How to Kill a Rural Hospital
In her 10 years as a nurse, Sara Pikaart had never ignored a call light. But in the early weeks of the Covid-19 pandemic in the United States, Pikaart simply had no way to respond to all the patients’ appeals for help. At Rehoboth McKinley Christian Hospital in Gallup, N.M., there were too many patients and too few nurses. The town of 21,000 was locked down, and just outside its borders, the Navajo Nation was reporting infection rates higher than those in New York City. There was no comparable hospital for 120 miles, yet RMCH’s CEO had just laid off 17 nurses. Pikaart was terrified: “I just had this feeling all day, like I was going to walk into a patient’s room and find them dead.”
Pikaart was a labor and delivery nurse, but she had volunteered to work in the ICU. The majority of the hospital’s patients were poor, old, or Native American and received health insurance through Medicaid or Medicare. One day, at the end of her shift, Pikaart noticed that some of her worst-off patients had not eaten. Aides had dropped off trays of food, but no one was free to help the patients feed themselves. Pikaart was horrified. She clocked out and then stayed to help an elderly patient with her dinner. In an e-mail, she described the nightmare of the ward to a few physicians. Spurred by her story, doctors in the hospital decided to call for a vote of no confidence in the CEO, David Conejo.
In response, the RMCH board of trustees fired Conejo. “At that point, I thought, ‘OK, we’ve had a disaster here, but now things have to get better,’” Pikaart said. Instead, “it just went from bad to worse.”
Rather than turn to local leaders to run the hospital, the board of trustees hired Community Hospital Corporation Consulting—a for-profit management services firm based in Plano, Tex., and controlled by the Community Hospital Corporation (CHC), a nonprofit that manages or owns 21 hospitals, primarily in the South and Southwest.
Over the next two years, 148 employees, or about a third of the hospital’s staff, would leave. Entire units of the hospital would have to close. Last year, every ob-gyn and all 18 nurses in the labor and delivery unit quit, temporarily shutting down the department and forcing patients to drive two hours to Albuquerque to deliver their babies. On August 3 of this year, the unit shut down for a second time—this time with no timeline for reopening.
Many of the doctors and nurses who left the hospital stayed in Gallup and started organizing against their former employer. They charge that CHC administrators retaliated against staff who raised safety concerns; failed to understand the economic a9nd tribal dynamics of the region; and drove the hospital into record financial losses. They told me that without community involvement and control of RMCH, the area could lose the only hospital available to all residents.
Gallup is like many other rural areas in the United States. Since the 2008 recession, 156 rural hospitals have closed, and with Covid-19 relief funds drying up, many more are on the verge of shutting their doors. More than 20 percent of the country’s 2,176 rural hospitals are currently at risk of reducing services or shuttering altogether.
Mark Holmes, director of the Cecil G. Sheps Center for Health Services Research, said that many rural health professionals “are gravely concerned about what the rest of this year and…2023 are going to look like.” Holmes explained that there are five key issues threatening rural hospitals: population, payment, practice, policy, and profitability. What he means is that, while rural communities increasingly rely on Medicare, they’re also grappling with changes to health-insurance payment models, federal policies, and treatment options that lean toward outpatient rather than more lucrative inpatient care—all of which are affecting hospitals’ ability to generate even a small surplus.
The loss of a rural hospital can devastate a town. In a study published earlier this year, Holmes and his colleagues found that when a rural hospital closes, huge sectors of the local economy lose money, and fewer families and businesses are likely to move to the area. Gallup residents told me the same. “Without the hospital, this place would be a ghost town,” said Warner Anderson, a retired military doctor who worked at RMCH in the 1980s.
The hospital is one of the largest employers in town. RMCH is also a crucial reason why elderly residents and young families feel safe living in the region and why travelers feel comfortable exploring the Southwest’s public lands. Its closure would force low-income households either to leave for a bigger city or to pay for gas, child care, lodging, and other expenses in order to travel for medical care. Brett Hartline, a Gallup resident and husband to a former RMCH physician, told me this is already happening. There are “elderly people in our community that are moving to Albuquerque, Phoenix, Scottsdale, wherever, because their health care needs cannot be met here,” he said. “This was their hometown. And now they can’t stay.”
