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Study uncovers factors that determine when rural hospitals convert to critical access hospital designation

Research Activities, July 2009, No. 347

The goal of Federal Medicare legislation that allows small rural hospitals meeting certain criteria to convert to Critical Access Hospital (CAH) status is to provide them with financial relief and ensure Medicare-insured rural patients access to care. While hospital administrators often cite financial concerns as the main reason for converting to CAH status, other factors actually determine when rural hospitals decide to undergo conversion, concludes a new study. CAH designation enables hospitals to change from fixed prospective to cost-based Medicare reimbursement, which pays them more for swing beds in which patients initially receive acute care followed by skilled nursing care. However hospitals must meet bed size restrictions and have an average annual length of stay of 4 days, notes Marcia Ward, Ph.D., of the University of Iowa.

Dr. Ward and colleagues examined conversion factors among 89 not-for-profit, nonteaching rural hospitals in Iowa from 1998 to 2005, a time when the number of Iowa CAHs grew from 1 to 81. They used a variety of hospital-level data from several databases, including the American Hospital Association and the Iowa Hospital Association. Hospital inpatient volume and average length of stay were the two strongest predictors of time to conversion. Hospitals that converted early on in the period tended to be smaller, with lower operating margins and fewer full-time nurses per bed. They also had significantly higher skilled swing bed days (when patients received skilled nursing care) relative to acute bed days (when patients received acute care).

The mean number of staffed hospital beds in 1998 was 52 for early converters compared with 76 for nonconverting hospitals. Other characteristics of early hospital conversions besides fewer staffed beds, were acute discharges and acute inpatient days, but higher Medicare acute days. The number of skilled swing bed days had a stronger effect on time to conversion compared with nonskilled swing bed days. The study was supported in part by the Agency for Healthcare Research and Quality (HS15009). See "Factors associated with Iowa rural hospitals' decision to convert to critical access hospital status," by Pengxiang Li, Ph.D., Dr. Ward, and John E. Schneider, Ph.D., in the Winter 2009 Journal of Rural Health 25(1), pp. 70-76.

Current as of July 2009
Internet Citation: Study uncovers factors that determine when rural hospitals convert to critical access hospital designation: Research Activities, July 2009, No. 347. July 2009. Agency for Healthcare Research and Quality, Rockville, MD.