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.     

The Role of Critical Access Hospital Status in Mitigating the Effects of New Prospective Payment Systems Under Medicare

This article examines rural hospitals that potentially qualify as critical access hospitals (CAH) and identifies facilities at substantial financial risk as a result of Medicare's expansion of prospective payment systems (PPS) to nonacute settings. Using Health Care Financing Administration (HCFA) cost reports from the federal year ending Sept. 30, 1996, combined with county-level sociodemographic data from the Area Resource File (ARF), characteristics of potential CAHs were identified and their finances analyzed to determine whether they could benefit from the cost-based reimbursement rules applicable to CAH status. Rural hospitals were identified as potential CAHs if they met a combination of federal and state criteria for necessary providers. Rural facilities were classified as "at risk" if they had poor financial ratios in conjunction with high levels of dependence on outpatient, home-care or skilled nursing services. Almost 30 percent of all rural hospitals were identified as potential CAHs. Ninety percent of potential CAH facilities were identified as "at risk" by at least one of five possible risk criteria, and one-third were identified by at least three. Of those classified "at risk," 48 percent might not benefit from conversion to CAH because their inpatient Medicare reimbursement would likely be less under CAH payment rules than under their current PPS payment rules. Many potential CAHs were doing well under inpatient PPS because they were sole community hospitals (SCH) and were therefore eligible for special adjustments to the PPS rates. The Rural Hospital Flexibility Act would be more beneficial to the population of isolated rural hospitals if those eligible for both CAH and SCH status were given the option of retaining their SCH inpatient payment arrangements while still qualifying for outpatient cost-based reimbursement.     

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.     

Adoption and perceived effectiveness of financial improvement strategies in critical access hospitals

Purpose: To ascertain the use and perceived success of strategies to improve the financial performance of Critical Access Hospitals (CAHs). Methods: Information about the use and perceived effectiveness of 44 specific strategies to improve financial performance was collected from an online survey of 291 CAH Chief Executive Officers and Chief Financial Officers. Responses were merged with financial and operational characteristics of the respondents’ hospitals obtained from Medicare cost reports. Use rates and perceived success and failure were calculated for each strategy. A cluster analysis was applied to classify strategies based on their use and success. Finally, CAH characteristics were examined to predict the use of individual strategies. Findings: Financial improvement strategies are pervasive among CAHs. The administrators who responded to the survey in this study reported using an average of 17.0 of the maximum 44 strategies listed in the survey questionnaire. Revenue/cost, human resource, and capital strategies were more frequently used than service expansion and reduction strategies. Overall, CAH characteristics did not explain the use or perceived success of specific strategies, but they did partially predict the number of strategies attempted. Conclusions: CAH administrators have used multiple strategies to improve financial performance with a wide variety of reported success. More research into the effectiveness of specific interventions is needed to help administrators select evidence‐based strategies.     

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.     

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.     

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.     

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.     

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.     

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.     

A methodology for assessing the professional development needs of nurses and midwives in Indonesia: paper 1 of 3

Background

The number of international medical graduates (IMGs) entering family medicine in the United States of America has steadily increased since 1997. Previous research has examined practice locations of these IMGs and their role in providing care to underserved populations. To our knowledge, research does not exist comparing professional profiles, credentials and attitudes among IMG and United States medical graduate (USMG) family physicians in the United States. The objective of this study is to determine, at the time when a large influx of IMGs into family medicine began, whether differences existed between USMG and IMG family physicians in regard to personal and professional characteristics and attitudes that may have implications for the health care system resulting from the increasing numbers of IMGs in family medicine in the United States.

Methods

This is a secondary data analysis of the 1996–1997 Community Tracking Study (CTS) Physician Survey comparing 2360 United States medical graduates and 366 international medical graduates who were nonfederal allopathic or osteopathic family physicians providing direct patient care for at least 20 hours per week.

