Nearly every seat is taken during lunchtime at the Remnant Cafe in Parsons, Kansas, and Brian Williams is caught up in conversation about the happenings at the local hospital.
It’s not unusual for Williams, the CEO of Labette Health, to field questions about personal medical concerns or roadblocks, and lately about how the hospital is faring financially. In a town of under 10,000 people, a hospital CEO is a fairly visible figure, and the hospital is a boon to the community.
But it hasn't been smooth sailing lately in southeast Kansas for many hospitals, and time won’t heal these financial wounds. Under the One Big Beautiful Bill Act, Medicaid reimbursement will drop 10% each year from 2028 until it reaches a cap noticeably lower than the rate today.
Estimates suggest rural hospitals nationwide will face $70 billion in cuts over the next decade due to these changes. That’s why Williams always stresses the value hospitals bring to a community and the importance of supporting hospitals now.
“Rising tides lift all ships,” Williams said of his experience in hospital and community partnership, particularly amid financial turmoil. “That’s what we need to do today.”
Williams describes his hospital's situation as “better than most and worse than some.” But since his arrival in 2015, he's watched facilities in nearby Independence, Kansas, and Oswego close. One hospital in Fort Scott closed twice, although it seems a new option might be available.
That leaves Labette Health as the only Level 3 Trauma Center in the region, meaning they are equipped to handle traumatic injuries from things like car crashes. It serves a six-county area and has 99 short-term inpatient beds. Doctors see well over 100,000 patients each year across their clinics and in the hospital.
They also employ about 800 people, one of the largest employers in Parsons. That means they are critical in providing jobs that help keep it a viable place to live and work.
“Without your schools, without your health care, without your local pharmacy, how are we gonna keep our youth here?” Williams said. “How are we going to continue to have viable communities?”
Parsons native Justin Brown, who stopped to chat with Williams for a bit, has been a patient at Labette Health on multiple occasions.
“The care that I’ve always received there has always been top-notch, from the doctors to the surgeons to the lab and all the departments overall,” Brown said.
He reflected on how lucky Parsons is to have a hospital a short drive away, compared to the long drives some have to make in western Kansas.
Lisa Johnson lives in Parsons and, like Brown, has had a few instances where she required medical assistance. While she said Labette has room to improve, she’s thankful they’ve been there to support her when needed.
“You could go to Kansas City, and it's crazy getting in to see doctors, but here it isn’t that way,” she said.
As other hospitals close in the surrounding towns, her appreciation for Labette Health only grows.
Smaller hospitals struggle
Many rural hospitals across Kansas struggle to stay open. The state has more rural hospitals at risk of closure than any other state, according to national data from the Center for Healthcare Quality and Patient Reform.
Estimates vary depending on who you ask, but the Pennsylvania-based think tank suggests that 67 out of 100 rural Kansas hospitals are at risk of closing. Thirty face an immediate risk of closure.
According to the United Methodist Health Ministry Fund, 87% of hospitals are operating in the red.
Cindy Samuelson, a spokesperson for the Kansas Hospital Association, said losing a hospital can be a destabilizing force for rural communities.
“A healthy, thriving hospital is important for the sustainability of employers being able to come there and have a business — because then their employees have care,” Samuelson said. “And then retirees being able to retire there in the years that they really need health care services.”
According to a 2021 Kansas Hospital Association report, for every four health workers employed in Kansas, there are about three other jobs supported in related industries.
Many Kansas communities recognize that value and put additional taxpayer money back toward their local hospital via taxes and levies, Samuelson said. But those aren’t guaranteed funds year over year.
Samuelson notes a few examples of more guaranteed funding that Kansas hospitals are missing out on. One factor is that Kansas never expanded Medicaid.
Without expansion, hospitals absorb costs for treating uninsured patients who might be otherwise covered by Medicaid. These health care plans pay hospitals 65 cents for every dollar spent providing care to Medicaid patients.
