"When you cut all of that out, he says," it ends up that most critical access hospitals receive about 95% of their costs. It varies depending upon who you talk to from 92% to 98%. But they all lose money on Medicare patients, every single one of them."
In addition, Putnam says most, if not all, critical access hospitals don't receive the market basket adjustments that urban hospitals get. So they are paid at a much lower rate for the same services. "The critical access program was designed to recognize that the (diagnosis-related group) payments were for urban hospitals and not small rural hospitals. It tried to even the playing field," Putnam says.
"I have heard that we would move from losing about 5% on Medicare patients to somewhere in the 20% range" without critical access funding.
It's also difficult to talk about "economies of scale" or "leveraging" market share with payers when you've got 25 beds or fewer. "When you have a smaller patient population, my emergency room has to be open 24 hours a day regardless of the volume. What revenue you get out of 100,000 visits in the ER is completely different from what you get off of 5,000," Putnam says.
"But you have to be ready for everything and the cost of readiness is a big aspect of it but you just don't have the volume to cover that."