Results

Compared to USMGs, IMGs were older (p < 0.001) and practised in smaller (p = 0.0072) and younger practices (p < 0.001). Significantly more IMGs practised in metropolitan areas versus rural areas (p = 0.0454). More IMG practices were open to all new Medicaid (p = 0.018) and Medicare (p = 0.0451) patients, and a greater percentage of their revenue was derived from these patients (p = 0.0020 and p = 0.0310). Fewer IMGs were board-certified (p < 0.001). More IMGs were dissatisfied with their overall careers (p = 0.0190). IMGs and USMGs did not differ in terms of self-rated ability to deliver high-quality care to their patients (p = 0.4626). For several of the clinical vignettes, IMGs were more likely to order tests, refer patients to specialists or require office visits than USMGs.

Conclusion

There are significant differences between IMG and USMG family physicians' professional profiles and attitudes. These differences from 1997 merit further exploration and possible follow-up, given the increased proportion of family physicians who are IMGs in the United States.     

Factors Associated with Iowa Rural Hospitals' Decision to Convert to Critical Access Hospital Status

ABSTRACT:  Context: The Balanced Budget Act (BBA) of 1997 allowed some rural hospitals meeting certain requirements to convert to Critical Access Hospitals (CAHs) and changed their Medicare reimbursement from prospective to cost-based. Some subsequent CAH-related laws reduced restrictions and increased payments, and the number of CAHs grew rapidly. Purpose: To examine factors related to hospitals' decisions to convert and time to CAH conversion. Methods: Eighty-nine rural hospitals in Iowa were characterized and observed from 1998 to 2005. Cox proportional hazards models were used to identify the determinants of time to CAH conversion. Findings: T-test and one-covariate Cox regression indicated that, in 1998, Iowa rural hospitals with more staffed beds, discharges, and acute inpatient days, higher operating margin, lower skilled swing bed days relative to acute days, and located in relatively high density counties were more likely to convert later or not convert before 2006. Multiple Cox regression with baseline covariates indicated that lower number of discharges and average length of stay (ALOS) were significant after controlling all other covariates. Conclusion: Iowa rural hospitals' decisions regarding CAH conversion were influenced by hospital size, financial condition, skilled swing bed days relative to acute days, length of stay, proportion of Medicare acute days, and geographic factors. Although financial concerns are often cited in surveys as the main reason for conversion, lower number of discharges and ALOS are the most prominent factors affecting rural hospitals' decision on when to convert.     

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.     

Use of deceptive tactics in physician practices: are there differences between international and US medical graduates?

Concerns have been raised about the medical practices of international medical graduates (IMGs) in the United States. This study examined the differences between IMGs and US-trained medical graduates (USMGs) in their attitude toward and utilization of deception in medical practices. A random sample of physicians practicing in the US was surveyed by mail in 1998. The dependent variables of interest included 11 attitudinal and behavioral indicators of deceptive tactics in medical practice. IMGs and USMGs displayed limited difference in their attitudes but some differences in their self-reported use of deceptive tactics in medical practice. IMGs were less likely than USMGs to change the patient's official diagnosis (OR, 0.557; 95% CI, 0.344-0.902) or to withhold a useful service because of utilization rules (OR, 0.612; 95% CI, 0.382-0.979). The hypothesis that IMGs have less appropriate professional standards than USMGs is not supported by this study. Alternative hypotheses, such as IMG familiarity with US health care and legal systems, warrant investigation.     

Technical efficiency of Critical Access Hospitals: an application of the two-stage approach with double bootstrap

The Critical Access Hospital (CAH) Program has offered Medicare cost-based reimbursement to small hospitals that meet certain eligibility criteria to improve their financial viability and quality of care. However, cost-based reimbursement has been associated with inefficiency in hospital operations. This study uses a two-stage approach and bootstrap procedures to examine the effects of environmental variables on the technical efficiency of CAHs. The two-stage approach with quality controls significantly improved statistical efficiency of parameter estimates in the second stage bootstrapped truncated regression relative to a similar model without quality controls. Overall, our results suggest that enhanced Medicare reimbursement may not have had detrimental effects on the technical efficiency of CAHs.     

