Financial Indicators for Critical Access Hospitals

CONTEXT: There is a growing recognition of the need to measure and report hospital financial performance. However, there exists little comparative financial indicator data specifically for critical access hospitals (CAHs). CAHs differ from other hospitals on a number of dimensions that might affect appropriate indicators of performance, including differences in Medicare reimbursement, limits on bed size and average length of stay, and relaxed staffing rules. PURPOSE: To develop comparative financial indicators specifically designed for CAHs using Medicare cost report data. METHODS: A technical advisory group of individuals with extensive experience in rural hospital finance and operations provided advice to a research team from the University of North Carolina at Chapel Hill. Twenty indicators deemed appropriate for assessment of CAH financial condition were chosen and formulas determined. Issues 1 and 2 of the CAH Financial Indicators Report were mailed to the chief executive officers of 853 CAHs in the summer of 2004 and 1,092 CAHs in the summer of 2005, respectively. Each report included indicator values specifically for their CAH, indicator medians for peer groups, and an evaluation form. FINDINGS: Chief executive officers found the indicators to be useful and the underlying formulas to be appropriate. The multiple years of data provide snapshots of the industry as a whole, rather than trend data for a constant set of hospitals. CONCLUSIONS: The CAH Financial Indicators Report is a useful first step toward comparative financial indicators for CAHs.     

Financial performance monitoring of the technical efficiency of critical access hospitals: a data envelopment analysis and logistic regression modeling approach

From 1980 to 1999, rural designated hospitals closed at a disproportionally high rate. In response to this emergent threat to healthcare access in rural settings, the Balanced Budget Act of 1997 made provisions for the creation of a new rural hospital--the critical access hospital (CAH). The conversion to CAH and the associated cost-based reimbursement scheme significantly slowed the closure rate of rural hospitals. This work investigates which methods can ensure the long-term viability of small hospitals. This article uses a two-step design to focus on a hypothesized relationship between technical efficiency of CAHs and a recently developed set of financial monitors for these entities. The goal is to identify the financial performance measures associated with efficiency. The first step uses data envelopment analysis (DEA) to differentiate efficient from inefficient facilities within a data set of 183 CAHs. Determining DEA efficiency is an a priori categorization of hospitals in the data set as efficient or inefficient. In the second step, DEA efficiency is the categorical dependent variable (efficient = 0, inefficient = 1) in the subsequent binary logistic regression (LR) model. A set of six financial monitors selected from the array of 20 measures were the LR independent variables. We use a binary LR to test the null hypothesis that recently developed CAH financial indicators had no predictive value for categorizing a CAH as efficient or inefficient, (i.e., there is no relationship between DEA efficiency and fiscal performance).     

Meaningful Use of Health Information Technology by Rural Hospitals

Purpose: This study examines the current status of meaningful use of health information technology (IT) in Critical Access Hospitals (CAHs), other rural, and urban US hospitals, and it discusses the potential role of Medicare payment incentives and disincentives in encouraging CAHs and other rural hospitals to achieve meaningful use. Methods: Data from the American Hospital Association (AHA) Annual Survey IT Supplement were analyzed, using t tests and probit regressions to assess whether implementation rates in CAHs and other rural hospitals are significantly different from rates in urban hospitals. Findings: Of the many measures we examined, only 4 have been met by a majority of rural hospitals: electronic recording of patient demographics and electronic access to lab reports, radiology reports, and radiology images. Meaningful use is even less prevalent among CAHs. We also find that rural hospitals lag behind urban institutions in nearly every measure of meaningful use. These differences are particularly large and significant for CAHs. Conclusion: The meaningful use incentive system creates many challenges for CAHs. First, investments are evaluated and subsidies determined after adoption. Thus, CAHs must accept financial risk when adopting health IT; this may be particularly important for large expenditures. Second, the subsidies may be low for relatively small expenditures. Third, since the subsidies are based on observable costs, CAHs will receive no support for their intangible costs (eg, workflow disruption). A variety of policies may be used to address these problems of financial risk, uncertain returns in a rural setting, and limited resources.     

