Home > Property & Casualty > Critical Access should not be the target of cuts for rural healthcare

Critical Access should not be the target of cuts for rural healthcare

I am a big fan of National Public Radio. I enjoy and rely on their news programs not only for information, but also for the perspective on many of the news items of the day. However sometimes in their effort to be brief, their news items miss the important aspects of a news story that cannot be ignored. Today NPR ran a story about Critical Access Hospitals. In my opinion, this story was one of those times. Jenny Gold of the NPR/Kaiser Health News Partnership reported on whether or not the federal program designating these facilities as such was effective or necessary. While the piece focused its attention on Hood memorial Hospital in Amite, LA and its operating loss of $700,000 last year, the essence of the story goes much deeper. Specifically, it raised the issue of the need for the enhanced Medicare reimbursements for these facilities in the current fiscal environment in which our nation finds itself.

I want to be clear in my response and reaction to this news story. We do need to carefully examine and demand greater efficiency from ALL of our government programs. This is true from our entitlement programs, our defense spending and all the way down to the most mundane of policies and regulations. Our federal spending is too high and needs to be cut. However, programs such as the Critical Access Hospital program are being made easy targets in an era when “sound-bites” too often influence, shape and dictate basic governmental policy.

Our nation’s healthcare is the finest in the world. The quality of care available in this country is second to none. However, our spending and the related ancillary costs associated with our healthcare system are growing at a rate well beyond other economic sectors. This reality is a result of many complicated and interrelated factors. These include the dramatic lengthening our life expectancies, the types and availability of new and remarkably effective treatments and medicines, the physical demands of sophisticated and modern treatment facilities as well as our “expectation” of universal access to care. But these realities raise serious and potentially dangerous trends for a significant number of Americans living in our rural communities.

According to the National Rural Health Association’s (NRHA), more than 62,000,000 Americans live in rural communities. That is roughly the equivalent to the populations of California and Texas combined. Or, as another example, that number is greater than the combined populations of our nation’s 25 smallest states plus the five US Territories. In short, these people make up about 20% of our nation’s population. However, according to the NRHA only about 10% of our physician population serve these communities. These people are less likely to have employer-sponsored health insurance, which means that they often have to spend a greater percentage of their own money on care. Faced with strong economic restraints, it is well-known that people will spend their income of other essential needs before they do on their own health care.

According to the NPR story, the Medicare Payment Advisory Commission estimates that in 2003, these hospitals were paid an average of $850,000 more than they would have been without the CAH designation. This equates to about $1.19 billion dollars. While this is no small amount and it pales in comparison to other government programs that do not reach nearly as many people.

I am most concerned about what is not mentioned. Hood Memorial is compared to North Oaks Medical Center in Hammond, LA. It is about 22 miles away down Interstate 55. This “sprawling medical campus” offers the full range of medical care, from the simple to the very complex. Hood Memorial, on the other hand, is no longer intended to offer the same services as North Oaks does. That was never the intent of the Critical Access Hospital Program. In instances where a severe automobile accident occurs in Tangipahoa Parish, those 22 miles may be the difference between life and death. As most medical risk managers and care givers will tell you, the sooner emergency medical care can be rendered, the greater the chances for patient survival. That fact alone gives a strong case to the support of small, rural hospitals such as Hood Memorial.

Other equally important components to this story that were missed include:

  • In many of the rural communities where these hospitals exist, they are one of, if not the largest employers. In a time of high unemployment, closing these facilities would only add to the economic hardship facing many smaller communities.
  • The cost of care provided in many of these hospitals, for simple procedures, is less than for those offered in larger health systems. The time taken to travel to the larger systems increases the cost to the patients (as noted above, are less likely to have insurance).
  • The facilities often partner with larger health systems in order to keep “non-emergency” or other less complex care patients out of these facilities. This allows the larger systems to focus on areas where they can achieve higher quality outcomes for these complex procedures and treatments.
  • Rural healthcare patients are nearly 15% more likely to be Medicare beneficiaries than urban patients. This automatically makes their need to Medicare reimbursements a larger and more significant revenue source for the hospitals.
  • The Medicare payment to cost ratio for rural providers is lower than for urban ones. This adds to the strain these smaller providers face for the care they provide.

The statistics that support and more than justify the need for our rural health systems are stark and plentiful. The NPR story, however, failed to discuss one final aspect of Critical Access Hospitals that I believe is crucial for a complete understanding of their important value. Critical Access Hospitals, facilities with less than 25 beds, use a portion of the beds as “swing beds”. This is when a hospital uses its bed in another capacity of care for the local community. This can include psychiatric, rehabilitation of some form of senior care assistance. For most small, rural communities, these types of care are provided far away from the patient’s home. This only adds to the patient’s cost of care and diminishes the likelihood they will seek such care. This, as we all know, adds to the strain of our healthcare system overall. 

We are right to look to reform and improve on governmental programs so they deliver the maximum benefit for the tax dollars spent on them. Trying to cover the issue of Critical Access Hospitals and their value to rural and small town America in a five-minute radio piece is insufficient to address the shortcomings and, equally importantly, the remarkable benefits of the Critical Access Hospital designation program. I know first-hand how important these facilities are to our nation and encourage a better knowledge and understanding of their value before we seek to cut their financial legs out from under them.



About the Author

Pete Reilly is the Healthcare Practice Leader at WGA with extensive knowledge in healthcare systems, including hospitals, long-term care facilities, and medical practice groups of all sizes.

617.692.0256  PReilly@wgains.com  Connect with Pete on LinkedIn

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  1. seasaw9293
    February 27, 2012 at 9:13 am

    Excellent article. Thank you.

  2. Karen Gordon
    June 30, 2012 at 9:05 am

    Pete,
    Excellent coverage of a complex subject. You are correct – the details of such subjects are often either not covered or are not fully understood by the media. As you indicated, these rural healthcare hospitals do not typically attract a wealth of physicians, who should be recognized for their contributions and personal financial sacrifices in serving the medical needs of rural America. Without these willing providers, many untreated critically ill victims would not survive the time to reach a more metropolitan (and lucrative) hospital. Absent adequate CAH funding, rural areas may face an even greater deficit in healthcare providers.
    Thank you,
    Karen

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