Predicting Financial Distress and Closure in Rural Hospitals

Holmes, George M.; Kaufman, Brystana G.; Pink, George H.

doi:10.1111/jrh.12187

Cited by 71 publications

(76 citation statements)

References 35 publications

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“…PCFs with larger PCDGS did provide more comprehensive preventive and public health services but paid a price of reduced basic medical care services due to decreased financial revenue by the current pricing regulation and ceiling line set by the medical insurance system [16,17]. This is consistent with the fact that services provided across the United States Critical Access Hospitals are associated with the portion of charges and cost received from Medicare payment [44]. As the primary care system with comprehensive care demonstrated better health outcomes [45,46], future reform of the DGS system should establish an evaluation system that incentivizes wider provision of primary care services [47].…”

Section: Discussionmentioning

confidence: 59%

Association between direct government subsidies and service scope of primary care facilities: a cross-sectional study in China

Zhong

Hung

et al. 2020

Int J Equity Health

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Background: Comprehensive primary care practices, through preconception, preventive, curative, and rehabilitative care, have been a global priority in the promotion of health. However, the scope of primary care services has still been in decline in China. Studies on the factors for primary care service scope have centred on human resources and infrastructure; the role of direct government subsidies (DGS) on services scope of primary care facilities were left unanswered. This study aimed to explore the association between the DGS and services scope of primary care facilities in China. Methods: A multi-stage, clustered cross-sectional survey using self-administrated questionnaire was conducted among primary care facilities of 36 districts/counties in China. A total of 770 primary care facilities were surveyed with 757 (98.3%) valid respondents. Of the 757 primary care facilities, 469 (62.0%) provided us detailed information of financial revenue and DGS from 2009 to 2016. Therefore, 469 primary care facilities from 31 counties/districts were included in this study. Sasabuchi-Lind-Mehlum tests and multivariate regression models were used to examine the inverted U-shaped relationship between the DGS and service scope. Results: Of 469 PCFs, 332 (70.8%) were township health centres. Proportion of annul DGS to FR arose from 26.5% in 2009 to 50.5% in 2016. At the low proportion of DGS to financial revenue, an increase in DGS was associated with an increased service scope of primary care facilities, whereas the proportion of DGS to financial revenue over 42.5% might cause narrowed service scope (P = 0.023, 95% CI 11.59-51.74%); for the basic medical care dimension, the cut point is 42.6%. However, association between DGS and service scope of public health by primary care facilities is statistically insignificant. Conclusion: While the DGS successfully achieved equalization of basic preventive and public health services, the disproportionate proportion of DGS to financial revenue is associated with narrowed service scope, which might cause underutilization of primary care and distorted incentive structure of primary care. Future improvements of DGS should focus on the incentive of broader basic medical services provision, such as clarifying service scope of primary care facilities and strategic procurement with a performance-based subsidies system to determine resource allocation.

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Section: Discussionmentioning

confidence: 59%

Association between direct government subsidies and service scope of primary care facilities: a cross-sectional study in China

Zhong

Hung

et al. 2020

Int J Equity Health

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“…Consideration of these hospital and market characteristics is particularly important given the growing number of rural hospitals at risk of financial distress 11 and closure. 5 Rural hospitals with greater odds of financial distress share similar hospital and market characteristics with the hospitals that would be most negatively affected by loss of the ACA LVH adjustment: they are more likely to be smaller hospitals, located in smaller communities, 11 located in the South, 12 and located in communities with higher poverty rates.…”

Section: Discussionmentioning

confidence: 99%

“…5 Rural hospitals with greater odds of financial distress share similar hospital and market characteristics with the hospitals that would be most negatively affected by loss of the ACA LVH adjustment: they are more likely to be smaller hospitals, located in smaller communities, 11 located in the South, 12 and located in communities with higher poverty rates. 11 Similarly, research by Thomas and colleagues 13 found that, compared to rural hospitals in financial distress that remained open during the same period, closed rural hospitals were more likely to be located in markets with higher percentages of black and Hispanic/Latino residents and with higher rates of unemployment. 13 Given the similarities between the hospitals and hospital markets that would be most affected by loss of the ACA LVH adjustment and the rural hospitals at risk of financial distress and closure, policy makers might want to consider the risk of financial distress and closure when deciding whether to modify the existing ACA LVH program.…”

Section: Discussionmentioning

confidence: 99%

How Would Rural Hospitals Be Affected by Loss of the Affordable Care Act's Medicare Low‐Volume Hospital Adjustment?