Variations in Financial Performance Among Peer Groups of Critical Access Hospitals

CONTEXT: Among the large number of hospitals with critical access hospital (CAH) designation, there is substantial variation in facility revenue as well as the number and types of services provided. If these variations have material effects on financial indicators, then performance comparisons among all CAHs are problematic. PURPOSE: To investigate whether indicators of financial performance and condition systematically vary among peer groups of CAHs. METHODS: Suggestions from CAH administrators, a literature review, expert panel advice, and statistical analysis were used to create peer groups based on whether a CAH: (1) had less than $5 million, $5-10 million, or over $10 million in net patient revenue; (2) was owned by a government entity; (3) provided long-term care; and (4) operated a provider-based Rural Health Clinic. FINDINGS: Significant differences in financial performance and condition exist among CAH peer groups. CONCLUSIONS: CAHs should ensure that they use appropriate peer comparators when assessing their financial performance and condition. If quality, outcome, safety and access are affected by financial performance and condition, it may also be important for research in these areas to control for peer group differences among CAHs.     

The Financial Performance of Rural Hospitals and Implications for Elimination of the Critical Access Hospital Program

Purpose: To compare the financial performance of rural hospitals with Medicare payment provisions to those paid under prospective payment and to estimate the financial consequences of elimination of the Critical Access Hospital (CAH) program. Methods: Financial data for 2004‐2010 were collected from the Healthcare Cost Reporting Information System (HCRIS) for rural hospitals. HCRIS data were used to calculate measures of the profitability, liquidity, capital structure, and financial strength of rural hospitals. Linear mixed models accounted for the method of Medicare reimbursement, time trends, hospital, and market characteristics. Simulations were used to estimate profitability of CAHs if they reverted to prospective payment. Findings: CAHs generally had lower unadjusted financial performance than other types of rural hospitals, but after adjustment for hospital characteristics, CAHs had generally higher financial performance. Conclusions: Special payment provisions by Medicare to rural hospitals are important determinants of financial performance. In particular, the financial condition of CAHs would be worse if they were paid under prospective payment.     

Implementing a Hospitalist Program in a Critical Access Hospital

Purpose

The hospitalist model of inpatient care has rapidly expanded, but little is known about hospitalist care in critical access hospitals (CAHs). We aimed to determine the impact of a hospitalist model of care on staff satisfaction, patient volumes, patient satisfaction, length of stay, and care quality in a CAH.

Methods

We initiated a hybrid rotating hospitalist program in September 2008 at Winneshiek Medical Center (Decorah, Iowa), a 25‐bed rural CAH. We reviewed patient volumes, Centers for Medicare and Medicaid Services core quality measures, acute length of stay, and staff satisfaction for primary care—hospitalist physicians and inpatient and clinic nurses. Patient volume and length of stay were compared with CAH data reported by the Iowa Hospital Association.

Findings

Patient volumes (acute, skilled, and observation) increased by 15% compared with a 17% decrease for statewide CAHs. Length of stay decreased from 2.88 to 2.75 days and remained lower than the average stay for Iowa CAHs (3.05 days). In the year after implementation, we observed no deterioration in core quality measures (range, 93%‐100%) or patient satisfaction (86th percentile). Inpatient nurse satisfaction and primary care‐hospitalist satisfaction improved. Early clinic nurse skepticism showed improved satisfaction at the 5‐year review.

Conclusions

Hospitalist care contributed to ongoing delivery of high‐quality care and satisfactory patient experiences while supporting the mission of a CAH in rural Iowa. Implementation required careful consideration of its effects on the outpatient practice. Broader implementation of this model in CAHs may be warranted.     

A comparison of quality of care indicators in urban acute care hospitals and rural critical access hospitals in the United States.

