CAH Financial Crisis and Flex Opportunities
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1 CAH Financial Crisis and Flex Opportunities George H Pink, Sharita R. Thomas, Brystana Kaufman, and G. Mark Holmes 2016 Flex Program Reverse Site Visit Rockville MD July 21, 2016 This work is funded by federal Office of Rural Health Policy, Award #U1GRH07633
2 All of the documents in this presentation are available at: programs-projects/ruralhealth/projects/north-carolinarural-health-research-and-policyanalysis-center/publications 2
3 Q1. Between , how did profitability change? Rural hospitals Urban hospitals a. Increased Increased b. About the same Increased c. Decreased Increased 3
4 4
5 Total Margins of Urban PPS (Prospective Payment System) Hospitals and All Rural Hospitals (excluding RRCs) The blue box is moving up and the green box is moving down. The profitability gap between rural and urban hospitals is widening. 5
6 Median Total Margins of Urban PPS Hospitals and Rural Hospitals by Medicare Payment Classification 4.53% 5.72% 5.89% 3.53% 4.06% 3.14% 1.47% 1.00% 0.76% 1.88% 2.57% 1.83% 2.45% 2.52% 1.95% 2.08% 1.87% -1.14% 3.69% 3.35% 3.18% 4.16% 5.39% 5.91% % 6% Average urban hospital is more profitable in 2014 than Average rural hospital is less profitable in 2014 than 2012 (except RRCs) 5% 4% 3% 2% 1% -1% -2% U-PPS R-PPS <26 R-PPS R-PPS >50 CAH MDH SCH RRC Least profitable 6
7 Key Findings Average profitability of rural hospitals decreased while the average profitability of urban PPS hospitals increased between 2012 and 2014 Urban PPS hospitals and RRCs were most profitable Rural PPS hospitals with beds (n=98) and MDHs (n=162) were the least profitable This is new 7
8 Q2. Which state had least profitable CAHs in 2014? Median total margin a. Florida b. Mississippi c. Arkansas d. Kansas a. -6.7% b. -2.9% c. -1.4% d. -1.3% 8
9 9
10 Total Margin 2014 Critical Access Hospital, Other Rural Hospital and Urban PPS Hospital Median Total Margins by Census Region 8% 7% 6% 5% 4% 3% 2% 2014 CAH, ORH and Urban PPS Median Total Margins by Census Region 1% 0% Northeast Midwest South West US Median CAH ORH U-PPS CAHs and ORHs were less profitable than urban PPS hospitals across all census regions 10
11 Key Findings Across all census regions and divisions, CAHs and ORHs were less profitable than urban PPS hospitals, particularly in the South. Across census divisions, CAHs, ORHs, and U-PPS hospitals in East South Central were less profitable than their counterparts in other divisions. Urban PPS hospitals in West South Central, West North Central, and Mountain were the most profitable. Across states, the lowest median total margins were for CAHs in Florida, CAHs in Mississippi, and ORHs in Oklahoma. The highest median total margins were for urban-pps hospitals in South Dakota, Alaska, and Utah. 11
12 Q3. Which state has the largest number of rural hospitals at high risk of financial distress? a. Oklahoma a. 17 b. Tennessee c. Texas b. 14 c
13 13
14 Number and Percentage of Rural Hospitals at High Risk of Financial Distress in 2015 The distress belt 14
15 Percentage of Rural Hospitals in Each Category of Risk of Financial Distress in 2015 by Census Region 15
16 Key Findings Texas, Oklahoma, Tennessee, Arkansas, Georgia, Alabama, and Kentucky have the largest number of rural hospitals at high risk of financial distress (10+ rural hospitals in each state). Hawaii, Oklahoma, Arkansas, Tennessee, and Alabama have the largest percentage of rural hospitals at high risk of financial distress (>20% of rural hospitals in each state). The South census region has the largest percentage of rural hospitals at high and mid-high risk of financial distress. 16
17 Q4. What most frequently happens after a hospital closes? a. Urgent care or emergency facility b. Skilled nursing or rehabilitation facility c. Outpatient or primary care facility d. Facility is abandoned 17
18 18
19 What did closed hospitals morph into? More than half were abandoned - no health care provided in facility. 19
20 Demographic Characteristics of the Markets Served by Closed Rural Hospitals Communities with abandoned hospitals 20
21 Key Findings From 2010 through 2014, 47 rural hospitals ceased providing inpatient services ( closed ). Of the 47, 26 hospitals no longer provide any health care services ( abandoned ) while 21 continue to provide a mix of health services other than inpatient care ( converted ). Abandoned rural hospitals served markets with a higher proportion of non-whites (26%), particularly Blacks (14%), compared to converted rural hospitals (11% and 2%, respectively) and were located farther away from other hospitals. Survey respondents from the markets of closed hospitals perceived increased travel distances to health care as a stressor and a risk to the health of those communities. 21
22 Conclusion Rural-urban hospital profitability gap is growing Rural hospitals in the South were substantially less profitable TX, OK, TN, AR, GA, AL, and KY have the largest number of rural hospitals at high risk of financial distress. Emerging evidence of disparate effects of rural hospital closures 22
23 23
24 Resources North Carolina Rural Health Research Program Rural Health Research Gateway Rural Health Information Hub National Rural Health Association National Organization of State Offices of Rural Health 24
25 North Carolina Rural Health Research Program Location: Cecil G. Sheps Center for Health Services Research University of North Carolina at Chapel Hill Website: Colleagues: Mark Holmes, PhD George Pink, PhD Kristin Reiter, PhD Ann Howard Brystana Kaufman, MSPH Denise Kirk, MS Julie Perry Randy Randolph, MRP Sharita Thomas, MPP Kristie Thompson, MA 25
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