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Opportunities for Critical Access Hospitals

Guest blog by Audrey Smith, Critical Access Hospital Coalition Executive Director


Since 2010, 81 rural hospitals have closed in the United States with another 673 at risk, endangering the health of individuals, families, and communities. Nearly 30 million people don’t live within an hour of trauma care. In fact, residents living in 16% of the mainland United States are 30 miles or more away from the nearest hospital. The rate of accidental deaths adjusted for age was nearly 50% higher in rural versus urban areas from 1999 to 2015 according to a CDC study, which also noted that long travel distances to specialty and emergency care placed residents at higher risk of death.


In response to rural hospital closures in the 1980s and early 1990s, the Critical Access Hospital (CAH) designation was created by Congress as part of the 1997 Balanced Budget Act, designed to reduce the financial vulnerability of rural hospitals and improve access to healthcare by keeping essential services in rural communities. Eligibility requirements for CAHs include 25 or fewer acute care inpatient beds; another hospital must be located more than 35 miles away; the facility must maintain an average length of stay of 96 hours or less for acute care patients; and the hospital must provide 24/7 emergency care services.


Today, Critical Access Hospitals are in 45 states. Many of these hospitals are the largest employer in their community, and each offers services and programs customized to area residents’ needs. For example, one hospital partners with their state government to provide vaccinations to children, another offers hip replacement surgery, and yet another conducts surgery for patients using the latest robotic equipment. Local rural hospitals develop very close relationships with their patients, providing hands-on care. One CAH executive shared with me how their hospital employees pushed an elderly patient in a wheelchair through the snow from a nearby clinic for care.


Despite having CAH designations, cuts to reimbursements and potential federal policy modifications, including proposed changes to Medicaid, intensify rural hospitals’ risk of closure. With 1 out of 5 people living in rural areas, CAHs serve a vital role in the health of their communities.


The Critical Access Hospital Coalition advocates on behalf of vulnerable CAHs located throughout the United States by proposing policy changes and regulatory adjustments that would benefit these essential facilities. Recently, in the wake of Hurricane Harvey, the Centers for Medicare and Medicaid Services announced that it will waive certain requirements for hospitals providing care, allowing lengths of stay beyond the capped 96-hour period and waiving the 25-bed limit for CAH designation. This type of relief is welcome to CAHs and rural communities.


About the Critical Access Hospital Coalition

The Critical Access Hospital Coalition (CAH Coalition) is a consortium of innovative healthcare leaders representing CAHs nationwide. Its sole purpose is to assist policy makers in understanding the unique needs of CAHs so that quality healthcare is sustained in rural communities. For more information, visit the CAH Coalition website.



Tags: Critical Access Hospitals, Healthcare Reform , Rural hospitals
Calling Community Hospitals: A New Era of Opportunity

By Mike Williams,  President and CEO, CHC

As we usher in 2017 with our country’s new administration, it’s not surprising that hospitals, healthcare providers, insurers, and consumers alike are asking “what’s next?” related to healthcare. There’s no question that some changes will occur, although they won’t happen overnight. Many details are forthcoming in the weeks and months ahead.


Regardless of the road in front of us, we must continue to position community and rural hospitals in optimal fashion. CHC will be looking at innovative ways to help community hospitals during these times of change, by lending our expertise, and upholding our mission to guide, support and enhance the mission of community hospitals and healthcare providers.


Strong community hospitals are critical to the vitality of entire populations, especially in rural environments, because they support both the health and economy of the communities they serve. Here are some top-line recommendations to stay the course for continued success, even with impending healthcare reform changes on the horizon:

  • Assess your market position. As a smaller community hospital, this may be a good time to examine relationship opportunities with additional organizations. Could you benefit from optimizing connections with other providers through affiliations or clinical relationships? Are existing services duplicated in your market? Be creative in exploring new associations to position your hospital confidently and strategically.
  • Reduce operational expenses. Maintain or reinvigorate your existing productivity efforts. Monitor key productivity measures, including FTEs per occupied bed. Do you have the right FTEs at the right place at the right time? Also, consider supply chain optimization from an operational perspective. Are you paying too much? Selecting the right group purchasing organization can help streamline your processes and yield optimal supply savings and support, making this a short-term critical success factor.
  • Evaluate your facility’s clinical strength. Look to your IT department for clinical outcomes documentation, and partner with medical staff members to review opportunities for improvement. Examine your HCAHPS scores to determine if there are ways to enhance patient experience.