OBJECTIVE: Two recent Institute of Medicine reports highlight that the quality of healthcare in the US is less than what should be expected from the world's most extensive and expensive healthcare system. This may be especially true for critical access hospitals since these smaller rural-based hospitals often have fewer resources and less funding than larger urban hospitals. The purpose of this paper was to compare quality of hospital care provided in urban acute care hospitals to that provided in rural critical access hospitals. DESIGN: Cross-sectional study analyzing secondary Hospital Compare data. T-test statistics were computed on weighted data to ascertain if differences were statistically significant (P=0.01). SETTING: Centers for Medicare and Medicaid Services hospitals. PARTICIPANTS: US Acute Care and Critical Access hospitals. MAIN OUTCOME MEASURES: Differences between urban acute care hospitals and rural critical access hospitals on quality care indicators related to acute myocardial infarction, heart failure and pneumonia. RESULTS: For 8 of the 12 hospital quality indicators the differences between urban acute care and rural critical access hospitals were statistically significant (P=0.01). In seven instances these differences favored urban hospitals. One indicator related to pneumonia favored rural hospitals CONCLUSIONS: Although this study focused on only three disease states, these are among the most common clinical conditions encountered in inpatient settings. The findings suggested that there may be differences in quality in rural critical access hospitals and urban acute care hospitals and support the need for future studies addressing disparities between urban acute care and rural critical access hospitals.     

Choosing to convert to critical access hospital status

The authors profile facilities converting to critical access hospitals (CAHs) from 1998-2000, comparing characteristics of their communities, operations, and finances to those of other small rural providers. Counties where CAHs are located are more sparsely populated, but do not have substantially different sociodemographic profiles than other rural counties. Converting hospitals' acute daily census averaged well below the statutory limit of 15, but over one-half reduced unused bed capacity to meet CAH size limitations. The average case-mix adjusted Medicare cost per case was 16-percent higher for CAH converters than for other small hospitals and their financial ratios were substantially worse, although many other operating characteristics were similar.     

What Is the Impact of Health Reforms on Uncompensated Care in Critical Access Hospitals? A 5‐Year Forecast in Washington State

Context: The 2008 financial crisis had a far‐reaching impact on nearly every sector of the economy. As unemployment increased so did the uninsured. Already operating on a slim margin and poor payer mix, many critical access hospitals are facing a tough road ahead. Purpose: We seek to examine the increasing impact of uncompensated care on the revenues earned by Washington's critical access hospitals; to forecast uncompensated care to the year 2014; and to forecast the financial impact on rural hospital uncompensated care of HR 3590, the Affordable Care Act (ACA). Findings: For critical access hospitals in the state of Washington, total uncompensated care increased by almost $16 million, a 22% increase from 2008 to 2009. By 2014, total uncompensated care is forecast to more than double from 2009, totaling $174 million annually without health reforms. Using the Urban Institute's Health Insurance Policy Simulation Model, uncompensated care is forecast to fall by $106 million in 2014, thereby reducing the uncompensated care percentage from 5.31% to 2.07%. Conclusions: Policy makers and health care managers should note that a substantial portion of the newly insured from the ACA will most likely be Medicaid participants. Given this source of lower revenue per case, critical access hospital administrators should seek additional public and private sources of revenue. Most importantly, rural hospital managers must maintain or improve their cost efficiency, while serving the needs of their rural population as we move closer toward the implementation of health reforms.     

