The REH designation aims to curb rural hospital closures by offering them a chance to close infrequently used inpatient beds and focus on outpatient and emergency department services.
To become a REH, facilities must give up their expensive inpatient beds and focus solely on emergency and outpatient care. In exchange, they receive a 5% increase in Medicare payments and average facility fee payment of about $3.2 million a year.
Clifton-Fine had been battling several challenges common with rural hospitals, including shrinking population, low inpatient volumes and insufficient revenue for years.
“For our hospital, with an inpatient census of one for the most part, it made a whole lot of sense,” Dierdra Sorrell, CEO of the hospital, told Becker’s. “We really struggle with getting the inpatient census since we’re in a very remote location and the closest hospital to us is about a 50-minute drive.”
Hospital leaders conducted a thorough financial analysis with guidance from the REH Technical Assistance Center, which demonstrated that the REH model would be a viable solution for Clifton-Fine’s long-term sustainability.
In 2023, the hospital’s total revenue was about $7.5 million and expenses were $10.2 million, resulting in a $2.7 million operating loss. By running the REH model against Clifton-Fine’s 2023 performance and subtracting all inpatient revenue and expenses, revenue as a REH would have increased to $8.1 million because some outpatient service lines get paid at an increased reimbursement rate of 5%.
“So, modeling our outpatient services, we actually would have brought in more revenue and our costs would have been down to $7.9 million, which would give us a net income of about $200,000,” Ms. Sorrell said.
The conversion to an REH affected about a dozen jobs. Clifton-Fine no longer provides inpatient care, but continues to offer a wide range of services, including:
- 24/7 emergency services
- Observation level of care
- Primary care and behavioral health services
- Laboratory testing
- Radiology services
- Physical and occupational therapy
Clifton-Fine is also opening a new urgent care clinic with its REH conversion, offering accessible, high-quality care for non-emergency needs.
