Implementing EACHs (essential access community hospitals) and RPCHs (rural primary care hospitals) on a statewide basis: a preliminary analysis.

Declining hospital utilization has created excess hospital capacity in rural areas, has depressed occupancy rates, and threatens the financial viability of rural hospitals. Access to hospital care could be reduced and rural economies damaged if rural hospitals close. The federal Essential Access Community Hospital (EACH) demonstration program is an attempt to address these issues by establishing regional hospital networks. A preliminary analysis of the impact of state-wide implementation of the EACH program in Iowa suggests that about 60% of rural hospital beds and about 28% of all hospital beds would be eliminated. The EACH program could well prove difficult to implement because of the need to select hospitals for reduced services.     

Hospital Mergers and Closures: Survival of Rural Hospitals

There are two major models to save financially failing rural hospitals: (1) expanding through an affiliation or merger with other hospitals to increase the utilization and diversity of services, or (2) downsizing by employing the limited-service model and providing only emergency and primary care service with limited acute care. This study investigates hospital mergers and closures from 1990 to 1992 using the American Hospital Association's (AHA's) data from the Annual Survey of U.S. Hospitals. The presence of potential scale and scope economies among merging and closing hospitals prior to the merger or closure suggests that rural hospitals are operating at a size level that has great potential for achieving scope and scale efficiencies through mergers.     

Hospitals on the frontier

The concept of a limited service rural hospital recently gained nationwide attention when Montana introduced the medical assistance facility (MAF) model, which allows a hospital to have a license under less stringent rules (rather than close completely). The MAF is a down-scaled, limited-service rural hospital that makes extensive use of midlevel practitioners and has flexible staffing requirements. MAFs restrict admission to patients with low-intensity, acute illnesses who typically require short-term hospitalization. Montana currently has four MAFs certified as Medicare and Medicaid providers under the terms of a waiver agreement with the Health Care Financing Administration (HCFA). MAFs are located in four "frontier" communities--counties or regions with fewer than six residents per square mile. A 96-hour cap on inpatient stay effectively guarantees that the MAF's scope of services will be circumscribed. However, the array of services that meet the definition of low intensity and short term is potentially broad. The flexibility--and thus the real strength--of the MAF model is in the licensure rules, which relax some of the requirements that the small rural hospital has difficulty meeting (such as those regarding staffing). The demonstration project is now entering its final two years. So far, it has gained widespread interest and support. The central question is whether HCFA will extend the waiver after 1993. Another possibility is the reclassification of MAFs to rural primary care hospitals, which do not require waiver coverage to receive Medicare and Medicaid reimbursement.     

Two measures for hospitals included in panel's legislation

Health care reform legislation that recently cleared the House Ways and Means health subcommittee includes two measures that have been sought by hospitals--the restoration of separate payments to physicians for interpretation of electrocardiograms and the reauthorization of the federal grant program aimed at developing networks of primary-and acute-care hospitals in rural areas, known as the "each/peach" program.     

Achieving Equity in Medicare Disproportionate Share Payments to Rural Hospitals: An Assessment of the Financial Impact of Recent and Proposed Changes to the Disproportionate Share Hospital Payment Formula

Historically, the Medicare Disproportionate Share Hospital (DSH) payment program has been less favorable to rural hospitals: eligibility thresholds were higher and the payment adjustment was smaller for rural than for urban hospitals. Although the Medicare, Medicaid, and SCHIP Benefit Improvement and Protection Act (BIPA) of 2000 established a uniform low-income threshold and increased the magnitude of the adjustment for certain small and rural hospitals as a means to promote payment equity, the DSH distribution formula continues to vary by location. This study examines how the DSH revisions mandated under BIPA are likely to affect rural hospitals' financial performance and simulates the financial impact of implementing a uniform DSH payment adjustment. Using data from the 1998 Medicare cost report and impact files, this study found that two-thirds of both rural and urban hospitals would have qualified for DSH payments following BIPA compared with only one-fifth of rural hospitals and one-half of urban hospitals prior to BIPA. Although the impact of BIPA revisions on rural hospitals' total margins were found to be modest, the financial impact of a uniform payment adjustment would be somewhat greater: rural hospitals' average total margins would have increased by 1.6 percentage points. Importantly, 20% of rural hospitals with negative total margins would have been "in the black" if rural and urban hospitals were reimbursed using the same DSH formula. These findings suggest that elimination of rural and urban disparities in DSH payment could strengthen the rural health care safety net.     

