Nineteen hospitals have converted to "rural emergency hospitals" in the first 13 months that the new Medicare provider type was available, but more hospital leaders are seriously considering the new designation this year as a way to stay open and maintain access to critical healthcare services in their communities.
The designation aims to curb rural hospital closures by offering them a chance to close infrequently used inpatient beds and focus on outpatient and emergency department services. By relinquishing their inpatient beds and focusing solely on emergency and outpatient care, REHs receive a 5% increase in Medicare payments as well as an average facility fee payment of about $3.2 million a year.
The designation makes perfect sense for Star Lake, N.Y.-based Clifton-Fine, a 20-bed critical access facility. The hospital has an average inpatient census of one per day and is operating at a $2.7 million annual loss, CEO Dierdra Sorrell, MSN, RN, told Becker's.
Clifton-Fine's 2023 revenue was about $7.5 million while expenses were $10.2 million, culminating in a $2.7 million operating loss. If the hospital had operated under the REH model last year, Ms. Sorrell calculates that revenue would have increased to $8.1 billion and expenses would have dropped to $7.9 million, giving it an annual net income of about $200,000.
After doing a thorough financial analysis, Ms. Sorrell decided it made sense for Clifton Fine to convert to a rural emergency hospital and is submitting the appropriate applications to the state department of health. If approved, Clifton Fine would be the first REH in New York State and the 20th in the nation.
Here are the hospitals that have successfully made the switch so far, beginning with the most recent, according to data compiled by the University of North Carolina's Cecil G. Sheps Center for Health Services Research:
- Eureka Springs (Ark.) Hospital
- Panola Medical Center (Batesville, Miss.)
- Harper Community Hospital (Buffalo, Okla.)
- South Central Kansas Medical Center (Arkansas City)
- St. Bernards Five Rivers Medical Center (Pocahontas, Ark.)
- Guadalupe County Hospital (Santa Rosa, N.M.)
- Assumption Community Hospital (Napoleonville, La.)
- Sturgis (Mich.) Hospital
- TriStar Ashland City (Tenn.) Medical Center
- Stillwater Medical-Blackwell (Okla.)
- Blue Ridge (Ga.) Medical Center
- St. Luke's Health-Memorial San Augustine (Texas)
- Jefferson County Hospital (Fayette, Miss.)
- Stillwater Medical-Perry (Okla.)
- Anson (Texas) General Hospital
- Alliance Healthcare System (Holly Springs, Miss.)
- Falls Community Hospital and Clinic (Marlin, Texas)
- Irwin County Hospital (Ocilla, Ga.)
- Crosbyton (Texas) Clinic Hospital
The REH program is still very new, but more rural hospitals — such as Rush County Memorial Hospital in La Crosse, Kan., and Warren Memorial Hospital in Friend, Neb. — are pursuing the designation after doing financial analyses and seeing the progress made by some of the program's inaugural class.
"Just as it took time for the hospital community to warm up to the critical access hospital designation, this will be no different," Brooke Kensinger, CEO of MercyOne Elkader (Iowa) Medical Center, told Becker's. "Hospital leaders and community boards are learning more about the pros and cons of this option, and whether it is truly the best path at this time for their community."
Discontinuing any service is a difficult decision for hospitals, particularly those in rural communities where distance and transportation, as well as limited access to care, can be big challenges.
Rural hospitals, by nature, often battle tougher economic conditions than their urban counterparts, according to the American Hospital Association.
Rural communities have fewer people and do not generate the healthcare utilization to finance the full spectrum of services. Rural healthcare can also be more costly on a per patient basis as those in rural communities tend to have more complex health needs, are more likely to be uninsured and more likely to rely on public programs when they do have coverage.
Staff shortages, rising labor costs and recruitment and retention challenges have exacerbated rural hospitals' financial challenges over the past four years. However, in a 24/7 industry, it is important to not inadvertently create inpatient deserts when considering facility closures or conversions, according to Ms. Kensinger.
"We expect that as healthcare leaders and board members across the country continue to evaluate this program, there will be improvements made — similar to the CAH program — to better ensure access to care," Ms. Kensinger said.