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When ‘Critical Access Hospitals’ Aren’t So Critical

Filed by KOSU News in US News.
December 8, 2011

Hood Memorial Hospital, in Amite, La., hasn’t been full in at least two decades. Some people say that makes it’s a perfect target for efforts to reduce federal spending.

On an average day, fewer than four of the hospital’s 25 beds are occupied. Last year, Hood posted a $700,000 loss on its $7.5 million in total operating expenses. One of the few bright spots on Hood’s balance sheet: the extra money it receives from the federal government through a program for critical access hospitals — small facilities that receive a higher Medicare reimbursement rate to help keep them afloat.

In the ongoing deficit reduction talks, critical access hospitals have been singled out at least twice as a program ripe for cutting: in President Obama’s budget proposal and by the Congressional Budget Office.

The program was created by Congress in 1997, after a wave of rural hospitals closures, to make sure Americans in isolated areas would still have access to health care. Hospitals with 25 or fewer beds that are at least 35 miles away from another facility, or 15 miles across secondary roads, qualify. 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.

But there was also a loophole: States could waive the distance requirement — and they did. Today more than 1,300 U.S. hospitals — nearly one in four acute care facilities – are designated as critical access.

Congress eliminated the exception in 2006. But the program grandfathered in hospitals like Hood — which is located in a small town, but within a 26-mile radius of at least four other hospitals.

When I visited in November, Shirley Holden, 78, was an inpatient at Hood being treated for dehydration. She’s been coming since the hospital first opened in 1971 and argues that seniors in Amite need a hospital in town because “a lot of us just can’t afford to hire someone to take us to another hospital, and all of our families work.” If the hospital closed, she says, “mostly I’d stay at home. I would not be going to North Oaks or anywhere else unless I went on a stretcher.”

North Oaks Medical Center, 22 miles away, is the threat to Hood’s financial stability. It’s a booming hospital complex packed with 2,400 employees and a healthy profit margin. And it’s getting bigger: A $200 million construction project will add another 79 new beds and 14 new operating suites. Those kinds of resources make it attractive to area patients, says Michele Sutton, executive vice president at North Oaks.

“If they’re having a heart attack, they’re not going to stop at a local smaller hospital without an open heart program or a cath lab,” she says. “They’re going to come straight here.”

Gail Wilensky, former administrator of Medicare and Medicaid, says the critical access program remains valuable, but it needs to be trimmed back because of hospitals like Hood.

“What started out as a reasonable concept has morphed into a program that is providing funds to a financially stressed group of hospitals that are not, in any reasonable sense of the term, critically needed to stabilize care for their community,” Wilensky says.

Even if Hood can keep its critical access funding, CEO Hoppie Jones says the hospital may close its doors. His problems are myriad.

“It’s not any one thing,” Jones says. “It’s the uninsured, our inability to collect payments from patients, it’s the tightening up of the funding on the federal and state side. It’s a lot of variables, and all of them right now are working against us.”

This story is part of a reporting partnership that includes NPR, member stations, and Kaiser Health News. [Copyright 2011 Kaiser Health News]

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