Rural Hospitals and the Purpose they Serve
Posted: Wednesday, February 23, 2011
by Rose-Marie Chaperon
Chaperon Consulting, LLC
Rural hospitals play an important role in sustaining the economic health of their host communities through employment of local residents and provision of one of the basic community services that is crucial to attract and retain other employers. In today’s economic downfall there are many issues affecting the survival of rural healthcare in America. Residents and communities are facing a multitude of issues. Issues such as: LimitedAccess, Cost/Affordability, Uninsured, Quality of Care, and managed care cut back.
Cash flow for rural hospitals is a challenge, an awful lot of the government’s decisions concerning reimbursement flow from decisions in the 80s and they use a big city hospital model for determining costs for what reimbursement rates should be provided. It's unrealistic to expect the same cost efficiencies in low volume rural hospitals that you can obtain in high volume urban hospitals.
Low income, (poverty) and being uninsured contributed negatively, to healthcare access in rural communities. The uninsured and underinsures populations in small rural areas are hurting small healthcare systems. The uninsured populations are young adults who work for employers and who are unable to afford the high premium of their employers’ insurance. These employees elect to go without insurance. That same population earns a few dollars over the federal poverty guideline limits; therefore they are not qualified for state insurance such as Medicaid.
Rural communities have long struggled to maintain access to quality health care services. Rural hospitals are faced with quality of care issues due to limited access to funds, and other variety of elements contribute to these problems in rural areas, including a declining population, economic stagnation, shortages of physicians and other health care professionals, a disproportionate number of elderly, poor, and underinsured residents, and high rates of chronic illness (Wiesgraw, 1995).
Declining reimbursements, resulting from the 1997 Balanced Budget Act (BBA), have placed an enormous strain on small, rural hospitals that are typically dependent on Medicare patients for the majority of their revenue (Fox, 2006). To reduce the negative impact many hospitals have had to take advantage certain provisions suggested to them. Small rural hospitals have expanded outpatient services, embrace telemedicine and Tele-health initiatives, and actively seek alternative funding from foundations and other sources (Fox, 2006). Even with these programs in-place funds is still limited for rural hospitals to stay open. Small rural hospitals cannot absorb the Medicare cuts in the BBA of 1997 for an extended period of time and expect to remain unscathed. These vulnerable facilities must seek federal, community, and private funding in order to remain open.
Those issues affecting rural hospital are common to all of the small facilities in the US, these hospitals are forced to deliver healthcare to a population who is unable to pay for services and at the same time there are under strict federal guidelines to not withhold emergency treatment to patients who are unable to pay for healthcare. To meet managed care cut challenge, the most popular strategy for small rural hospitals was to convert to Critical Access Hospital (CAH) status. Small hospitals that agree to a limit of 15 acute care patients can usually be declared a Critical Access Hospital and obtain cost-based reimbursement for inpatient and outpatient care. This CAH designation has helped put them on a higher Medicare reimbursement rate from PPS to CAH cost base reimbursement may have a positive impact on their financial stability.
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