Moreover, the smallest rural hospitals have many patients receiving inpatient rehabilitation and/or long-term nursing care in their inpatient beds in addition to individuals receiving acute inpatient care. In most cases, the revenues generated by inpatient care at a small rural hospital exceed the direct costs of delivering that care, so the hospital would be worse off financially if it no longer received those revenues.

As a result, a hospital will be financially penalized if it helps the residents of its community stay healthy and they need fewer services.Įliminating inpatient care would harm both the hospitals and their communities rather than preventing closures. When fewer services are delivered, fee-for-service revenues decrease, even though the costs at a small rural hospital will not decrease. Under the fee-for-service payment systems used by most health plans, the hospital receives the same fee for delivering a service regardless of how many times the hospital delivers that service. Use of fee-for-service payments increases the likelihood of financial losses at small rural hospitals. As a result, the average cost per service will be higher in a smaller community where fewer services are needed. For almost every type of service the hospital delivers, there is a minimum level of staffing and equipment required to deliver the service. The cost of inpatient care, laboratory tests, imaging studies, primary care visits, and most other essential services is also inherently higher at small rural hospitals. Since this “standby capacity” cost will not decrease even if fewer patients visit the ED, the average cost per ED visit will be higher in a smaller community. At least one physician needs to be available around the clock in order to respond to injuries and medical emergencies quickly and effectively, regardless of how many patients actually visit the ED. The cost of an Emergency Department visit is inherently higher at small rural hospitals than at larger hospitals. Most spending at small rural hospitals is for delivery of six essential services: (1) the Emergency Department, (2) inpatient services, (3) the laboratory, (4) radiology, (5) drugs and medical supplies, and at most hospitals, (6) one or more Rural Health Clinics. Why Fee-for-Service Payment Will Never Sustain Rural Hospitals.

The Impact of Eliminating Inpatient Care.

The Average Cost Per Visit in Rural Health Clinics.

The Cost of Operating a Rural Health Clinic.

The Volume of Services at Rural Health Clinics.

The Cost of Delivering Rural Health Clinic and Primary Care Services.

The Problems Caused by Ancillary Service Fees.

The Profitability of Ancillary Services.

The Cost of Radiology Services in Small Rural Hospitals.

The Cost of Laboratory Services in Small Rural Hospitals.

The Number and Types of Ancillary Services in Small Rural Hospitals.

The Cost of Ancillary Services in Small Rural Hospitals.

Differences in Costs and Payments for Acute Admissions vs. Swing Bed Patients.

The Problems Caused by Per Diem and Per Case Payments.

Differences in the Average Cost Per Patient Between Different Hospitals.

The Cost of Delivering Inpatient Care in Small Rural Hospitals.

The Different Types of Inpatient Care at Small Rural Hospitals.

The Cost of Inpatient Care in Small Rural Hospitals.

Tradeoffs Between Quality, Affordability, and the Financial Viability of Services.

The Problems Caused by Visit-Based Fees.

Impact of Changes in Volume on the Cost Per Visit.

Differences in the Cost of an ED Visit at Different Hospitals.

Variation in Costs for EDs of Similar Size.

The Cost of Operating an ED with Even Fewer Visits.

The Cost of Operating an ED with More or Fewer Visits Per Year.

The Cost of Operating an ED With 10,000 Visits Per Year.

The Number of ED Visits at Small Rural Hospitals.

The Cost of Delivering Rural Emergency Department Services.

The Key Role of the Core Services on the Financial Viability of Small Rural Hospital.

Impact of Changes in the Number of Service Lines on Costs of Services.

The Largest Categories of Direct Service Costs.

Direct Service Costs vs. Overhead Costs.

The Major Categories of Expenses in Small Rural Hospitals.

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