Quality-of-Care Challenges for Rural Health

The purpose of this article is to examine the issue of quality of care in rural America and to help others examine this issue in a way that is consistent with the very real challenges faced by rural communities in ensuring the availability of adequate health services. Rural citizens have a right to expect that their local health care meets certain basic standards. Unless rural providers can document that the quality of local health care meets objective external standards, third-party payers might refuse to contract with rural providers, and increasingly sophisticated consumers might leave their communities for basic medical care services. To improve the measurement of health care quality in a rural setting, a number of issues specific to the rural environment must be addressed, including small sample sizes (volume and outcome issues), limited data availability, the ability to define rural health service areas, rural population preferences and the lower priority of formal quality-of-care assessment in shortage areas. Several current health policy initiatives have substantial implications for monitoring and measuring the quality of rural health services. For example, to receive community acceptance and achieve fiscal stability, critical access hospitals (CAHs) must be able to document that the care they provide is at least comparable to that of their predecessor institutions. The expectations for quality assurance activities in CAHs should consider their limited institutional resources and community preferences. As managed care extends from urban areas, there will be an inevitable collision between the ability to provide care and the ability to measure quality. As desirable as it might be to have a national standard for health care quality, this is not an attainable goal. The spectrum and content of rural health care are different from the spectrum and content of care provided in large cities. Accrediting agencies, third-party carriers and health insurance purchasers need to develop rural health care quality standards that are practical, useful and affordable.     

Intensive Care in Critical Access Hospitals

CONTEXT: Although critical access hospitals (CAHs) have limitations on number of acute care beds and average length of stay, some of them provide intensive care unit (ICU) services. PURPOSE: To describe the facilities, equipment, and staffing used by CAHs for intensive care, the types of patients receiving ICU care, and the perceived impact of closing the ICU on CAH staff and the local community. METHODS: A semistructured interview of directors of nursing at CAHs that provide intensive care services. RESULTS: Two thirds of CAHs that provide intensive care do so in a distinct unit. Most have continuous or computerized electrocardiography and ventilators. Other ICU equipment common in larger hospitals was reported less frequently. Nurse:patient ratio ranged from 1:1 to 1:3, and some or all nursing staff have advanced cardiac life support certification. Most CAHs admit patients to the ICU daily or weekly, primarily treating cardiac, respiratory, gastrointestinal, endocrine, and drug- or alcohol-related conditions. ICUs are also used for postsurgical recovery. Respondents felt that closure of the ICU would be burdensome to patients and families, result in lost revenue, negatively impact staff, and affect the community's perception of the hospital. CONCLUSIONS: Intensive care services provided by CAHs fall along a continuum, ranging from care in a unit that resembles a scaled-down version of ICUs in larger hospitals to care in closely monitored medical-surgical beds. Nurse to patient ratio, not technology, is arguably the defining characteristic of intensive care in CAHs. Respondents believe these services to be important to the well-being of the hospital and of the community.     

Do private hospitals outperform public hospitals regarding efficiency,accessibility, and quality of care in the European Union? A literature review

European countries have enhanced the scope of private provision within their health care systems. Privatizing services have been suggested as a means to improve access, quality, and efficiency in health care. This raises questions about the relative performance of private hospitals compared with public hospitals. Most systematic reviews that scrutinize the performance of the private hospitals originate from the United States. A systematic overview for Europe is nonexisting. We fill this gap with a systematic realist review comparing the performance of public hospitals to private hospitals on efficiency, accessibility, and quality of care in the European Union. This review synthesizes evidence from Italy, Germany, the United Kingdom, France, Greece, Austria, Spain, and Portugal. Most evidence suggests that public hospitals are at least as efficient as or are more efficient than private hospitals. Accessibility to broader populations is often a matter of concern in private provision: Patients with higher social‐economic backgrounds hold better access to private hospital provision, especially in private parallel systems such as the United Kingdom and Greece. The existing evidence on quality of care is often too diverse to make a conclusive statement. In conclusion, the growth in private hospital provision seems not related to improvements in performance in Europe. Our evidence further suggests that the private (for‐profit) hospital sector seems to react more strongly to (financial) incentives than other provider types. In such cases, policymakers either should very carefully develop adequate incentive structures or be hesitant to accommodate the growth of the private hospital sector.     

