policy to preserve their institutions, or at least relax regulations that prevent creative ways for them to cope.
Consultant Richard Tradewell, an adjunct scholar with Los Angeles-based Reason Foundation, suggested government just let the hospitals die.
"In many communities, that is the last thing they need," Mr. Tradewell said. "They end up operating a hospital for three times what they could pay somebody else to care for their indigents."
He argues it would be cheaper to close rural hospitals and furnish transportation for patients to larger regional hospitals that probably have vacant beds anyway. Money would be left over to spend on other government services that would make the communities more attractive to prospective industries, he said.
While few may openly agree with Mr. Tradewell, the state really has had no coherent policy on rural health, many observers say.
"I am willing to make sure we take care of all hospitals out there, that we take care of our health safety net," said state Sen. Eddie Madden, D-Elberton, chairman of the state Senate Insurance and Labor Committee.
Community leaders describe the loss of a local hospital as devastating because they are major employers in their counties and because they are needed when trying to attract new industry to town.
"The real reason they are at risk is for the last four years, the state of Georgia has cut their reimbursement rates," said Jimmy Lewis, HomeTown Health lobbyist.
The rates have dropped to 35 percent below what private insurers would pay for the same patients, Mr. Lewis said. That means hospitals can't recover all their costs for treatment.
One survival strategy has been for rural hospitals to convert some of their empty beds to an in-house nursing home. Hospital-based nursing homes qualify for a higher reimbursement rate because their patients are sicker.
However, state regulations have essentially stopped hospitals from getting permission to set up in-house nursing homes.
HomeTown Health and its allies trying to stop rate cuts and loosen the rules on new hospital ventures feel they could succeed this year.
"I think there is a general awareness in the General Assembly that rural hospitals are in dire straits," said state Rep. Mickey Channell, D-Greensboro, chairman of the Medicaid subcommittee of the state House Appropriations Committee.
The state budget surplus offers concerned legislators some hope.
"I think they have seen they have cut into the bone, and there isn't anything left but marrow," said Skin Edge, a former senator who now lobbies for three hospital chains. "The money situation is good, so it's not like you have a question of resources."
A look at the health of Georgia's rural residents:
Of Georgia's 159 counties, 117 are considered rural, comprising more than 2.2 million Georgians and 30.8 percent of the state's population.
Eighteen percent, or 1.3 million, rural residents are uninsured.
Of the 58 hospitals in counties with 35,000 people or less, 51 hospitals have lost money in at least one of the past three years.
The death rate for Georgia's rural population is 37 percent higher than in urban areas; the infant mortality rate is 10 percent higher.
Sixty-five percent of all physicians in Georgia practice in the eight counties with more than 150,000 people.
Source: Georgia Senate Study Committee on Rural Hospitals and Rural Health