Oregon’s Rural Hospitals Struggle to Make Profits
Wednesday, April 08, 2015
While a majority of hospitals end the year with an profit overall, rural hospitals must find a way to fill a crucial role in their community with fewer funds.
“It’s really a balancing act—we can’t raise prices so high that it might make a huge profit, but would harm residents of the county who can’t afford it,” said Jim Bishop, chief executive officer at rural Harney District Hospital. “If we weren’t out here, a lot of communities would die away.”
Rural hospitals have a crucial role in the state's health care, making up over half of the state's 62 hospitals and employing roughly 20 percent of the state’s hospital workforce, according to the Oregon Association of Hospitals and Health Services.
Last year, 53 percent of rural Oregon hospitals had negative margins, while 81 percent had margins under five percent. In recent years, the majority of hospitals with negative margins have been rural ones. From 2011 to 2013, rural hospitals made up 76.3 percent of all state hospitals with negative margins.
Hospital Profits
Although a hospital may end the year losing money, it doesn’t mean the hospital failed to pay bills or staff. Bishop said Harney District Hospital tries to get as close to breaking even as they can, to keep costs down for patients.
“Personally, I have a problem with hospitals that make a ton of money, that’s not part of our goal as health care providers,” Bishop said.
Yet being financially stable can do a lot for improving a hospital and its services, and making ends meet in the day-to-day operations, according to Robert Duehmig, deputy director for the Oregon Office of Rural Health.
“It's about trying to invest in the future, in the health care system and bringing in new providers—offering the services patients need,” Duehmig said.
Challenges For Rural Hospitals
The structure and client base for rural hospitals create challenges for turning profits compared to larger, urban hospitals. Larger facilities can offset the costs of patients who pay with Medicare and Medicaid through payments from private insurers, according to Duehmig. Yet a majority of rural hospital patients tend to be older, poorer, and sicker.
“Rural hospitals don’t have the luxury to crossover costs like urban ones,” Duehmig said.
Attracting hospital staff and specialists can be a challenge as well. Bishop said projected health care professional shortages will be felt more in rural hospitals.
“Recruiting the type of doctors who truly understand what rural medicine is all about is difficult, a tiny percentage will want to practice in rural communities,” Bishop said.
While rural hospitals may have fewer resources, they are still required to provide the same level of health care.
“Finances are fairly volatile from year to year, so that appreciate needs to be had that rural hospitals have the same expectations for healthcare transformation,” said Andy Van Pelt, executive vice president of Oregon Association of Hospitals and Health Services. “The state needs to appreciate they have unique situations.”
A Fixture in the Community
Despite any limitations a rural hospital may face, they play a crucial role in the community.
“Besides being the only hospital, we are the number one employer in Harney County,” Bishop said. “We are part of the glue that holds small communities together.”
Bishop said these physicians also provide a personal connection that is often overlooked in a larger hospital.
To keep rural hospitals from falling to behind on revenues, Duehmig said it is important to find ways to adapt with a changing health care system.
The OAHHS has been working since 2009 on a program to help reform rural health, positioning them to adapt even if they lack the size or scale of larger facilities.
Rural or critical-access hospitals receive some grants and extra federal funds, while the expansion of Medicaid has helped as well. Yet rural hospitals must still find a way to provide services with the resources they have.
“Hopefully we won’t lose so much money we have to close—like a lot of smaller hospitals in the south—it’s challenging,” Bishop said.
Related Slideshow: 20 Oregon Hospitals That Charge The Most
Which Oregon hospitals charge the most? Act Now for a Healthy Oregon analyzed 2013 data from Oregon Health Authority’s Inpatient Discharge Data for each of the 100 most frequent MSDRG primary diagnoses. An average charge was calculated per diagnosis (MSDRG) per hospital for patients with commercial insurance.
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