Many rural hospitals in the United States trace their origins to 1946, when Congress passed the Hill-Burton Act. The legislation funded the construction of some 6,800 nonprofit hospitals in rural America and required that the facilities serve everyone in the community, no matter their race, income, or national origin. But under President Ronald Reagan, a wonky funding law pushed rural hospitals into decline. Facilities in rich areas are more often reimbursed by private insurance companies than those in poor, rural regions, where budgets depend on government insurance: Medicaid for low-income households, Medicare for seniors and people with disabilities. In 1983, Congress mandated that hospitals use fixed rates to get reimbursed by Medicare, which meant that they often had to take a loss on certain procedures. Between 1987 and 1991, 7 percent of rural hospitals closed their doors.
In the 1980s, the area surrounding RMCH was becoming older and poorer. Decades earlier, coal and uranium were being scooped from nearby deserts, and Hollywood stars like John Wayne and Ronald Reagan visited Gallup while filming westerns. After those industries left, almost everyone except retirees and the original inhabitants of the land, the Navajo and Zuni peoples, moved away. The percentage of residents over 65 nearly doubled, and a third of the remaining population was below the poverty line. Health care was more important than ever, and the hospital was operating on thin margins—some years eking out a million-dollar surplus, others having a million-dollar deficit.
To respond to the difficulties facing rural hospitals, Congress introduced the Flex Program in 1997, which increased the reimbursement rate for facilities designated as “critical access hospitals.” But RMCH was too large to qualify—35 beds over the 25-bed limit.
The 2008 financial crisis forced many patients who’d previously had private insurance to rely on Medicaid, which produced even greater hospital deficits. In McKinley County, where Gallup is located, unemployment spiked from 4.1 percent in April 2007 to 11 percent in June 2010. Across the border in Arizona’s Apache County, where many of RMCH’s Navajo patients live, unemployment reached 20 percent in June 2011. That year, RMCH lost $6.8 million, and the hospital would continue to operate in the red for most of the next decade.
Before the pandemic hit, David Conejo, the hospital’s cost-cutting CEO, was earning nearly $1 million a year. And according to RMCH staff, the men who replaced him were little better. Steve McKernan, a retired hospital executive in Albuquerque, was named acting CEO. Two months later, the hospital’s board hired Don Smithburg to take his place. McKernan wrote in an email that CHC was recommended to the board in summer 2020 and that CHC proposed bringing on Smithburg. (Smithburg did not respond to requests for comment.)
Anyone with the sense to Google Smithburg’s name would have discovered that he had a notorious history in health care. As The Nation reported in 2011, the hospital system he was leading at the time of Hurricane Katrina allegedly scammed its way into receiving hundreds of millions of dollars in FEMA funds. Cleanup volunteers at Charity Hospital said they saw signs of deliberate sabotage: clogged drains, locked doors to prevent ventilation, and even disconnected generators. Critics claimed this allowed hospital officials to inflate their application for federal funds. That money was then used to renovate a facility in a wealthy neighborhood. Charity, New Orleans’s premier hospital serving low-income Louisianans, never reopened.
McKernan, meanwhile, became the chair of RMCH’s board of trustees. In that role, he set about rewriting rules to all but eliminate active physicians from the board. Indeed, the board only increased the influence of CHC. By May 2021, CHC employees held the roles of chief executive officer, chief financial officer, chief nursing officer, and head of human resources. (In an email, McKernan stressed that the organizational structure of the board is in compliance with the New Mexico Hospital Funding Act.)