Critical access hospitals: hubs for rural health care

A 1997 federal law created a new type of rural hospital called the Critical Access Hospital (CAH). Having CAH designation allows a facility to receive cost-based reimbursement from Medicare in exchange for providing services such as emergency care and limiting the number of beds and the average length of stay. Minnesota has 79 CAHs. This article describes how having the designation has allowed these facilities to better meet the needs of the populations they serve. It also describes the challenges all CAHs face in light of federal budget constraints and health care reform.     

CEO turnover in rural northwest hospitals

This study examines rates of and reasons for turnover among administrators from 148 rural hospitals in four northwestern states. Data were obtained from a survey of CEOs who left their positions between 1987 and 1990 and from a survey of board members from those same hospitals. During the study period, 85 CEO turnovers occurred at 78 hospitals. High-turnover hospitals were generally smaller than those facilities with fewer turnovers. The annual rate of CEO turnover was 15 percent in 1988 and 16 percent in 1989. The reasons for turnover most often cited by those in their positions for less than four years were due to: seeking a better position elsewhere, an unstable health care system, conflict with hospital board members or with medical staff, and inadequate salary. High levels of self-reported job satisfaction and job performance by turnover CEOs contrasted to the much lower performance evaluations reported by hospital board members. Nearly three out of four board members indicated they would not rehire their departed CEOs. CEOs perceived their professional weaknesses to center on deficiencies in leadership and financial skills as well as problems with physician, hospital board, and community relations.     

Do International Medical Graduates (IMGs) “Fill the Gap” in Rural Primary Care in the United States? A National Study

ABSTRACT:  Context: The contribution that international medical graduates (IMGs) make to reducing the rural-urban maldistribution of physicians in the United States is unclear. Quantifying the extent of such "gap filling" has significant implications for planning IMG workforce needs as well as other state and federal initiatives to increase the numbers of rural providers. Purpose: To compare the practice location of IMGs and US medical graduates (USMGs) practicing in primary care specialties. Methods: We used the 2002 AMA physician file to determine the practice location of all 205,063 primary care physicians in the United States. Practice locations were linked to the Rural-Urban Commuting Areas, and aggregated into urban, large rural, small rural, and isolated small rural areas. We determined the difference between the percentage of IMGs and percentage of USMGs in each type of geographic area. This was repeated for each Census Division and state. Findings: One quarter (24.8% or 50,804) of primary care physicians in the United States are IMGs. IMGs are significantly more likely to be female (31.9% vs 29.9%, P < .0001), older (mean ages 49.7 and 47.1 year, P < .0001), and less likely to practice family medicine (19.0% vs 38%, P < .0001) than USMGs. We found only two Census Divisions in which IMGs were relatively more likely than USMGs to practice in rural areas (East South Central and West North Central). However, we found 18 states in which IMGs were more likely, and 16 in which they were less likely to practice in rural areas than USMGs. Conclusions: IMGs fill gaps in the primary care workforce in many rural areas, but this varies widely between states. Policies aimed to redress the rural-urban physician maldistribution in the United States should take into account the vital role of IMGs .     

Health departments' use of international medical graduates in physician shortage areas

The Conrad "State 20" Program places international medical graduates (IMGs) on J-1 visas in health professional shortage areas (HPSAs). The authors surveyed program administrators from health departments in forty-two participating states. Problems reported include unfair working conditions and compensation for physicians. Federal immigration agencies were reported to be unresponsive and difficult. Employers seem to be more satisfied than physicians with the program. After the exit of the U.S. Department of Agriculture as a sponsor for physician J-1 visa waivers, Congress expanded the Conrad Program, signaling a continued reliance on IMGs to serve in shortage areas.