2006
I am practicing in a small town in extremely rural Wisconsin, employed by a medium-sized multispecialty clinic that is part of a large healthcare system based in Minnesota. I do inpatient work at a local community hospital, with which our clinic has a very good relationship. At the end of a day, as I am walking past the administration suite of the hospital after completing a consult on the medical floor, I run into the hospital CEO. I ask him if he has some time to chat. He does. We walk into his office.
“Mr. CEO, I hear we are going to be applying for Critical Access Hospital (CAH) status,” I proceed, “I don’t know what it means. Could you tell me a bit about it so that I understand?”
“Sure, doc,” says the CEO, “We have to apply for the CAH designation with CMS (Center for Medicare and Medicaid Services). If we get that designation, we will get higher reimbursement from CMS. And as you know, almost 50% of the patients we treat have public insurance. So that will be good for our bottom line.”
What does it require to be a CAH?
Well, first hurdle is the distance criteria. To qualify and receive CAH designation, a hospital must be a certain minimum distance — 15 miles by secondary roads and 35 miles by primary roads — from another hospital. The next is that it must have no more than 25 beds. There are some exceptions….
Hold, on! 25 beds?! Does that mean our hospital will have to reduce beds?
Yes, you’re right. Currently we have 40 beds, not including the psychiatric beds. Fortunately, our psychiatry unit is not attached to the hospital. You know how you have complained of having to walk between the psych unit and the main building in the winter? That inconvenience will end up saving the psychiatry unit.
CMS says that if there is a psychiatry unit that is separate from the hospital but part of the hospital organizationally, its beds don’t count in the CAH bed limit.
That’s great!
The CEO continues, “It is great. And not. Unfortunately, the CAH designation requires that the unattached psychiatry unit have no more than 10 beds.”
Whaaat? That would mean almost 40% reduction in the number of psychiatry beds.
37.5% to be precise. But you are in the ballpark. Yes, we will have to close 6 beds.
But our nearest psychiatry units are over 100 miles away to the southeast, more than 180 miles to the south, over 180 miles to the east and about 70 miles to the west.
That’s true. But the CAH designation does not take that into account.
What happens if we don’t become a CAH?
You can guess, doc. We are a rural hospital in a town of 9,000 people. We draw our patients from a population of about 120,000 but many of them are folks on public insurance. And many don’t have any insurance. We couldn’t keep going without the increase in reimbursement. We might be forced to close the beds anyway.
So, we are between a rock and a hard place.
“That sums up the situation,” concludes the CEO.
“Thanks for taking the time to explain it to me,” I finish off, exchange some pleasantries and leave for the day.
I did live through the bed reduction that accompanied a rural hospital getting CAH designation. This is a fictionalized composite of multiple conversations I had with different people that helped me understand the CAH designation and its implications.
