Critical Access Hospitals Hit on All Sides

The list of policy implications to the rural health care marketplace got even bigger this week when President Obama released his FY 2013 budget.

That budget is generally considered an electioneering document, as Congress has not demonstrated an ability to get appropriations – or budgets – done lately and particularly in a presidential election year. That said, there are two important items in the budget for critical access hospitals.

– Funding will be cut from 101% of costs to 100%

On the face of it, this almost seems reasonable – who gets 100% of costs these days? – and maybe it is reasonable. But, the scope of challenges facing these rural providers is immense – this only adds to the challenges faced by the safety net in rural Washington.

– CAH designation will be eliminated for hospitals within 10 miles of another facility

Again, on the face of it, this doesn’t seem so unreasonable – and, again, maybe it isn’t. After all, if there is another hospital facility 10 miles away, that wouldn’t seem so far to travel, (though if you live on the Gorge or in Island County, it might take you 45 minutes to travel the 10 miles as the crow flies, relying on bridges or ferries) thus making the CAH designation perhaps unneeded.

But here’s the problem – these items happen within a broader context of dramatic uncertainty for critical access hospitals. Add these to the conversation in Washington State and some similar patterns emerge. Here’s how.

– $44 million in critical access hospital funding is cut in the Governor’s proposal.

– Key legislators tell me they will be adding some of that money back into the budget this week, saying that they think it’ll be hard to justify up those levels of cuts in a court of law.

– Those same folks are telling me, though, that they want to take this next 9 months to lead a broad conversation about critical access hospitals, and moving them towards what is perceived to be their more appropriate role: as rural health clinics.

“Look at McCleary down the road from here. They have an average daily census of less than 1, and yet their building a new facility!” said one legislator. The idea of paying facility charges for care not deemed either tertiary or emergent in order to fund new buildings for services that are already provided in a community is not the best way to spend money in a tight system, another legislator explained.

This conversation will be one to watch carefully over the next 9 months. It involves a wide swath of geography, but the complexity of the conversation will likely have implications for the urban providers as well.