Why going critical access was 'not a hard decision' for a Maine hospital

In June, Farmington, Maine-based Franklin Memorial Hospital applied for critical access designation after a change in rules that allowed the hospital to qualify.

The critical access designation unlocks new sources of federal funds in exchange for decreasing the inpatient bed count to 25. Originally, hospitals could only qualify for critical access status if it wasn't "more than 35 miles from a hospital or another critical access hospital," However, a change to the rules created an exception for "more than 15 miles in mountainous terrain or only secondary roads (or) certified by the state," allowed Franklin Memorial to qualify. 

To learn more about the switch to critical access, Becker's reached out to Barbara Sergio, president of Farmington, Maine-based Franklin Community Health Network.

Question: What is the timeline for the switch to critical access designation?

Barbara Sergio: We actually started this work in November of 2022 as soon as we identified that there was a definition change in the 35-mile road requirements. That's what allows Franklin to now become a critical access hospital. We've always had the census and the length of stay pretty much to be a critical access hospital, but because of the 35-mile requirement, we were not able to, and so since November, we have started looking into what that would look like for us. Our plan is to transition on Oct. 1, 2023, to coordinate with our fiscal year. So we're currently in that process. We've been working with our EHR teams, Epic, to make sure that everything is ready for that side. We've been working with some of our internal teams on just ensuring that we don't exceed that 25 inpatient cap that we need, and we're full steam ahead, ready to go for Oct. 1.

Q: What was Franklin's financial situation? How will turning critical access change that?

BS: Currently, Franklin runs in the negative every year, and we were grateful to have the support of Maine Health and be part of that health system. For that reason, when we turn critical access on Oct. 1, we should actually turn positive. We haven't identified the exact bottom dollar yet, but we're definitely looking positive when you put in the cost reporting system. It's definitely a positive for Franklin and Maine Health. Right now, our payer mix is approximately 74.8 percent government payer, which in the critical access world, that's huge because Medicare, Medicaid and MaineCare will reimburse us 101 percent of reasonable costs once we convert to critical access. We currently get about 50 or 60 cents on the dollar from those payers.

Q: What was the decision to turn critical access like?

BS: It was not a hard decision. Pre-COVID-19, the average patient daily census for the past 10 years was approximately 15 or 16. During COVID-19, we saw numbers in the 20s and 30s. We are still holding at right about 20, 21 or 22 on the inpatient side of things. On any given day, we can have 30 or 35 patients in the hospital total, as a mix of observation and inpatients mixed together. As far as the decision making it wasn't tough at all, once we put those finances into the cost reporting model, and they turned positive. We didn't have to limit any access, so all the beds that are going to be there on Sept. 30, and all the patient access that's all going to stay the same. We're not limiting any of that because we really haven't had the need. If we ever did approach that 25 bed inpatient census, we would work with our partner in hospitals on you know, we have transfer agreements in place if that was needed, but we're not anticipating that need.

Q: Will turning a profit under the critical access designation allow you to invest in new services?

BS: Absolutely, I am grateful to have a strong system behind us. That's money we can put right back into our local health system, to hopefully expand our emergency department in the near future. We're currently getting ready to undergo an oncology infusion expansion. All of that helps to support any additional programs that could come to our community.

Q: What advice would you give to other hospitals considering changing their designation?

BS: There haven't been any hospitals or any that have converted in the last maybe 15 to 20 years. Because the rules have been pre-set for so long we've actually had a pretty steep learning curve. So my advice would be to use your entire team. We work with Maine Health, we use our corporate entities and Maine Health in the finance world. We also partner with Epic, working with billing and finance. Our regulatory agencies are lobbyists at our government level to help with some of our state conversations. So just the advice would be to pull in as many people as soon as you start thinking about the process, keep track of who's got what bucket of work because I find through this process, confusion can occur. But if we're all talking pretty regularly, then then it's going pretty smooth.

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