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Payment Cuts to Critical Access Hospitals 'Inevitable'

John Commins, for HealthLeaders Media, February 8, 2012

The more than 600 hospital leaders packed in a hotel ballroom at this week's 25th Annual Rural Health Care Leadership Conference in Phoenix were asked a simple question: How many of you have made contingencies plans for Medicare critical access funding cuts?

Only a few hands were raised.

The man asking the question, James E. Orlikoff, a senior consultant at the Center for Healthcare Governance, told HealthLeaders Media after the presentation that he was not surprised that so many rural hospitals leaders are in denial about a major funding cut that he calls "inevitable" within the next three years.

"That response is very typical. There is a level of denial that says 'we understand there has to be a lot of change but it won't affect us,'" Orlikoff says. "Upton Sinclair has a wonderful quote: 'It is difficult to get a man to understand something when his salary depends upon his not understanding it.' Critical access hospitals are carved out and they have been protected. It's the normal human condition to think that this is normal, this will always last, it can't go away because if it does, it will destroy us."

In times of economic woe, however, Orlikoff says standard operating procedure is often the first casualty. Outsized payments for critical access hospitals provide low-hanging fruit for a cash-strapped healthcare delivery system.

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