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Medicare Advisors Offer Suggestions for Rural Hospitals

Converting hospitals to outpatient emergency facilities may keep them from closure

The Medicare Payment Advisory Commission (MPAC) has suggested a number of models to try to keep more rural hospitals in business. The models would replace inpatient care with 24-hour emergency services.

As reported by Healthcare Finance, at least 30 rural hospitals nationwide have closed since 2013. Others are in danger of closing as admissions decline, according to a report by MPAC staffers Dr. Jeff Stensland and Zach Gaumer. Ten percent of critical access hospitals had two or fewer discharges per week in 2013. Declining occupancy then results in higher costs per inpatient day, causing more financial strain at the smallest rural hospitals, they said.

The Kansas Hospital Association has proposed changing the critical access hospital model to allow for more flexibility. Stensland and Gaumer said options to acute inpatient services include having rural, free-standing emergency departments with no inpatient care or having a primary clinic and an ambulance available 24 hours a day, an alternative being examined in Kansas.

For financial viability, Prospective Payment Service rates alone may not be enough to support the new models, they said. Other types of financial support could include fixed grants to pay for standby capacity costs and uncompensated care, and targeted special payments with a focus on low-volume isolated providers.

The commission is expected to review the research and make recommendations to Congress. 

Source: Healthcare Finance, October 22, 2015.

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