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Opportunites and Challenges for Rural Hospitals in an Era of Health Reform

A new Trendwatch report from the American Hospital Association provides a snapshot of the nearly 2000 rural community hospitals that serve a quarter of the nation’s population. Challenges facing rural hospitals include:

  • Rural residents are older, have lower incomes, are more apt to be uninsured, and are more likely to suffer from chronic diseases.
  • Rural health care workers are aging and are nearer retirement age than their urban counterparts. The growing shortage of health workers may have a greater impact on rural facilities.
  • Access issues, such as longer travel distances and lack of reliable transportation, can delay treatment by rural patients, aggravating health problems and leading to more expensive care when received.
  • Rural hospitals are smaller — nearly half have 25 or fewer beds — but must still maintain a broad range of basic services to meet the needs of their communities. Costs per case tend to be higher, because fixed expenses are spread over fewer patients.
  • The shift from inpatient to outpatient care is more pronounced in rural hospitals, and rural hospitals are more likely to offer home health, skilled nursing, and assisted living services. Medicare payment shortfalls are greater for outpatient, home health, and skilled nursing care.
  • 60% of gross revenue in rural hospitals comes from Medicare, Medicaid, or other public programs.
  • Insufficient access to capital affects the abilities of rural hospitals to modernize facilities and acquire new technologies to improve operational effectiveness. Rural hospitals lag their urban counterparts in adoption of  health information technology.

Special Medicare programs, such as critical access hospital, sole community hospital, rural referral center, and Medicare-dependent hospital designations, have been developed to stabilize rural hospitals. The new health reform law has provisions to further help rural hospitals, such as programs to bolster the supply of rural health workers. Health reform’s  expansion of  insurance coverage should reduce uncompensated care costs, but may require upfront investments by rural hospitals to handle the increased demand of new patients. Medicaid enrollment could expand by a third in many rural states, due to the new health reform law, yet Medicaid underpays hospitals for the cost of care.

The report includes several brief case studies focused on what rural areas are doing to address these challenges.

Source: American Hospital Association. The opportunities and challenges for rural hospitals in an era of health reform. Trendwatch, April 2011. http://www.aha.org/aha/trendwatch/2011/11apr-tw-rural.pdf

Posted by the AHA Resource Center, (312) 422-2050, rc@aha.org

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