Although the Sallisaw hospital has been around for 75 years, it’s no secret that there have been financial struggles.

As it is with real estate, it turns out the same mantra applies to rural hospitals — location, location, location.

With Northeastern Health System Sequoyah (NHSS) located just 25 miles from Baptist Health Center in Fort Smith, 100% reimbursement by Medicare for critical care access is not available for NHSS because the distance threshold is 32 miles.

As NHSS Administrator Stephanie Six told the Sallisaw City Commissioners on June 9 about Sallisaw’s distance to Baptist Health Center, “there was nothing that we could do.”

But that was before NHSS was selected to participate in the CMS Rural Community Hospital Demonstration Program, a federal initiative aimed at supporting healthcare access and sustainability in rural communities.

“It is absolutely going to be life-saving,” Six told the commissioners. “We will get cost reimbursement, so the first year we’ll set what we start getting next year. What was bid this year will set for next year. We’ll start getting more money this year. We’re anticipating about $50,000 more per month at the very least. That started in May. It’s a huge deal and life-altering for us.”

So how did things change?

“In 2004, Medicare started a project that allowed 30 hospitals across the nation to be in a project called Rural Community Hospital Demonstration Project. That project is very similar to critical access. It’s cost reimbursement, which is 100% what we needed to survive,” Six explained the genesis program. “They had permission to have 30 hospitals in the project. Over the past 20 years, they let 20 hospitals in. In December, they announced that they were going to look at 10 more hospitals across the nation to fill those 10 last spots. You had to fill out a grant, apply and go through a rigorous interview process to make that happen. The first of May, we were awarded one of the 10 final selections for that project.”

While the federal initiative has given the hospital a new lease on life, the commissioners had also taken steps to ensure the hospital’s survival.

In December 2024, Todd Martin, who has served on the hospital board for 18 years and is currently the board chairman, asked the city to intervene on the hospital’s behalf with a financial lifeline, what Martin called “the best thing for our financial situation at this point.”

At a special meeting, the commissioners affirmed the importance of saving the hospital, voting unanimously to buy a $12 million bond to give the hospital a clean slate as it charts a more financially stable course.

“I’m looking at brighter times down the road with all these things coming together. I think it’s going to be on the upswing for opportunities we haven’t seen in years,” Mayor Ernie Martens said in support of the bond proposal. “I just don’t see any downside to this. All I see are positives.”

After closing on the bond in February, Six reported that there was $2.37 million left, which was applied to the remaining outstanding debt, and the hospital’s financial future was bright.

“We have been struggling, and as you guys know, you’ve been working with us on the bond for about six months,” Six told the commissioners on June 9. “The hospital’s been struggling for a long, long time. We’ve known for many years that probably about the only thing that was truly going to save us was if we could be deemed critical access. But critical access, according to Medicare, was not going to happen for us because we had to be located 32 miles from the next hospital. That being Baptist [Health Center], we were within 25 miles, and there was nothing that we could do. We worked with all the state representatives, we have been to the White House, worked with everybody. There was no moving that needle, there just was nothing we could do.”

Then the Rural Community Hospital Demonstration Project helped move the needle. Along with the bond through the city, the hospital looks to be on its way to financial recovery.

“We’re very thankful for you guys for helping us with the bond that got us to where we need to be at,” Six told the commissioners. “I think we’re going to have about $30,000 left in that account, above the sales tax for the past four months. That’s huge.”

Six said the project goes through 2028, then the project re-evaluates the hospital and renews the program for another five years, if needed.

“The hospitals that have already been in have been getting those five-year extensions. So we don’t see any reason why we would not continue on,” Six said.

‘A step forward’

While news of the hospital’s selection for the CMS Rural Community Hospital Demonstration Program was well received by the commissioners, it was also welcome news for hospital trustees.

“Rural hospitals have operated at a disadvantage, being underfunded and overburdened. This program is a step forward, giving the hospital additional resources to provide quality care and remain open,” Martin said of the selection.

“It is a great honor to be selected as one of 10 hospitals across the country to be awarded this designation in 2025 by CMS,” said hospital trustee Bryan Warner.

“Participation in this program will bring desperately needed funding to our rural hospital, and to be one of only 10 in the nation selected is a great and well-deserved testament to our hospital and its employees. I am thrilled for the hospital, employees and community,” added trustee Treye Girdner.

“This is a meaningful victory for NHSS and the patients that depend on us,” said NHSS trustee Dr. Bill Anderson.

Trustee Debbie Bartel also praised the efforts to receive the program award. “Participation in the Rural Community Hospital Demonstration Program will provide NHSS more equitable reimbursement under Medicare to ensure we can continue serving patients in Sequoyah County well,” she said.

The Department of Health and Human Services Center for Medicare and Medicaid Services in December 2024 began accepting applications for the additional 10 program participants. The program is designed to test the feasibility of establishing cost-based reimbursement for rural community hospitals to furnish covered inpatient hospital services to Medicare beneficiaries. A community hospital is defined as a hospital that is located in a rural area, has fewer than 51 acute care inpatient beds, provides 24-hour emergency care services and is not designated or eligible for critical access hospital consideration.

Northeastern Health System Tahlequah prepared and submitted the 27-page application identifying the needs of the surrounding population and potential benefits, the strategy for financial viability and the NHSS goals for the demonstration. It is anticipated that during fiscal year 2026, the three-year program will provide an additional $600,000 in Medicare funding to NHSS.