Governor Gretchen Whitmer signed a bill on Tuesday that expands which hospitals the state considers “rural.”
SB 701 changed two key provisions governing a state fund that covers the costs of providing services for Medicaid beneficiaries. The new definition means Livingston, Muskegon and Saginaw counties now meet the state’s population requirements for that funding.
But in practice, the bill only changes eligibility for one hospital in the state. That’s Memorial Healthcare Hospital in Owosso.
The hospital will receive about $475,000 for its labor and delivery department, said Ben Frederick, the associate vice president for advocacy and government relations at the hospital's company.
“We're very excited to have this legislation pass,” he said. “Memorial Healthcare's been working on this issue from the budgetary side for the last two budget seasons.”
The hospital qualified for the state funding because Owosso’s population dropped below 15,000 between 2010 and 2020. Under the newly signed law, hospitals in cities with populations below 15,000 in the 2020 census are eligible.
The law also raises the cap on the population of a county that can be considered "rural" to 195,000 from 165,000. The governor's office touted that provision, but according to the Michigan Health and Hospital Association, the change did not alter eligibility for any hospitals in the state.
Nonetheless, the association praised the bill for providing necessary funding for rural hospitals.
Rural hospitals face unique challenges thanks to their remote location and the populations they serve, said Laura Appel, executive vice president for government relations and public policy at the health and hospital association.
“It's very challenging to maintain a rural hospital financially in the current environment,” she said, referring to high fixed costs and unpredictable patient loads in less populated areas. Medicaid has set reimbursement rates for hospitals, but market fluctuations – like inflation and scarcity – can change the price of supplies.
The state money can keep hospitals afloat when reimbursements from Medicaid don’t cover the cost of supplies and care, she said.
Whitmer signed the legislation alongside 16 other bills, many of which are meant to expand healthcare access and support families.
