Abstract
PurposeCritical Access Hospitals (CAHs) serve rural populations and receive government subsidies to compensate for their relatively high overhead costs and low occupancy rates. Twenty-nine percent of all hospitalizations in the United States include a surgical procedure, and hospitalizations involving surgery accounted for nearly half of all hospital revenue in 2011. This study aims to determine the value surgical services bring to CAHs and their impact on the viability of these facilities. MethodsPublic access data from the American Hospital Directory (AHD) was analyzed about each hospital's revenue and surgical services offered. Excel was utilized to randomly select 300 CAHs from a pool of 1350 CAHs based on a 95% confidence interval and a 5% margin of error. Linear regression models were fit to the data evaluating the association of net income with the number of surgical services offered per hospital and the association of total margin with the number of surgical services offered per hospital. Models were adjusted for location, occupancy rate, and case mix index. FindingsThe linear regression model demonstrated that for every additional surgical service provided by a CAH, the hospital net income increased by $630,528 (p=0.0032). A similar trend was observed when modeling profitability. The total margin increased 0.73% for each additional surgical service added, albeit without statistical significance (p=0.1342). CAHs providing two or three surgical services showed tighter group variance than those not offering surgery or only offering one surgical service. ConclusionsNet income was significantly correlated to the number of surgical services offered at CAHs. Furthermore, CAHs offering more surgical services seem to have more predictable profits than those offering less surgical services. CAHs would financially benefit from offering more or expanding surgical services at their facilities.
Highlights
In 1997, the United States federal government created the Critical Access Hospital (CAH) program as part of the Balanced Budget Act [1]
Linear regression models were fit to the data evaluating the association of net income with the number of surgical services offered per hospital and the association of total margin with the number of surgical services offered per hospital
Net income was significantly correlated to the number of surgical services offered at CAHs
Summary
In 1997, the United States federal government created the Critical Access Hospital (CAH) program as part of the Balanced Budget Act [1]. The "Critical Access Hospital” designation provides significant financial supplementation for hospitals through guaranteed mortgages, access to pre-allocated grant money, increased Medicare reimbursement with a payout rate of 101%, and inclusion in the 340B Drug Pricing Program [1]. Evidence shows these financial incentives have helped sustain profitability and quality of care at CAHs. From 2011 to 2017, nonprofit rural CAHs were shown to be more profitable than rural hospitals lacking the CAH designation. Studies have concluded that qualitative safety outcomes at CAHs are generally equivalent to those at nonCAHs [2,3,4,5]
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