Rural hospital networks: implications for rural health reform

This article summarizes the perspectives gained in the course of evaluating a 4-year demonstration program that supported rural hospital networks as mechanisms for improving rural health care delivery. Findings include: (1) joining a network is a popular, low-cost strategic response for rural hospitals in an uncertain environment; (2) rural hospital network survival is enhanced by the mutual resource dependence of members and the presence of a formalized management structure; (3) rural hospitals join networks primarily to improve cost efficiency but, on average, hospitals do not appear to realize short-term economic benefit from network membership; and (4) some of the benefits of these networks may be realized outside of the communities in which rural hospitals are located.     

Attracting physicians to underserved communities: the role of health networks

As health networks battle for additional market share and encourage additional Medicaid HMO subscribers to use their physicians and hospitals, more health executives are analyzing proposals of how to attract qualified doctors to practice in poor rural or inner-city communities. Supplying more physicians to those areas by increasing the number of medical schools, expanding the National Health Service Corps (NHSC) program, and allowing more international medical graduates (IMGs) to pursue residency training in the United States have been relatively unsuccessful strategies to improve America's geographic maldistribution of medical manpower. This article focuses on several approaches that health networks might use to increase market penetration and at the same time deliver enhanced health services to the underserved. Health networks may provide eminent leadership in the overall design and governance of soundly conceived Medicaid HMOs; strengthen existing or develop additional community health/primary care centers; interface more effectively with local schools to foster Medicaid HMOs for children of low-income families; and reimburse at "premium rates" primary care physicians who practice in underserved communities. The reluctance of physicians to practice in these areas and of middle-income and upper-income taxpayers, and therefore elected officials, to support increased spending or redirection of funds continue to be major barriers for health alliances to demonstrate willingness to invest additional resources in poor inner-city and rural environments.     

Information for integration. A senior services program spurs development of a multi-hospital integrated network

In 1985 St. Charles Hospital, Oregon, OH, and Mercy Hospital of Toledo, OH, launched a plan to jointly offer a continuum of services to area seniors. A multidisciplinary team of professionals from both hospitals decided that a membership program (titled the Senior Advantage Program) would be the most effective way to market the services and make them available. As part of the program's development, professionals from the two facilities created a personal computer-based software package that enabled them to capture and update information about Senior Advantage participants. The software program includes a detailed application form and a section for recording enrollees' service utilization. The program enables care givers to enter data when they interact with clients in any healthcare or community-based setting. To complement the personal computer software, a program to construct a central data base was written for the two hospitals' main computer systems. In 1991 St. Charles and Mercy hospitals joined two other facilities to form First InterHealth Network, a for-profit integrated delivery network. The Senior Advantage Program became the basis for the first package of services offered by First InterHealth. In 1992 the program became the catalyst for yet another collaborative venture, linking two rural Ohio Mercy hospitals to St. Charles and Mercy hospitals. The expanded network encouraged rural patients to remain within the Mercy network, utilizing inner-city and suburban Mercy-sponsored hospitals when appropriate.     

