Skip to main content

Rethinking the Critical Access Hospital

 |  By John Commins  
   October 28, 2015

The goal of a Kansas Hospital Association project is to find a financially sustainable model that can provide essential health services within a reasonable distance from patients while encouraging collaboration between local and regional providers.

The ongoing crisis confronting critical access hospitals across the nation has prompted a rethinking of the most cost- and resource-effective roles they can play in care delivery for rural America.

The Kansas Hospital Education and Research Foundation, a think-tank attached to the Kansas Hospital Association, is in the midst of a "paper test" with five CAHs that volunteered for the study. They're trying to determine the viability of transitioning away from the traditional 24/7, inpatient and emergency care model and toward a more proactive "primary health center" care model which focuses on prevention, community and population health, and access to primary and urgent care.


Melissa Hungerford

"There are a lot of different reasons why a community might want to look at other options. Right now those options aren't available," says KHERF CEO Melissa Hungerford. "What we are trying to do is provide choices for communities that may not be able to sustain a critical access hospital; their volumes are too low, or they have trouble retaining physicians and other providers, or their tax support isn't enough to sustain some of the 24/7 services."

Ultimately, KHERF says the goal of the project is to find a financially sustainable model that can provide essential health services within a reasonable distance while encouraging collaboration between local and regional providers. The tests involve financial and clinical analyses to determine how much money would be needed to keep the doors open for these new primary health centers.

"There are many critical access hospitals that are thriving full-service facilities," Hungerford says. "But there are a lot that have much less. In Kansas we have a lot with one or two patients a day. Some may only have one to three admissions a week. Those kinds of facilities may be thinking about what their future needs will be and especially as we are looking at ways to keep populations healthier."

Volume Falling

Nationally, discharges dropped 27% in critical access hospitals between 2003 and 2013, and that pace is accelerating, according the MedPAC. Hungerford says the volume declines are a result of care delivery changes that focus on outpatient procedures, and population declines in rural Kansas.

"A gall bladder operation used to take seven to 10 days in the hospital and now it is a laparoscopic procedure. Some of it is prevention," she says. "We are advancing our approach to medical care, we are preventing things that used to require hospitalization because we know so much more, and in some communities we have to face the fact that our populations are decreasing."

Outpatient vs. Inpatient Volumes
One obvious hurdle for the transition to primary health center is whether or not the favored reimbursements that critical access hospitals make could be maintained. That is a critical detail that would have to be work out with the Centers for Medicare & Medicaid Services.

"It's not a matter of waiving reimbursements. It's a matter of designing a new payment system for this set of services," Hungerford says. "The critical access hospital model is focused on an inpatient model and the models for a primary health center are focused on an outpatient and emergency services. You would have to pay for it differently."

"We are trying to gather the information to determine how much it will cost. If it costs 'X dollars' to turn on the lights every day at a critical access hospital, what does that cost for a 24-hour primary care center, or an 18- or a 12-hour facility? Once we figure out what those costs are and what the relative differences are, then we have to look at a different way of doing it."

Whatever the model, Hungerford says, it most likely will need financial support.

"The biggest hurdle is that in these small communities with low volumes, these services are going to have to be subsidized. They just are not self-sustaining," she says. "They don't have the population to sustain those core services fully. We don't know who would be subsidizing them. We would assume that payers would recognize a certain fixed cost and the importance of sustaining especially emergency services in a small community."

The paper test is looking at the demographics and the services provided at the five CAHs. "Of the patients that these test sites see regularly, how many could be treated in this model? How many would have to leave the community for services, and how many could stay in the community for services?" Hungerford says. "We would also want to know what services are going to be needed locally. We are basing that on what is being used, not necessarily a need."

'Between the CAH and an FQHC'
Another challenge would be to ensure that the core services delivered by these primary health centers are not duplicating what is already being delivered by federally qualified health centers. Hungerford sees potential for a hybrid.

"There are some services that a FQHC can't do. What we are trying to determine is exactly what those are," she says. "Our model is in between the CAH and an FQHC. There is a pretty big gap there. An FQHC can't keep patients overnight. Traditionally [they] don't have an extended observation service. Some are beginning to be a 24-hour model, but they are primarily urgent care. We are not exactly sure what level of urgent care these local facilities would have. They are not allowed to bill in some ways for those kinds of services."

Hungerford says any transition of a CAH to a primary health center would have to have the full support of the community that it's serving. She hopes the study undertaken by KHERF will serve as blueprint, identifying the factors that could facilitate the transition.

"It could be volume. It could be a change in focus that relates to community need," she says. "If they look at their community and say, 'these higher level or inpatient services are available in other places and we want to focus on community health and that is primarily outpatient,' it would be a combination of volume and community need where I think the motivation would come from."

"It would also be the economy of the community because many of our hospitals are subsidized by local tax support in some way," she says. "Some communities are finding that more of a challenge, especially as there is more responsibility at the community level for all different kinds of services. There is a lot of competition for the limited dollars."

Kansas is not the only place that is reconsidering the role of the CAH. The Office of the Inspector General at the Department of Health and Human Services has repeatedly called for a re-examination of CAH status, and a possible overhaul of the program. MedPAC's report this month suggested many of the strategies that KHERF is examining now.

"Folks are paying attention to the conversation," Hungerford says. "We have been talking with lots of other states. Everybody has a little different twist on things. We have a number of issues that have to be resolved. Things like long-term care, post-acute care, how do we deal with local debt, how do we identify community need? There are a lot of different issues that folks are taking different approaches toward, but I know that this is at the core of what these other states are discussing."

"We just appreciate the opportunity to get the issue in front of people and get people really buzzing about the opportunities and the need to have some choices locally."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Tagged Under:

Get the latest on healthcare leadership in your inbox.