Even with health care changes ahead, I’m confident community hospitals can persevere by focusing on and optimizing their strength and position as we welcome the New Year.


Learn more about strategies for success moving ahead in 2017.



Tags: Affordable Care Act, Healthcare Reform , Hospital Management, Hospital Performance Improvement, Operational Improvement, Strategic Direction
Six Months In: Preparation Eased Community Hospital Transition to ICD-10

by Beth Kim, VP of Revenue Integrity, CHC


October 1, 2015, was a much-anticipated day for the U.S. healthcare system. It was the final compliance date for the shift from ICD-9 to ICD-10, a set of codes used to report diagnoses and inpatient procedures to identify health trends and track morbidity and mortality. The Centers for Medicare and Medicaid Services (CMS) characterized the change as “more than an update, a leap in how we define care.”


Physicians, hospitals and health insurance companies rely on these codes for diagnosing patients and billing for services. ICD-9 had been used since 1979 with periodic updates. ICD-10 would introduce 69,000 diagnosis codes from the previous 14,000. Originally set to take effect on October 1, 2014, the deadline for implementation was pushed to Oct. 1, 2015.


How It Fared


Despite some trepidation and anxiety, transition to ICD-10 went more smoothly than expected on both the provider and payor sides. Many billing elements remained fairly constant pre- and post-transition, including claims submissions, rejections and denial rates. Early reports suggest there have been no major disruptions in claim submissions and payment for providers, or a significant productivity drain. The delay in the implementation date allowed extra time for preparation, communication and training, decreasing the risk of major problems.


Readiness Makes All the Difference


To help hospitals get ready for the change, CHC’s support focused on communication, education and teamwork. Preparation and collaboration would be critical in making the move to the new system. Some of the steps to a less worrisome ICD-10 implementation included:

  • Formation of interdisciplinary hospital teams with representatives from various departments — not just medical records coders;
  • Monthly group calls for hospitals to share and discuss information and best practices;
  • Monthly meetings with individual hospitals to discuss project and action plans prior to the go-live date;
  • Collaborative testing with payors;
  • Development of contingency plans including safety net resources built into hospital budgets, such as contracting with coding companies to handle any potential work overload;
  • Online ICD-10 health education not only for coders but all affected parties;
  • Offering user-friendly apps for physicians;
  • Dual-coding exercises, focusing on hospitals’ highest-volume cases.

Looking ahead


Although data related to the actual impact of ICD-10 (positive or negative) is currently limited, one thing is clear: the critical role of documentation in the ICD-10 coding set. For instance, similar injuries on opposite limbs cannot be accounted for in ICD-9; with ICD-10, different injuries or varying severities of medical conditions can be coded. The bottom line is that enhancing documentation can lead to better, more efficient patient care. Documentation also gives valuable information to health care providers providing follow-up care to patients. Clinical document improvement (CDI) programs can be added to a hospital’s tool kit for staff education.


Finally, change is constant. A code freeze has been in effect to help manage the transition to ICD-10; however, regular updates to ICD-10 code sets will begin on Oct. 1, 2016, to account for new technologies and diseases. Implementation of an estimated 1,900 diagnosis and 3,600 new procedure codes are scheduled when the freeze lifts.


CHC takes a collaborative approach with clients to help them navigate change, such as ICD-10 implementation. Learn more about CHC Revenue Cycle Assessment offerings including coding and related support services.

Tags: Coding, Electronic Health Record, Healthcare Reform , ICD-10
Three Steps to Help Rural Hospitals Overcome Financial Distress

by Michael Morgan, Director of Due Diligence and Strategic Analysis, CHC


An array of issues – from increasing charity care, bad debt and declining reimbursement rates to negative profit margins – create financial distress for rural hospitals. Despite today’s challenging operating environment, many rural hospitals across the country are using a practical approach to grow revenues and control costs.