Whitaker

Holmes

Pink

2016

The Journal of Rural Health

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Purpose: The low-volume hospital (LVH) payment adjustment established in the Patient Protection and Affordable Care Act (ACA) of 2010 is scheduled to sunset on October 1, 2017. The purpose of this analysis was: (1) to estimate the effect of the ACA LVH adjustment on qualifying hospitals' profitability margins; and (2) to examine hospital and market characteristics of the hospitals that would be most adversely affected by the loss of the ACA LVH adjustment.Methods: [2004][2005][2006][2007][2008][2009][2010][2011][2012][2013][2014][2015] data from the Hospital Cost Report Information System, Hospital Market Service Area File and Nielsen-Claritas Pop-Facts file were used to estimate difference-in-difference regression models with hospital-level random effects in order to determine whether the ACA LVH adjustment improved qualifying rural hospitals' profitability margins. Recycled predictions estimated the effect of losing the ACA LVH adjustment on profitability margins. Bivariate analyses explored associations between the predicted profitability margins and hospital and market characteristics. Findings:The ACA LVH adjustment significantly improved Sole Community Hospitals' Medicare inpatient margins in the year they received the adjustment, and it had a large but statistically insignificant effect on the profitability margins of other rural hospitals. Hospitals that would be the most adversely affected by loss of the ACA LVH adjustment were more likely to be small, located in the South, and in high-poverty markets with higher proportions of black and uninsured individuals. Conclusions:Elimination of the ACA LVH adjustment would have differential effects on subgroups of hospitals, and those located in markets serving historically underserved populations would be the most adversely affected.

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“…Usually, the following financial indicators are employed: (1) Profitability, (2) liquidity, (3) capital structure, (4) revenue indicators, (5) costs, and (6) utilization (bed occupancy) [57,68,69]. Most of the previous studies confirm rural hospitals' poor financial performance (based on indicators listed above) [37,69,70], while some results are inconsistent, suggesting that rural hospitals can be as profitable (or efficient) as their urban counterparts [58,71]. According to the pillars of the environment of the traditional definition of sustainable development, the efficiency of rural hospitals can help them use their resources in the best way and to direct them toward their missions of patient care.…”

Section: Rural Hospitals As Part Of a Sustainable Health Systemmentioning

confidence: 99%

Hospitals’ Financial Health in Rural and Urban Areas in Poland: Does It Ensure Sustainability?

et al. 2019

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Literature review suggests that rural hospitals are in the worst financial conditions due to several factors: They are smaller, located in remote areas, and they provide less specialized services due to their problems with employing well-qualified staff. We decided to check whether it is true in the case of Polish hospitals. Based on the literature review, we have assumed that rural hospitals have less favorable financial conditions. In order to verify this assumption, we use seven indicators of financial health as well as a synthetic measure of financial condition. We have found that, in fact, there is no difference in financial condition between rural and urban hospitals, or even that the financial health of rural hospitals is better if we employ the synthetic measure. Additionally, we have found that the form of activity can be a crucial driver of better financial performance. The concept of rural sustainability is supported by good financial conditions of rural hospitals, which helps to provide better access to medical services for inhabitants of rural areas.

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Predicting Financial Distress and Closure in Rural Hospitals

Abstract: This methodology offers improved specificity and predictive power relative to existing measures of financial distress applied to rural hospitals. This risk assessment tool may inform programs at the federal, state, and local levels that provide funding or support to rural hospitals.

Cited by 71 publications

References 35 publications

Association between direct government subsidies and service scope of primary care facilities: a cross-sectional study in China

Association between direct government subsidies and service scope of primary care facilities: a cross-sectional study in China

How Would Rural Hospitals Be Affected by Loss of the Affordable Care Act's Medicare Low‐Volume Hospital Adjustment?

Hospitals’ Financial Health in Rural and Urban Areas in Poland: Does It Ensure Sustainability?

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