Rural hospitals a model for cutting healthcare costs

Rural hospitals play a vital role in delivering quick emergent care to people in some of the more isolated areas of the country. These institutions provide 24/7 emergency services to rural communities where the next closest hospital could be 35 miles away or more. But because they often serve so few people, it’s hard for them to be financially successful. So the federal government set up the critical access hospital program, whereby hospitals meeting certain criteria would receive Medicare refunds at 101 percent of reasonable costs.  

Since the program began in 1997, 1,331 hospitals have been given critical access hospital status, 35 of which are in Missouri. But policy makers are beginning to question whether that’s too many for the government to handle financially.

Brock Slabach doesn’t think so. Slabach is the senior vice president for member services at the National Rural Health Association, which released its Rural Relevance Under Healthcare Reform study this past April.

“Critical access hospitals aren’t costing the federal government what everyone seems to think [they are],” Slabach says.  “The notion that the program is just a gaping hole in the federal budget is simply a myth.”  

The numbers appear to support Slabach’s view. Critical access hospital spending is just 2 percent of the Medicare budget. Medicare is also spending less per patient in rural areas than it is in urban areas, to the tune of 1.5 billion dollars. But how can that be? Especially when critical access hospitals are getting that sweet reimbursement rate of 101 percent from the federal government?