Providing Palliative Care to Patients Throughout the State of Indiana from a Centralized Virtual Palliative Care Hub

BackgroundAccess to palliative care clinicians is a limited resource. Expanding the reach of existing palliative care expertise by utilizing virtual care is one strategy to reach areas that lack access. We delivered virtual services through a centralized hub across multiple health settings and tracked outcomes.MethodsThrough a centralized virtual palliative care hub based in an urban academic health center, access to specialty palliative care was offered across homes, critical access hospitals (CAHs), and extended care facilities (ECFs) in the state of Indiana. Webpage-based platforms were used, and hardware included a cart on wheels for rural hospital sites. Data specific to palliative care were monitored for each encounter.ResultsOver one year, 372 patients were seen for virtual palliative care consultations, of whom 275 (73.9%) were seen in the outpatient setting (where the patient was at home or in an ECF) and 97 (26.1%) were inpatient visits performed in CAHs. Visits occurred with patients from almost all counties in Indiana. Advance directives were established for 286 (76.9%) patients seen, and 107 (28.8%) patients were referred to hospice.ConclusionSpecialty palliative care is a limited resource that has been further constrained by the COVID-19 pandemic. Our experience demonstrates that centralized virtual hub-based palliative care can be leveraged to provide effective, patient-centered, and compassionate care in regions without a specialist and has the potential to improve access to specialty palliative care.     

Quality Improvement Strategies and Best Practices in Critical Access Hospitals

ABSTRACT: Context: Critical access hospitals (CAHs) face many challenges in implementing quality improvement (QI) initiatives, which include limited resources, low volume of patients, small staffs, and inadequate information technology. A primary goal of the Medicare Rural Hospital Flexibility Program is to improve the quality of care provided by CAHs. Purpose: This article describes key quality improvement initiatives for a national sample of CAHs that are actively involved in implementing quality-related initiatives in collaboration with support hospitals and statewide organizations. Methods: Researchers conducted a national telephone survey of 72 CAHs and 2 in-depth case studies of CAHs. Findings: The survey and case studies demonstrate that many CAHs are successfully implementing QI activities, including patient safety initiatives, improvements in overall QI processes and peer review processes, and implementation of QI projects focused on treatment of 1 or more specific diseases. The CAHs are involved with multiple external organizations in these activities. The administrators of the 2 case study CAHs have made QI a priority for their hospitals; ensured that resources are available for QI activities; and worked with their support hospitals, statewide organizations, and other CAHs to develop and implement rural-relevant QI initiatives. Conclusions: Cost-based Medicare reimbursement has been a key factor in the ability of CAHs to fund additional staff, staff training, and equipment to improve patient care. The commitment of hospital leaders and key staff is a crucial factor in moving QI initiatives forward in CAHs.     

Impact of Local Resources on Hospitalization Patterns of Medicare Beneficiaries and Propensity to Travel Outside Local Markets

Purpose: To examine how local health care resources impact travel patterns of patients age 65 and older across the rural urban continuum.
Methods: Information on inpatient hospital discharges was drawn from complete 2004 hospital discharge files from the Healthcare Cost and Utilization Project (HCUP) State Inpatient Databases (SID) for New York, California, and Florida, and the 2003 hospital discharge file for Pennsylvania. The study population was Medicare patients with admissions for ambulatory care sensitive conditions. Analysis was at the patient-level, and area contextual variables were developed at the Primary Care Service Area (PCSA) level. Local resources considered included inpatient supply, provider supply, supply of international medical graduates, and critical access hospitals (CAHs) in the patient's PCSA.
Findings: Findings generally confirmed enhanced retention of the elderly in local markets with greater availability of community resources, although we observed considerable heterogeneity across states. Community resource variables such as median household income or inpatient hospital capacity were stronger and more consistent predictors along the urban rural continuum than any of the provider or CAH variables. Only in California and New York did we see significant effects for provider supply or CAH, but they were robust across the 2 states and models of travel propensity, always reducing the travel propensity.
Conclusions: Findings support policies aimed at augmenting supplies of critical access hospitals in rural communities, and increasing primary care physicians and hospital resources in both rural and urban communities.     

