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Medicare Compliance & Reimbursement

Hospitals:

SMALL FACILITIES HIT HARDEST BY CLOSURES

Published on Wed Jun 25, 2003

In rural and urban settings alike, smaller hospitals that treat fewer patients than their peers are more likely to be forced into shutting their doors.

That's the upshot of a pair of recent analyses from the HHS Office of Inspector General. The reports - "Trends in Rural Hospital Closure: 1990-2000" (OEI 04-02-00610) and "Trends in Urban Hospital Closure: 1990-2000" (OEI 04-02-00611) - combine 11 years' worth of OIG scrutiny of the issue. Significant findings include:

  • 296 urban hospitals and 208 rural hospitals closed since 1990 - 10.6 and 7.8 percent of all urban and rural hospitals, respectively;

  • business decisions (i.e., relocation, consolidation or merger) and low patient census were the top reasons cited for closure by rural facilities; competition and business decisions took the top spots in the urban setting;

  • about 10 percent of both urban and rural hospitals cited low Medicare and Medicaid reimbursement as a reason for shutting down.

    The reports are available at http://oig.hhs.gov/w-new.html.

    Lesson Learned: Some hospitals were able to avoid closure by converting to critical access hospital status - a move that typically increases Medicare reimbursement.

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