The hospital itself was falling into chaos. In March 2021, the patient call-light system malfunctioned. Instead of replacing it as legally required, the hospital handed out bells. But some patients could not physically ring the bells, and at least one person died as a result, according to an inspection completed by an outside accrediting body. While CHC and Smithburg collected their checks, a group of doctors donated several thousand dollars to be used for a new call-light system. But the hospital’s foundation initially refused to use the donations, and the call-light system remained dysfunctional until April 2022. Naman Shah, a family medicine physician and infectious disease epidemiologist who left RMCH in the spring of 2022, told me, “You can’t imagine your loved one falling down in the bathroom and not being able to ask for help. And that actually happened to a patient, who was stuck for several hours.”
In July 2021, Smithburg announced that he was laying off 80 employees. Two of the first to go were Caleb Lauber, RMCH’s only Navajo-speaking physician, and Andrea Walker, the hospital’s chief ob-gyn—both of whom had raised concerns about the state of the hospital.
In response, the doctors at RMCH began discussing something that had never been done by physicians in New Mexico: unionizing. Rather than organizing for better pay or benefits, the doctors wanted to protect each other’s right to speak up for their patients after watching Lauber and Walker get let go. In August, a majority of RMCH doctors submitted union authorization cards to the National Labor Relations Board. Two weeks later, McKernan denounced the union, writing in a letter: “We fear that a physician bargaining unit at our hospital will only undermine a true sense of community by demanding rights, privileges and considerations for themselves at the expense of nursing and other colleagues at the hospital.” The local investigative newspaper Source NM revealed that the hospital had hired a union-busting consultant at $425 an hour.
In October, the physicians of RMCH voted 14 to nine to join the Union of American Physicians and Dentists. Afterward, the board of trustees revised its bylaws again, this time to prevent any unionized doctor from joining the board even as the staff representative. Without any doctors on the board drawn from the hospital’s permanent employees, former physicians told me, there was no way for doctors or nurses to report concerns to the trustees without opening themselves up to retaliation. “A medical staff is important to safeguard the quality of care, to make sure that there is an independent voice and a check on patient safety, on quality, on high standards,” Shah said. “It was really a shame that instead of treating the hospital’s medical staff as an asset, as a resource, as a place for help and advice, it’s seen as the enemy.”
Heading into 2022, the hospital reported a record $9.4 million annual loss. Activists wondered whether such results were due to incompetence or whether CHC was deliberately driving the hospital toward bankruptcy in order to buy it cheaply down the line. (CHC does own hospitals, but it purchases only long-term acute care facilities, which RMCH is not. But in 2014, the last time the hospital was approaching bankruptcy, the board of directors entered into an agreement that would allow it to sell RMCH to the CEO, Conejo. CHC executives did not respond to requests for comment.)
On top of everything else, the hospital’s phone system broke down in February. Many patients had to drive hours to schedule appointments in person. Constance Liu, an ob-gyn at the Gallup Indian Medical Center who is married to one of the unionized RMCH doctors, created a Facebook group, “RMCH Is Our Hospital,” to help organize support.
In February, Liu, Pikaart, and Lauber, along with a dozen supporters, staged a protest at an intersection near the entrance to RMCH. It had snowed in Gallup, and the concerned patients and former providers bundled up against the freezing temperatures and held signs that read “Failing Hospital = Failing Community” and “My Vote, My Taxes, My Hospital.” They demanded not only that the broken phone system be repaired, but also that CHC leave town—or at the very least hire a new CEO. Hospital administrators responded by closing its outpatient clinic two hours early, citing “safety concerns.” Smithburg told the Gallup Independent, “Can you imagine patients having to potentially walk through picketers with vulgar, vulgar, obscene signs, yelling and screaming? I wasn’t there. I didn’t waste my time.” The activists continued their protests for several weeks and resumed them this summer.
In March, they held a town hall meeting in a church, where former doctors and nurses testified about their experiences at RMCH. Valory Wangler, who had been its chief medical officer and was named the state’s 2021 Physician of the Year by the Society of Hospital Medicine before being pushed out in February, ascended the pulpit and told the audience that “outside corporate interests see Gallup as a small, rural place that’s easy to take advantage of, that no one’s really going to say anything, that they can just come in and do what they want.”