The Presence of Ethics Programs in Critical Access Hospitals

The purpose of this study was to assess the presence of ethics committees in rural critical access hospitals across the United States. Several studies have investigated the presence of ethics committees in rural health care facilities. The limitation of these studies is in the definition of ‘rural hospital’ and a regional or state focus. These limitations have created large variations in the study findings. In this nation-wide study we used the criteria of a critical access hospital (CAH), as defined by the Medicare Rural Hospital Flexibility Program (Flex Program, 2007), to bring consistency and clarity to the assessment of the presence of ethics committees in rural hospitals. The Flex Monitoring Team conducted a national telephone survey of 381 CAH administrators throughout the United States. The survey covered a wide variety of questions concerning hospitals’ community benefit, impact activities, and whether the hospital had a formally established an ethics committee. About 230 (60%) of the respondents indicated they had a formally established ethics committee or ethics consultation program at their CAH. The prevalence of ethics committees declined as the CAH location became increasingly rural along a rural–urban continuum. Unlike CAHs, all rural Department of Veterans Affairs Medical Centers have ethics committees. The results of this study provide an understanding of the limited presence of ethics committee in rural America and the need to consider new approaches for providing ethics assistance. A virtual ethics committee network may be the most efficient and effective way of providing rural hospitals access to a knowledgeable ethics committee or consultant.     

Illness severity and propensity to travel along the urban-rural continuum

In this paper, we examine whether the relationship between severity of illness and the propensity to travel greater distance relative to the norm (defined by peers in one's county of residence) is uniform across the urban-rural continuum of geography or over time. We focus on the elderly in New York State who have been admitted to hospital for ambulatory care sensitive conditions (ACSCs), admissions which are presumed to be representative of usual travel patterns. The two periods of time examined span the implementation of the Balanced Budget Act (BBA) of 1997, which established the Medicare Rural Hospital Flexibility Program, a major national initiative to strengthen rural health care with the development of rural Critical Access Hospitals (CAHs). As the number of NY rural hospitals certified as CAH increased with the expanded funding from the BBA, one might expect to see increased distance traveled by more severely ill rural elderly, as their CAHs referred them to their affiliated support hospitals. The logistic regression estimates support this expectation, highlighting an asymmetrical relationship between relative distance and severity across patients in rural and urban areas. Despite a general decline in average propensity to travel further than the norm across the landscape, severity had a larger impact on travel propensity in rural areas, which increased over time.     

Critical Access Hospitals and Retail Activity: An Empirical Analysis in Oklahoma

Purpose: This paper takes an empirical approach to determining the effect that a critical access hospital (CAH) has on local retail activity. Previous research on the relationship between hospitals and economic development has primarily focused on single‐case, multiplier‐oriented analysis. However, as the efficacy of federal and state‐level rural health subsidies come under increasing scrutiny, more comprehensive investigations can provide support for continued funding. Methods: Data from 105 rural Oklahoma communities are used to explore whether the presence of a CAH impacts several measures of retail activity. The measures are: total retail sales, total number of retail establishments, and number of micro and small retail establishments. Ordinary least squares regression is used to evaluate the impact of a CAH after controlling for a host of other factors influencing retail activity such as local demographics, unemployment rates, and the presence of a Wal‐Mart. Findings: The presence of a CAH has a positive and significant influence on each measure of retail activity. The parameter estimates suggest that a CAH has a similar influence on rural retail sales as a Wal‐Mart, increasing total retail sales by approximately 28% over towns without a CAH. Other model results indicate that a CAH presence significantly increases the number of total retail establishments and the number of micro and small business establishments. Conclusions: The positive results provide additional evidence on the far‐reaching economic development impacts of CAHs. The results also emphasize the importance of continued support for these rural institutions, including federal and state subsidies.