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How do we provide hospital services in rural areas?

How does a society provide hospital care for people located in remote, sparsely-populated areas?  What role does government play in providing financial support to keep the doors open for small rural hospitals?  These are questions of long-standing concern to policy makers.  An approach has been the creation of special reimbursement categories for these hospitals under the Medicare program — such as the critical access hospital (CAH) designation, among others.  In this issue of The Journal of Rural Health, there are 3 articles looking at the financial performance and quality issues related to critical access hospitals.

Critical access hospitals are small facilities (less than 25 beds), located in rural areas, and have a short inpatient length of stay.  Because they are often the only hospital in the area, they receive Medicare reimbursement that is intended to be more supportive than the prospective payment system that is used to determine Medicare reimbursement for most hospitals.  Holmes et al. studied the financial condition of rural hospitals over the period 2004 to 2010 and concluded that if the Medicare CAH program were to be abolished, the percentage of critical access hospitals with negative total margins would jump up from the current 28 percent to 44 percent, which would likely lead to a wave of hospital closures.

Gautam, et al.  analyzed the performance of critical access hospitals in Missouri and found that CAHs were less efficient than other types of rural hospitals.  However, the researchers conclude that there are benefits based on the contribution to the local economy and the critical access hospitals’ role as the only health facility in the area that may outweigh any savings that might be derived from withdrawing their special cost-based reimbursement.

Finally, Casey, et al. took a look at existing quality measures to see which might be appropriate for reporting by critical access hospitals (not currently required to provide data to the Hospital Compare database).

Source:  Holmes, G.M., Pink, G.H., and Friedman, S.A.  The financial performance of rural hospitals and implications for elimination of the critical access hospital program; and, Gautam, S., and others.  Measuring the performance of critical access hospitals in Missouri using data envelopment analysis; and, Casey, M.M., and others.  Rural relevant quality measures for critical access hospitals.  The Journal of Rural Health;29(2):140-171, Spring 2013.  Click here for access to the publisher’s website: http://onlinelibrary.wiley.com/doi/10.1111/jrh.2013.29.issue-2/issuetoc  Posted by AHA Resource Center (312) 422-2050, rc@aha.org

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