Pocahontas, Ark.-based St. Bernards Five Rivers Medical Center was already operating like a rural emergency hospital before it converted to the designation.
“Only about 5% of our volume was inpatient, so we were already practicing as an REH — we just weren’t getting the reimbursement,” Randy Barymon, Five Rivers’ administrator, told Becker’s.
CMS’ rural emergency hospital designation took effect in January 2023 to help curb rural hospital closures. The model allows facilities to close infrequently used inpatient beds and focus on emergency and outpatient services. In exchange, hospitals receive a 5% Medicare outpatient payment increase and an average annual facility payment of about $3.2 million. There are currently 44 hospitals in the U.S. with the rural emergency designation.
Becker’s spoke with leaders at four rural emergency hospitals who were the first in their respective states to convert to the designation. In addition to Mr. Barymon, Becker’s spoke with Shawn Bright, CEO of Marion, Ky.-based Crittenden Community Hospital; Melissa Gale, CEO of Scotland, S.D.-based Landmann-Jungman Memorial Hospital Avera; and Dierdra Sorrell, MSN, RN, CEO of Star Lake, N.Y.-based Clifton-Fine Hospital.
Why they converted
Mr. Bright said Crittenden’s inpatient volumes declined to a level that the Prospective Payment System was increasingly difficult for the hospital to stay open long term.
“So it wasn’t whether we prefer the inpatient care, it was more about how do we preserve access to the community in a financially responsible way?” Mr. Bright said. “The REH model really helped us to protect what our community uses most, and that’s our 24/7 emergency and all of our outpatient services, including surgery, imaging, lab and therapy.”
Ms. Gale said Landmann-Jungman Memorial Hospital began evaluating the model during the COVID-19 pandemic as leaders saw the healthcare landscape shifting.
“But we knew it was coming out and we also knew COVID had really changed the landscape for healthcare, probably forever,” she said.
The hospital spent nearly two years reviewing factors such as patient volumes, financial implications, workforce considerations and community impact before deciding to convert.
Conversion challenges
The leaders who spoke to Becker’s said that the path to conversion was easy on the federal front, but challenges arose at the state level.
Five Rivers was one of the first dozen in the country to convert and the first in Arkansas. The state’s inexperience led to some nervous moments early on.
“They weren’t sure how to disseminate that monthly stipend,” Mr. Barymon said. “So there was about a two-month delay before we started receiving that stipend. So that was a little nerve-wracking, because we weren’t seeing inpatients, and we weren’t getting that reimbursement. But that was just bumps along the way because we were early adopters, I would say.”
Ms. Sorrell said her biggest disappointment was New York state’s reception to and perception of the model. Before converting, Clifton-Fine was a critical access hospital that received several routine annual grants.
“We asked what support would continue and what would discontinue, and we factored those answers into our pro forma,” she said.
But some funding the hospital expected to continue did not, leaving the facility short of projected revenue in its first year.
“We built one of those items into the pro forma and then found out post-transition that New York State was not going to support it,” Ms. Sorrell said.
She added that the hospital is still working with state officials to clarify that the facility remains a hospital despite no longer having inpatient beds.
“I think their perception is that we’re not a hospital anymore because we don’t have an inpatient unit,” she said. “But we still keep patients overnight in observation and are doing more observation care than we did before.”
Financial stability
Mr. Bright said the model didn’t fix everything overnight. Rural healthcare remains a challenge, but having the fixed monthly Medicare facility payment has brought some predictability that Crittenden didn’t have under its previous structure.
“You have to operate like a disciplined, fixed-budget model,” he said. “It requires you to look at your costs very carefully and manage those with some strategic long-term planning.”
He said that the first time since their conversion they are projected to have a positive bottom line in 2026.
“It wasn’t because the model couldn’t have produced that early on,” Mr. Bright said. “We weren’t critical access, we were PPS, so we had a big hole to dig out of. It’s taken us a while to get our [accounts payable] down and making sure that we’re on top of everything and that we’re getting the proper reimbursement from all of our insurance companies as we’ve made this conversion.”
Mr. Barymon said that while Five Rivers is not making money, it is losing less. Its finances have stabilized “without the roller coaster of a big loss here and there” and put them on a path to sustainability.
“It’s given us a little confidence,” he said. “We’ve been able to reinvest in the hospital. We bought a new MRI machine soon after we converted. It’s a state-of-the-art MRI, so we keep a lot more patients in our area. They don’t have to [travel] now to get those procedures done and we’ve seen about a 55% increase in utilization of that machine.”
He said they were also able to convert their EHR to the same platform that is used by the rest of the St. Bernards system.
Recruitment and retention
In rural areas, recruitment and retention can be challenging no matter what, but Ms. Gale said that Landmann-Jungman has filled several open positions since the conversion and currently has just one open role. She said that multiple employees are happier now in their roles than they used to be. Many of the multiple hats they used to have to wear are gone. The change is especially noticeable from a business office perspective.
“The arduous preauthorizations, denial managements on inpatients and swing beds — which were a real problem here with some payers — those just went away, so [those employees] were able to deploy in some different areas, which they really enjoyed, have strengths in.”
Ms. Sorrell said the conversion decreased Clifton-Fine’s FTE cap from about 80 to 55, but the hospital just had the most stabilized staffing year in the seven years she’s been at the helm of the hospital.
“I think everybody knows their role and we’re doing the services that make sense,” she said. “It’s staffed appropriately and I’ve seen no turnover this year. Nursing is stabilized. We’re not using any agency staff at all this year. So that’s been an unpredicted trickle down effect.”
Policy gaps remain
Among the policy changes leaders would like to see, one issue came up repeatedly: eligibility for the 340B drug discount program. Rural emergency hospitals are currently ineligible to participate.
“That program was set forth for safety net hospitals and you can’t get any more safety net than rural emergency hospitals,” Ms. Gale said.
Mr. Bright said he would like to see loan forgiveness for rural emergency hospitals regardless of their tax status. Crittenden is a for-profit hospital, which makes them ineligible for some loan forgiveness programs. A change would help for physician recruitment.
Ms. Gale said that the outpatient payment add-on of 5% should apply to all outpatient services provided and added that there are some state and federal policy alignment issues that could be addressed.
No regrets on conversion
All four leaders told Becker’s they are happy with their decision to convert and would make the choice again. Mr. Bright said conversion to a rural emergency hospital isn’t a “magical solution” to rural hospitals’ challenges, but it has been proven to be a significant tool to stabilize and even build at his hospital.
Importantly, Mr. Bright added, the conversion can be reversed if needed.
“If we have some drastic growth in the community and it becomes sustainable to go back to a 49-bed acute care hospital that we were before, that is doable.”
Ms. Sorrell said the designation provides a structural reset, but is not the finish line. The first year of the Clifton-Fine’s conversion had a learning curve, but they now have a strong strategic mindset on how to make the designation work.
“We would be going out of business if we didn’t convert,” Ms. Sorrell said. “I don’t think there was another option for us.”
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