Tuesday, February 03, 2004

As Medicare reimbursements are falling, smaller community hospitals are struggling for survival....

While looming health-care cuts and rising insurance costs have affected hospitals throughout the state, smaller community hospitals have been especially burdened as they struggle against tight budgets and poor perceptions to provide quality health care in rural Georgia.
Glen Pearson, executive vice president of the Georgia Hospital Association, said that since 1990, 27 Georgia hospitals have closed, a significant number of them rural community hospitals.
Pearson said that currently 59 percent of all hospitals in the state are losing money. And 70 percent of rural hospitals find themselves in the red, he said.Starting with 1997's Balanced Budget Act, $3 billion have been cut from Medicare payments for older patients; Medicaid for low-income patients currently pays about 94 percent of the actual cost of treatment. And since rural hospitals often have a high percentage of Medicare and Medicaid patients these cuts hit them especially hard, Pearson said.
Minnie G. Boswell Memorial Hospital in Greensboro felt the bind of government red tape in October when delayed Medicaid and Medicare payments left its officials $96,000 short and unable to pay its staff. It was only a private donation of the sum that paid the staff of the 25-bed facility on time.

The problems with smaller community hospitals go beyond the Medicare cutbacks and increases of insurance, however. One problem mentioned in the article is the perception of the local hospital as being a hospital of "last resort". Regional hospitals such as Athens Regional advertise aggressively in the smaller markets as well. Frequently specialists don't want to practice in smaller towns so patients who require care from cardiologists or orthopedic surgeons, for example, travel to the larger facilities. This feeds the perception of the local hospital as "inadequate".The lack of such specialists means the income that could be realized from cath labs or operating rooms is not available to provide for improvements of the hospital. The hospital can't improve so the perception of it as a dangerous place worsens, and fewer people utilize it, and so goes the vicious cycle.

Another problem is that many of these hospitals were used by physicians and administrators as their personal piggy bank. Since in many towns the hospital was a major employer, nothing was said to threaten it. I have family that live in Greensboro and describe how in the past someone could be admitted for "respite care" to the hospital there, and have insurance pay for it no questions asked. Kind of a narcotic and benzodiazapine assisted vacation from life, without the travel. When these "admissions" were denied payment, a major source of income was lost. Many such hospitals were bought up by larger hospitals in an attempt to create a network of sorts. But like hospitals that bought physician practices soon found out, such ventures lose a great deal of money.

Administrators at smaller hospitals hold out some hope, however....

Weinmeister (an administrator) said technology is making size irrelevant. And Hill said the hospital's smaller size cuts down on administrative red tape, often making his job easier.

Unfortunately technology requires something that these smaller hospitals do not have a tremendous amount of, investment capital. With the growing data showing correlation between hospital volume and outcomes for procedures there is a potential for more patients to seek care at larger facilities. The situation for smaller hospitals is likely to become worse before it becomes better.
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