Estimating Uncompensated Care Charges at Rural Hospital Emergency Departments

CONTEXT: Rural hospitals face multiple financial burdens. Due to federal law, emergency departments (ED) provide a gateway for uninsured and self-pay patients to gain access to treatment. It is unknown how much uncompensated care in rural hospitals is due to ED visits. PURPOSE: To develop a national estimate of uncompensated care from patients utilizing the ED in rural hospitals. METHODS: Clinical data from the National Hospital Ambulatory Medical Care Survey-ED (NHAMCS-ED) from 1999 and 2000 were linked to billing data from South Carolina. National estimates of utilization and charges were calculated, with rurality and self-pay status being the variables of focus. FINDINGS: Applying South Carolina billing data to national clinical data yields a national estimate for 1999-2000 of nearly $441 billion in charges being generated through emergency departments, with self-pay patients representing 9.0% of total charges. Rural self-pay patients accounted for an estimated $3.5 billion in charges in 1999 and $5.3 billion in 2000. These charges may represent a total financial burden of more than $4 billion to rural hospitals. CONCLUSIONS: Efforts should be made to reduce the uncompensated care burden on rural hospitals to ensure their viability. These efforts may include Medicaid/SCHIP expansions, FQHCs or RHCs, Critical Access Hospital Designation, or other indigent care programs that would reduce the need for self-pay patients to utilize EDs.     

Rural Hospital Nursing as an Elective*

A rural hospital elective in a diploma nursing program is described. A need and opportunity for this unique practicum was identified in a Canadian province where one-third of the acute care beds are in hospitals of under 100 beds, located primarily in towns outside of metropolitan areas. The six week course offers students 35 hours of classroom content focusing on rural health care concepts plus a 150 hour practicum in one of three participating hospitals. The course is seen as unique in that it focuses on rural health care and is offered within the context of a diploma nursing program. Vive student outcomes are identified: awareness of the differences between rural and urban health care; integration of knowledge and experience from previous nursing courses as it relates to the rural context; increasing understanding of how rural population groups affect health care delivery; awareness of rural employment opportunities; and, preparation for the graduate role. A shared vision and collaborative effort on the part of the School of Nursing, the rural hospitals and the host communities has been necessary to establish and maintain such a course.     

Practical and Policy Implications of Using Different Rural-Urban Classification Systems: A Case Study of Inpatient Service Utilization Among Veterans Administration Users

ABSTRACT:  Context: Several classification systems exist for defining rural areas, which may lead to different interpretations of rural health services data. Purpose: To compare rural classification systems on their implications for estimating Veterans Administration (VA) utilization. Methods: Using 7 classification systems, we counted VA health care enrollees who lived in each category, and number admitted to VA hospitals or non-VA hospitals under Medicare. For dual VA-Medicare enrollees over age 65, we compared VA and private sector hospitalizations on numbers of admissions and bed-days of care. We compared VA enrollees' relative proportions across rural to urban categories for each classification system and evaluated discordance between systems at the veterans-integrated service networks (VISN) level. Findings: Enrollment and inpatient utilization counts for rural veterans vary considerably from one classification system to another, though the systems generally agree that admission rates, length of stay, and reliance on the VA for care are lower for rural veterans. Among older dual VA and Medicare enrollees, rural residents rely on non-VA facilities more, though this effect also varies widely depending on the classification scheme. VISNs vary greatly in the proportions of patients who are rural residents, and in the degree to which classification systems are discordant in designating patients as rural. Conclusions: Decisions about allocating VA health care resources to target "rural" patients may be affected greatly by the rural classification system chosen, and the impact of this choice will affect some hospital networks much more than others.     

Access to hospital care for California and Michigan Medicaid recipients

This article is a comparison of the characteristics of hospitals serving the general population and Medicaid recipients in California and Michigan, using data from Medicaid uniform claims files and the American Hospital Association Annual Survey for 1984. A greater concentration of discharges in a small number of "high Medicaid volume" urban and rural hospitals in each State was observed for Medicaid recipients compared with the general population. In addition, discharge data suggest that Supplemental Security Income crossovers (individuals covered by both Medicaid and Medicare) and other recipients (mostly children not enrolled in the Aid to Families with Dependent Children program) receive inpatient care in different hospitals from the general population as well as from other Medicaid eligibility groups. Medicaid cost-containment policies and differential access to hospital care are discussed.     

