How to put critical access hospitals in positions of strength

5 steps critical access hospitals can take to put them in a strong position to succeed in healthcare today.

This content is sponsored by Community Hospital Corp.

By definition, critical access hospitals are often their communities' sole healthcare provider, as they must be located more than a 35-mile drive from any hospital (a 15-mile drive in mountainous terrain). For that reason, it is especially important that these hospitals remain in their communities, ensuring patients have easy access to healthcare services.

However, that may be easier said than done. As hospitals in mostly rural areas and with no more than 25 beds, critical access hospitals often face financial and operational obstacles that their larger or urban counterparts never encounter. While they do have some advantages when compared with the typical acute-care hospital that help them stay afloat, like receiving cost-based reimbursement instead of reimbursement based on DRGs, often these hospitals are still at a disadvantage because of their size.

"By nature, they're small, and their margin for error is much smaller than larger hospitals we work with," says Wilson Weber, the executive vice president and COO of Community Hospital Corp., which owns, manages and consults with mostly small and rural hospitals.

Additionally, there have been recent discussions of pulling the critical access hospital designation all together, taking away the cost-based reimbursement advantage critical access hospitals enjoy currently.

While they do face obstacles to success, there are certain steps this special breed of hospital can take that will put them in a strong position to succeed in healthcare today. Below are five examples.

Use swing beds advantageously

Critical access hospitals must have an average annual length of stay of 96 hours or less per patient for their acute care beds, which is why swing beds should be part of every critical access hospital's strategy, according to Mr. Weber.

"A critical access hospital should have a swing bed program," he says. "If a patient needs more extended care [beyond the 96-hour window], a swing bed allows [the hospital] to swing the patient and keep them there to provide needed services," he explains.

Gunnison Valley Health, the sole comprehensive health system for Gunnison Valley in Colorado that includes a 24-bed critical access hospital, has benefitted firsthand from swing bed use.

"For a critical access hospital, swing beds are key for revenue," says Robert Santilli, the CEO of GVH. Prior to Mr. Santilli joining the hospital, GVH sent many of its potential swing bed patients to a nursing home. With the help of CHC, GVH improved its swing bed utilization and gained $301,000.

In addition to boosting a critical access hospital's bottom line, swing beds can also improve the care provided to patients. For example, a swing bed patient can continue seeing the physician they started with in the hospital as well as receive care from the same nurses on the unit, thus improving the continuity of care, as opposed to discharging the patient to a new facility with new providers.

Streamline the revenue cycle

Many times, small hospitals like critical access hospitals just don't have the bandwidth to fully optimize certain operations, like the revenue cycle, Mr. Weber says, making it an area where these hospitals can gain some ground. "We see a lot of opportunity there for critical access hospitals," he says.

For instance, before partnering with CHC, GVH was in technical default for failing to satisfy bond covenants, including cash-on-hand requirements. Days in accounts receivable were over 100, and the hospital was struggling to stay afloat.

After looking into the revenue cycle and making certain improvements, like collecting appropriate patient information up front and sending out bills in days (as opposed to months), days in accounts receivable dropped to 35, and days cash on hand now hovers around 269. These revenue cycle improvements helped the hospital move from financially struggling to financially stable, with net revenue up 16.6 percent.

Examine supply chain costs

Another area where many critical access hospitals could stand to improve is in the supply chain. Here, critical access hospitals' size tends to put them at a disadvantage, Mr. Weber says. "We see critical access hospitals paying 10 to 15 percent more than what a larger hospital may be paying for the same item," he explains.

Officials at Community Hospital in McCook, Neb., experienced this first-hand. The hospital was in a supply spend contract with a national hospital network, but wasn't getting the desired results. "As a smaller hospital, we were subject to higher fees and less representation," James Ulrich, Community Hospital's president and CEO, says.

By entering CHC's group purchasing organization and shifting perioperative supply chain management from clinicians to the hospital's materials department, Community Hospital was able to save $532,000 in one year alone, showing the major impact supply chain changes can have on a critical access hospital's thin bottom line.

Think like a large hospital

Even though critical access hospitals are different in many ways from larger acute-care hospitals, that does not mean lessons learned from acute-care hospitals cannot be applied in the critical access hospital space.

"If we can apply best practices to critical access hospitals, we can move to positions of strength," says Mr. Santilli. "I'm not certain if there's really much of a difference between being successful in a large hospital versus a critical access hospital. If we really understand there are key formulas to driving strength within the healthcare industry, we just need to apply them in a critical access hospital."

Mr. Weber agrees. "A lot of the same practices that work at larger hospitals we try to bring to critical access hospitals," he says.

Janet Coates, CEO of Mother Frances Hospital-Winnsboro (Texas), had experience leading non-critical access hospitals before joining her current critical access hospital and draws on those experiences in her current role. "This is my first rural [critical access hospital], but the focus is very similar," she says. "There are a lot of similarities between acute care and non-acute care hospitals."

For example, strong leaders who execute projects and engage employees have helped hospitals of all sizes find success. So, at GVH, leaders go through training to understand employee engagement and become stronger leaders. "It's really about training leaders to be goal-oriented and to drive [project] execution," Mr. Santilli says.

More generally, Ms. Coates focuses on large national trends that affect all hospitals, she says, like reducing costs and increasing volumes.

Seek opportunities for growth

After sweeping through and making improvements in existing areas, critical access hospital leaders can and should start looking for areas to grow to continue to strengthen their organizations' position as the healthcare industry continues to change.

Now that GVH's finances are stable, Mr. Santilli has started looking at strategic initiatives to help grow the hospital. GVH has added new surgeons and hospitalists that have "made a tremendous difference in the organization," he says. Additionally, GVH has moved to provide urgent care services as that was a community need.

At Mother Frances Hospital-Winnsboro, the critical access hospital is using its relationship with a larger system, Trinity Mother Frances, and CHC to grow its outpatient service offerings. After performing a community needs assessment and mapping out its area's future healthcare needs, the hospital added an orthopedic program using TMF specialists.

"Over the past four years we've experienced growth every year in volumes," Ms. Coates says.

Though critical access hospitals do face some unique hurdles that can make running them a challenge, they also play a unique role in their communities and are an indispensible resource for their patients. Harnessing that feeling is important to their future success. "So often CEOs are viewed as someone who is there for the business component — you're really there to change a community," Mr. Santilli says. "You're there to change the lives of the people in the community."

Keeping the preceding five tips in mind can help critical access hospitals stick around and continue doing just that.

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