Two days later, the McKinley County Board of Commissioners, which controls the hospital’s lease, took action. It voted to terminate the lease unless the hospital appointed a new CEO within 180 days and committed to open and transparent communication with its employees and with the county. In response, CHC replaced Smithburg with Robert Whitaker, a hospital executive from Kansas. Doctors and community members told me they are giving the new CEO the benefit of the doubt but are growing increasingly frustrated as time passes without substantial improvements.
By April, there were new concerns emerging: RMCH had come under the scrutiny of an auditor, who had previously discovered that the quality assurance and performance improvement committee had not been meeting. This time the auditor wrote up the hospital for failing to document so-called adverse events, including three instances in which staff had failed to efficiently respond to patients in cardiac or respiratory distress because of the broken call-light system. (RMCH leadership did not respond to requests for comment.)
The problems continued to mount. The interim CFO revealed to the press that the hospital was down to three days of cash on hand; the board fired her the next day. Then, as summer approached and the desert heat approached 100 degrees, the HVAC system broke. Some days, it reached 93 degrees in the building, and the staff scrambled to set up fans. At the same time, the hospital decided to begin transitioning to an electronic records system, but patients’ files were not transferred. The remaining doctors, nurses, and medical assistants on staff had to re-input their patients’ medical histories.
In June, RMCH announced a $10 million loss for the year to date, and activists project it could reach $25 million by the end of the year. They say that since CHC took over management of the hospital in August 2020, approximately 85 percent of its nurses and 40 percent of its doctors have left. Bryan Toledano, a representative for the doctors’ union, said that instead of hiring new full-time employees, RMCH has relied on contractors and traveling doctors and nurses, who are paid far more than permanent employees. Neither group can join the union.
Toledano has another concern: When the union hits its one-year anniversary in October without a collective bargaining agreement, the hospital could call for a decertification vote. He said the hospital could offer permanent contracts to the temporary employees prior to the election in hopes that the new staff doctors would vote against renewing the union. The union has filed unfair labor practice charges, including retaliation and refusal to bargain, with the National Labor Relations Board, but Toledano worries that the organizing effort could peter out through attrition before the agency acts.
There are a few strategies that could help the hospital keep its doors open. RMCH could become a critical access hospital, which would require it to shrink from about 60 inpatient beds to 25, or become a rural emergency hospital and cease inpatient services entirely.
County commissioners and CHC administrators might also be considering a different course: preparing the hospital to merge with or be acquired by a larger hospital system. A study published in JAMA Health Forum in July found that rural hospitals that had been struggling in 2007 tended to benefit from joining a multi-hospital system. (Financially secure rural hospitals, however, were more likely to shut down if they joined a conglomerate.)
But former RMCH physicians told me that local control is particularly essential in Gallup. Lauber cited the challenges of working with Navajo patients who may not have running water, or electricity to power medical devices, or a refrigerator to keep drugs cool. “When you have an outside company like CHC that’s coming from a state like Texas,” he told me, “they’re coming to this community and they don’t understand the special needs of this community.”
Community members are holding out hope that the town can take back the hospital. Activists like Liu are pushing the county to require that doctors and community representatives get spots on the board. Liu also proposes that the county hire a physician-run management group that she and another doctor are designing. The goal is to allow physicians, not outside executives, to make decisions regarding patient care and hospital policy.
“There are some amazing doctors ready and willing to step up and take leadership of the hospital. And it would be a lot of work, but that’s how committed people are,” Pikaart said. “We have a really good group of people willing to be on the board, willing to serve on administration, willing to do whatever it takes—because they care about our patients and our community.”
Many of the physicians who were fired or resigned from RMCH are launching their own clinic so they can continue to serve their community. But even with a new medical facility, Gallup needs a hospital. The community is doing what it can to save RMCH, yet many residents worry about the hospital’s future and what could happen to the largest hub of grocery stores, Native markets, and social services between Flagstaff and Albuquerque if RMCH is not saved. Liu put it simply: “Gallup lives and dies by this hospital.”
Cecilia Nowell is an Albuquerque-based journalist.
Co-published with The Nation.