Shannon Health’s Certificate of Public Advantage (COPA) is up for renewal this year.
Under a 2019 law, hospital systems can apply for a COPA, which would shield them from anti-trust regulations, and force any disputes to have to go through state courts before they can be tried on the federal level. Currently, only a few counties in Texas are eligible.
The COPA essentially grants Shannon a monopoly on healthcare in the area.
This is the certification that allowed Shannon West Texas Memorial Hospital to acquire Community Medical Center in 2020, transforming into Shannon Health. Since then, Shannon has acquired Rivercrest Hospital in San Angelo.
The timing of both the original COPA certification and this year’s renewal are consequential.
In 2020, the COVID-19 pandemic arrived and disrupted the foundation of every healthcare system in the country, leading to a mass exodus of career nurses, doctors, and even maintenance and service workers.
This time around, healthcare systems nationwide are reckoning with major changes; namely this year’s reconciliation bill, the so-titled “One Big Beautiful Bill Act” (OBBBA). According to Congressional Budget Office (CBO) estimates that Texas would see a massive cut in medicaid funding, up to $39 billion over a ten year period.
The bill allocated $50 billion for a dedicated rural health fund, information about how it will be sorted is scarce, as there are not reporting requirements like there are with other sectors of healthcare.
Shannon’s 2020 COPA application was joined by a collection of letters of support from doctors, city councilmen, executives from almost every major organization in Tom Green County, and hospitals in neighboring counties.
For some of the organizations offering support, future developments could force them to rely more on Shannon Health.
From Schleicher County Medical Center:
“Since 2010, 20 rural Texas hospitals have closed – more than any other state. Furthermore, 63 counties in Texas don’t have a hospital at all. This acquisition ensures the residents of West Texas will continue to have access to the healthcare services they need for generations to come…
“By coming together as one, Shannon has the ability to make significant headway in addressing the health needs for residents in our region…
“I encourage you to approve this acquisition and preserve our access to the highest quality of care at the lowest cost in our region.”
– Paul Burke Administrator Schleicher County Medical Center
What does the future look like for rural hospitals?
Many Rural West Texas Hospitals Operating In The Red
As reported by WFAA News of Dallas in June, John Henderson, CEO of the Texas Organization of Rural and Community Hospitals (TORCH) says one-third of these rural hospitals have less than 10-days of cash on hand.
“Rural hospitals are scared and getting attention because our operating margins are so thin, 44 percent of rural Texas hospitals had negative margins in 2023. We will be the first provider type to feel the effects,” Henderson said.
Rural hospitals continue the battle that’s been waged for decades, the issue that their “type of care” is not as profitable as others. Running a fully operational hospital for a decreasing population means one thing: razor thin or steep negative margins.
Since the 1980s, there have been a steady stream of rural hospitals transitioning to different funding certifications. Acronyms which can leave you confused in their complexity, which dictate what a rural hospital can or cannot do to continue receiving cost-plus reimbursement under Medicaid and Medicare.
For many rural hospitals, a potential future Shannon buyout might be the thing that can allow them to keep the doors open. Though like many, this might lead to a change in what kind of services they provide.
From MHMR
“MHMRCV provides many services and supports to people who are considered ‘underserved’, often having no insurance or very little supports. Mental health services primarily focus on those with a serious mental illness and those who enter a mental health crisis and are at risk of harm to self or others.
“MHMRCV has a strong community partnership with Shannon West Texas Memorial Hospital that goes back many decades. Most recently is a partnership through the 1115 Transformation Waiver where Shannon co-locates a primary care provider at the MHMRCV adult psychiatric clinic. This healthcare provider works hand in hand with MHMRCV psychiatric staff to offer whole patient care for a population who often do not seek primary care or utilize an emergency room setting for their primary healthcare needs.
“With Shannon acquiring Community Medical Center all process with in the two emergency departments will become more uniform for our staff and improve care coordination for the patient.
“Furthermore, MHMRCV works closely with Shannon to contract for psychiatric inpatient care through Shannon Behavioral Health. MHMRCV has contracts with other local psychiatric hospitals where services are provided based on patient preference and availability of bed.