Hospital-sponsored rural health clinics: an effective diversification alternative for rural hospitals.

Changes in rural health care are resulting in new challenges for the administrators of rural hospitals. The lack of available care, economic deterioration, and demographic changes in rural America are contributing factors to rural health care problems and are detrimental to the financial well-being of rural hospitals. Diversification is becoming commonplace in these hospitals as administrators seek strategies to gain financial viability for their facilities. The concept of hospital-sponsored rural health clinics is more than a decade old, yet there are fewer than 30 such clinics nationwide. Reasons for the underutilization of such clinics may include the lack of knowledge that such clinics exist as well as inadequate information describing the establishment, operation, and financial feasibility of the clinics. The hospital-sponsored rural health clinic "concept" will be introduced, including potential benefits of such clinics to both the hospital and the communities they serve, factors to be considered in developing such a system, and problems that may arise in this development. This article presents a case study of how one rural hospital incorporated such clinics into its long-range plans.     

Has Medicare Been a ‘Bad Deal’ for Rural Hospitals?

Understanding the links between Medicare involvement and financial performance in rural hospitals is important for evaluating reimbursement policy under Medicare's prospective payment system (PPS). While simple comparisons between urban and rural hospitals suggest that the latter have lower PPS profit margins on average, there is little multivariate evidence on how Medicare involvement affects financial performance in rural hospitals and whether this relationship differs between rural and urban hospitals. Existing multivariate evidence suggests that Medicare involvement improves PPS profits in both rural and urban hospitals after controlling for other hospital- and market-specific factors. By contrast, the present analysis considers the relationship between Medicare involvement and broader measures of profitability than PPS profits. This provides insight into whether Medicare reimbursement is adequate relative to other forms of third-party payment. The results indicate that Medicare involvement has a markedly different effect on the profitability of rural versus urban hospitals. Greater Medicare involvement is associated with lower patient care profitability in rural hospitals but has a strong positive and significant effect on both patient care and overall (i.e., patient and nonpatient) profitability in urban ones. Medicare involvement is not significantly related to overall profitability in rural hospitals, however, suggesting that these hospitals may be able to mitigate patient care revenue shortfalls from greater Medicare involvement by increasing their nonpatient care revenue sources.     

Implementing swing-bed services in small rural hospitals.

Since 1983, twenty-six small rural hospitals in five states have been developing models of the "swing-bed" concept as part of a coordinated national demonstration project. Based on the experiences of these hospitals, swing-bed programs use excess hospital capacity to provide short-term, post-acute care in rural communities where there are nursing home shortages, and, thus, help avoid the need for new nursing home construction. The availability of swing-bed services in rural hospitals has allowed the elderly patient to receive a full-range of long-term care services within the community to avoid transfer to a nursing home outside the community. Introduction of services also has improved patient care for all hospitalized elderly. Finally, the revenue from the swing-bed services has helped to stabilize small, rural hospitals faced with declining utilization. The demonstration has provided evidence that the swing-bed program has the potential to deliver a needed service to the rural elderly while contributing to the preservation of the small, rural hospital as a valuable community resource.     

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.     

Evaluation of the national swing-bed program in rural hospitals.

The Health Care Financing Administration (HCFA) implemented a swing-bed demonstration and evaluation program for rural communities in the 1970's. The demonstration substantiated the cost effectiveness of providing long-term care in small, rural, acute care hospitals. As a result, Section 904 of the Omnibus Reconciliation Act of 1980 (Public Law 96-499) authorized the national swing-bed program, allowing rural hospitals with fewer than 50 beds to provide Medicare- and Medicaid-covered swing-bed care. A congressionally mandated evaluation of the program was conducted and the national swing-bed program was found to be cost effective. In this article, HCFA's report and recommendations to Congress are summarized in the context of the evaluation findings. HCFA recommended that the program be continued and that consideration be given to extending the option to larger hospitals. In this regard, the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203) extended the program to include rural hospitals with up to 100 beds.