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Critical Times for Small and Rural Hospitals

Philip Betbeze, for HealthLeaders Media, July 8, 2014

Linden says without the affiliation, which is reviewed yearly, his hospital likely would not have been able to maintain its independence even until now, to say nothing of the expected tougher times ahead.

"It's great to see because it allows hospitals like ours to still be independent," he says. "Part of the strategy is to bring the resources together to be able to do the analytics. A 50-bed hospital like mine can't put all that together."

In another example, the alliance hired a former insurance executive to help analyze where it could be better prepared to take risk with commercial contracts, Linden says.

"I can't employ that guy," he says. "We also rely on the network for clinical evidence-based medicine guidelines."

He still worries, however, seeing Grinnell's current position as transitory.

"You've got a couple different moving parts in contracting. Some of the minimum requirements we would struggle with," he says.

For example, even if Grinnell could get 5,000 people in a Medicare ACO, that's not nearly enough to effectively spread the risk.

"So whether it's Medicare Advantage or an ACO, we need to be part of something larger," he says. We also have to have partners for the services we don't offer, like access to quaternary and tertiary care. We have hospice, home health, but we don't have retail pharmacy, and we don't do long-term care, so those are two things we'll have to look at locally if we're going to be offering services at full continuum."

Capital needs

The best of times may be over if your critical access hospital has glaring capital needs for a renovation or rebuild. Though there always will be funding sources, an era of ultra-cheap financing seems to be over for the most part.

"It's really hard to drive around rural America and not find a critical access hospital that hasn't been redone or rebuilt," Simonin says. "We all saw the writing on the wall, and built a new hospital or renovated our existing hospital."

From his perspective, Hart is less certain of that need.

"Reimbursement at 101% of costs still doesn't cover capital, so to do it in a way that makes sense is often quite challenging," he says. "We were already providing subsidies, so while we've certainly upgraded, we've not done total rebuilds."

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