A study examines the differences in margins and commercial prices between critical access hospitals and other acute care hospitals.
Among hospitals facing financial pressures, critical access hospitals (CAHs) are particularly in a precarious position.
Compared to other acute care hospitals, CAHs have lower operating margins, with the gap even wider for independent and system-affiliated CAHs, according to a study published in JAMA Health Forum.
Researchers from Brown University and Johns Hopkins University obtained operating margins and hospital prices on over 4,000 hospitals in each dataset, limited to general medical and surgical hospitals and excluding speciality hospitals from 2016 to 2022.
The data revealed that the average operating margin was 2.6% for independent CAHs and 7% for system-affiliated CAHs, versus 11.4% for independent non-CAHs and 16.6% for system-affiliated non-CAHs.
Operating margins for system-affiliated CAHs were 63% higher than for independent CAHs, highlighting the discrepancy in negotiating leverage with commercial insurers, the authors stated.
The one area CAHs had favorable operating margins was in Medicare, where CAHs were around 2% while non-CAHs were approximately -4%. All hospitals, however, had similar Medicaid operating margins at around -18%.
In terms of standardized inpatient commercial prices, system-affiliated CAHs were 7.1% higher than independent CAHs, whereas independent non-CAHs were 15.4% lower and system-affiliated non-CAHs were 13.2% higher.
Though system affiliation can improve the financial health of hospitals and especially give CAHs some relief, it has shown to also result in higher prices for patients.
"Policymakers interested in improving patient access to hospital care in rural areas should consider the impact of consolidation for both CAHs and non-CAHs, such as whether the increased commercial prices associated with system affiliation correspondingly lead to improved and sustained patient access to care," the authors wrote.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Critical access hospitals have lower operating margins but higher Medicare operating margins than other acute care hospitals, researchers in a new study published in JAMA Health Forum found.
System affiliation significantly impacts financial performance, with system-affiliated critical access hospitals having 63% higher operating margins than independent critical access hospitals.
While pursuing affiliation is a viable strategy for all hospitals and specifically critical access hospitals to achieve financial stability, it often leads to increased commercial prices for patients.