“From MHMRCV’s perspective it is anticipated that with the acquisition of Community Medical Center, Shannon will improve patient access to not only primary care services, but be better able to provide psychiatric and behavioral healthcare for a larger portion of the West Texas region; especially an area that reaches to many rural communities…”
-Gregory J. Rowe, Executive Director, MHMR Services for the Concho Valley
Would recent executive orders put more strain on MHMR?
From Presidential Executive Order 14321: “Ending Crime and Disorder on America’s Streets”
From Sec. 1:
“Shifting homeless individuals into long-term institutional settings for humane treatment through the appropriate use of civil commitment will restore public order. Surrendering our cities and citizens to disorder and fear is neither compassionate to the homeless nor other citizens.”
From Sec. 2 (ii):
“[P]rovide assistance to State and local governments, through technical guidance, grants, or other legally available means, for the identification, adoption, and implementation of maximally flexible civil commitment, institutional treatment, and “step-down” treatment standards that allow for the appropriate commitment and treatment of individuals with mental illness who pose a danger to others or are living on the streets and cannot care for themselves.”
From Sec. 5 (B):
“The Secretary of Housing and Urban Development shall, as appropriate, take steps to require recipients of Federal housing and homelessness assistance to increase requirements that persons participating in the recipients’ programs who suffer from substance use disorder or serious mental illness use substance abuse treatment or mental health services as a condition of participation.”
This new order would inevitably place more strain on the recovery and mental health support systems already in place. And unfortunately it suffers from the same problem that rural healthcare has: it is not profitable to treat people who can’t afford it.
The Texas Tribune reports that mental health programs for school children might bear the brunt of major federal school funding cuts:
“As Texas schools face at least $600 million in federal funding cuts, multiple mental health programs, particularly those implemented in response to the pandemic and mass shootings, are at risk of losing funding.
“School programs focused on chronic absenteeism, mental wellness and crisis services that were created in response to the Uvalde school shooting, as well as social workers and counselors, could all be on the chopping block.
“Texas schools rely heavily on federal funding to support mental health programs. Data shows that two federal programs that are at risk of being cut or strictly regulated account for 86% of the school mental health funding for more than 2,500 campuses statewide, according to Mental Health America of Greater Houston.”
-Stephen Simpson, Texas Tribune: “Mental health programs could bear the brunt of $600M federal cuts to Texas schools”
From State Supported Living Center
“As the Medical Director of the San Angelo State Supported Living Center, I strongly believe we must ensure a broad range of healthcare services are available for all populations in our community.
“The San Angelo State Supported Living Center is home to close to 200 people with intellectual and developmental disabilities who are medically fragile or who have behavioral problems. Our Center serves a 38-county area and employs more than 900 full time positions.
“Shannon is our primary hospital provider to provide medical care for our patients that are considered among the state’s most vulnerable populations. Our patients are medically complicated and fragile. Dysphagia, aspiration, pneumonia, seizure disorders and gastrointestinal malfunctions are not uncommon. Our patients are hospitalized and utilize medical services more often than would a “normal” ambulatory population.
“Therefore, treating them is inevitably less profitable. Nonetheless, Shannon has consistently welcomed them. Through this acquisition, Shannon can have an even more significant impact on addressing the health needs of our community.”
– David A. Jolivet, M.D., Director of Medical Services, San Angelo State Supported Living Center
The future of low profit treatment
The question remains: can the profit motive and broadly accessible healthcare coexist? As pointed out by these three statements, certain kinds of treatment are simply not profitable. It could be in the very near future that these treatments must be worked into larger healthcare systems that are able to bear the cost, or risk closure. But continuously, we see that acquisition can lead to gaps in care. Like so many difficult changes, they never pick a good time to show up.
COPA Public Meeting is Thursday
Shannon will host an annual public meeting regarding its Certificate of Public Advantage (COPA) at 10 a.m. Thursday, Sept. 25 in the second floor Legacy Conference Room of Shannon Hospital, 120 E. Harris Ave.
The meeting is open to anyone within the Shannon service area and will provide a brief update from Shannon.
Participants will then have an opportunity to provide oral comments during the meeting. Shannon is also accepting written comments at www.careforsanangelo.com through 11:59 pm on September 24.
For more information about the meeting, please visit careforsanangelo.com or email contactus@shannonhealth.org.
