Rural hospitals need new revenue sources
Thirty-two of Alabama’s 46 rural hospitals are operating at a loss. That’s according to information recently developed by iVantage Health Analytics for the National Rural Health Association. Six rural Alabama hospitals have closed since 2009, tied with Georgia for the most closures in any state. An additional 14 rural Alabama hospitals have been identified as being at risk of closure.
Simply by being there, rural hospitals attract additional health care services and provide vital economic development opportunities for their service areas. With 41 of Alabama’s 67 counties projected to lose population between 2010 and 2040, our rural areas cannot afford a more threatened economic future by losing their local hospital.
The struggle to keep rural hospitals open is very complex. Rural hospitals receive lower reimbursement for the same service than hospitals in more urbanized areas. This poses a constant financial challenge. Continuing to offer health care services, such as obstetrics, that consistently cost more to provide than is reimbursed, is very important to the perception of local health care. Such consistent losses cannot be sustained forever.
In addition, government programs and private insurance have established admission and length of stay requirements that place many rural hospitals in a position of having daily inpatient censuses below the number of beds available for inpatient services.
Rural hospitals do not exist only to serve the local population. They provide a front line of health care defense for residents and visitors going through our rural areas who need immediate and critical health care services.
In response to financial threats, some rural hospitals are being innovative in welcoming and developing new sources of revenue. The Bibb Medical Center in Centerville and its administrator, Joseph Marchant, are an example. This medical center has 35 authorized beds with an average daily inpatient census of around 14 or 15.
This facility operates an affiliated rural health clinic to offer patients an option to the emergency room where care and reimbursement options may better benefit the patient and hospital. Approximately 24,000 primary care encounters were seen in this clinic last year. There is also an affiliated 131-bed nursing home with a current 92 percent occupancy rate.
However, this facility has established a 79-unit senior retirement community as a part of the hospital campus with 100 percent occupancy and a waiting list. This service has long-term benefits for the medical center since the majority elect to become residents in the affiliated nursing facility when independent living is no longer possible.
Residents are typically 55 or older and have underlying health care needs that prompt them to live near a medical center. The garden homes and apartments are available at highly impressive rates that include utilities, high definition Direct television, and lawn care. Other services such as meal delivery, laundry, etc. are available on a fee-for-service basis. Local physician care, dental care, Federally Qualified Health Clinic services, the cafeteria, and other services are readily available for community residents. The hospital offers health care advice and assistance in matters such as Medicare plan selection.
In addition to a new revenue stream that contributes to the financial stability of the medical center, the services of this retirement community are resulting in savings to individuals, families, and programs by delaying long-term facility residence for several years.
Another new revenue stream involves its cafeteria service, now named the Cahaba Lily Café, which has become one of the community’s favorite eating establishments, serving more than 24,000 non-patient meals last year.
With an uncertain reimbursement future, our rural hospitals and medical centers are encouraged to respond with innovation by developing additional revenue streams that may make the difference between remaining open or closing.
Dale Quinney is executive director of the Alabama Rural Health Association, 1414 Elba Highway, Troy, 36081.