Know the signs and symptoms of declining financial health


How does a hospital reach the point of “no return” where closure becomes inevitable? Were there warning signs along the way? Were they missed? Would the outcome have been different if danger signals had been noted and addressed?


Discussions around performance, growth and capital stewardship are at the heart of strategic planning for most health care organizations, and even though financial indicators are a harbinger of financial health, “finance” is often considered the responsibility of the chief financial officer or other “financial” folks. Budgeting is usually department-specific.


Like car dashboard warning lights, financial warning signs mean it’s time to sit up and take notice. A regular review of the most important indicators related to an organization’s financial health should be a shared responsibility for the entire health care team. Data points to focus in on include:

  • Look at aggregate volume and provider utilization trends. This data can offer a big-picture perspective to leaders and managers across departments.
  • Share operating ratios, including expenses as a percent of net operating revenue focusing on labor, supplies, and purchased services.
  • Examine labor costs relative to volumes. Is the hospital meeting productivity goals? Look at FTE staffing per adjusted occupied bed targets.
  • Review patient revenue indicators including bad debt percentage and net to gross percentage by payor class. Are there shifts in payor mix that need to be addressed?
  • Study liquidity ratios, such as net days in patient accounts receivable and cash collections as a percentage of net revenue minus bad debts. What steps can be taken to improve cash flow?


Identify and assess significant financial indicators


Operational best practices include a monthly review by hospital leadership of key measures, many of which are listed above. Procedures should be put in place by the hospital’s finance department, with input from department managers, to produce accurate monthly stats and financial performance metrics to facilitate these periodic reviews. A closer look at financial indicators also should be part of the annual review and planning process. A key to financial improvement for hospitals is clear communication of expectations and goals across the leadership spectrum in order to accomplish desired changes.  



Connect the dots for sustainability


Once data is available to everyone, the next step is to analyze the root cause. For instance, if inpatient admission volumes are down significantly in a current month compared to the same month in the previous year, the conclusion might be, “We think it went down because there were fewer flu cases this year compared to last year.” That may be true, but speculation can be risky. Do a deep data dive and take the guesswork out of the equation. What were the primary diagnoses of the admitted patients for each time period? Were there any abnormal physician trends? How do observation days this month compare? Understanding the trends and their causes is the key to creating actionable solutions.


Regular reviews of key financial indicators can identify operational best practices, support strategic planning efforts, enhance understanding and create accountability. These reviews can confirm or redirect efforts aimed at sustainability. The most critical element of the entire process is answering “why.” Only then can the team develop solutions to improve operating margins and avoid financial distress.


Learn more about CHC's Financial Improvement services.

Tags: Affordable Care Act, Healthcare Reform , Hospital Management, Hospital Performance Improvement, Operational Improvement, Strategic Direction
CHC Prescription for Board Competency Featured in HealthLeaders Magazine

At a time when hospitals are under extreme pressure, only 66 percent of CEOs consider their boards strong or very strong and 11 percent consider them weak or very weak, as published in HealthLeaders Media Industry Survey 2013. Many boards simply aren’t up to speed on all the forces at work in the current healthcare climate, including the Patient Protection and Affordable Care Act. Boards require education to make sense of these challenges and assess the long-term viability of their organizations.


CHC Consulting, the management and consulting arm of CHC, works with hospital boards on education as well as strategic vision. CEO Mike Williams shared best practices for hospital boards in the May cover story of HealthLeaders magazine, “Building Better Boards,” including:

  • A longer commitment by board members of three, three-year terms
  • A robust quality committee with multidisciplinary clinical representation
  • More active and vocal audit and compliance committees
  • Placing more accountability on the CEO
  • Engaging in advocacy efforts and dialog with elected officials  

Read the full article here.


Learn about CHC’s Board Advisory Services here, and call us to assist your hospital board and management with strategic decisions that affect your hospital’s future.

Tags: Affordable Care Act, Healthcare Reform , Hospital Board Advisory

CHC in the Spotlight