A 2023 study showed the 14 states with the highest uncompensated care had not expanded Medicaid. Kansas hospitals have historically filled this gap with other profitable services and money from patients with private insurance. But Samuelson said even commercial rates have remained stagnant in Kansas.
“Everything else costs more, like workforce in a rural area, where we have to be competitive,” Samuelson said. “And we have people that can't afford their part of the bill because their patient responsibility is so much higher than in the past.”
Something needed to change if struggling hospitals were to find some stability before Medicaid rates decrease further in 2028.
A temporary lifeline
After years of stagnant reimbursement rates, 39 Kansas hospitals, like Labette Health, were finally handed a lifeline last month, after the Centers for Medicare and Medicaid Services approved a provider tax change.
These Prospective Payment System, or PPS, hospitals — where reimbursement for inpatient services is based on a fixed amount rather than actual cost — will see an increase in the state Medicaid provider tax on hospitals from 3% to 6%. That means they’ll put more money into a pot matched by federal Medicaid dollars.
Estimates suggest as much as $1 billion statewide will be generated by the tax and matching federal money in the coming year.
It’s long overdue, Samuelson said. Kansas started at 1% before the Legislature raised the tax to 3%, but never went higher. That left Kansas near the bottom nationally.
“Over time, there will be a hit to us as Medicaid reimbursement rates decrease, but we’ve got a little time to prepare now,” she said.
This change is a big deal in southeast Kansas. Of the Labette patient base, about 13% are medicaid patients. At some off-campus clinics, that number can be as high as 20% of patients. That’s a lot compared to hospitals in other parts of the state.
Statewide, about 15% of all inpatient care and 32% of prenatal and postnatal care is covered by Medicaid.
Benjamin Anderson, president and CEO of Hutchinson Regional Medical Center, praised state and federal lawmakers for getting this done amid changes to the Medicaid program.
“CMS’s decision to approve Kansas’ 2025 Provider Tax increase means more federal support will be available for rural hospitals to continue our work of providing critical services and care to communities across our state,” he said.
Beyond continued care, it also gives hospital officials like Williams a small window of increased financial stability to plan before Medicaid rates decrease.
“How can we eliminate unnecessary duplications in rural areas that are fragile?” he said. “How can we consolidate where appropriate? How can we recruit together?”
Next year, the hope is that the provider tax will apply to all Kansas hospitals that serve medicaid patients, not just the 39 PPS hospitals. The Legislature approved it earlier this year, and CMS would likely approve the change in 2026.
Preparing while they can
During the pandemic, Williams said the most common statement he heard in the hospital was “I wish.”
He heard from people who wished they were vaccinated or wished they wore a mask, and others who wished the exact opposite. Some who wished they hadn’t gone to an event or that they’d said or done something different.
It’s a feeling he related to in a very personal way. He told the Kansas News Service he’d never thought much about an emergency room — beyond a professional sense — until he choked on a piece of steak and ended up in the operating room of Labette Health.
“That really humbled me,” he said. “We take a lot of things for granted until we lose them. And once we lose our health, it’s sometimes too late.”
While nothing is a guarantee, Williams is confident Kansans will step up to the plate before it's too late. He isn’t from the state and, in fact, as a former army officer, he's spent most of his adult life moving from place to place, but his confidence in the resilience he’s seen statewide is unshakable.
The groundwork of that resiliency is camaraderie and teamwork, Williams said. That is his vision for southeast Kansas health care: a collaborative effort. For example, when Labette Health and Independence, Kansas, teamed up to open a rural emergency hospital after the Independence hospital shut down.
He noted several towns in southeast Kansas have one or more emergency medical services units. What if, he wonders, they could combine them or, at the very least, streamline them?
Maybe these ideas don't work at all. Maybe they aren't feasible. But it can't hurt to have the conversation, Williams said.
“We have to do what's right beyond our individual hospitals,” he said. “We have to do what's right for regions.”
Noah Taborda reports on health care for the Kansas News Service.
The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.
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