Becker's Hospital Review

Save the date! CEO Roundtable + CFO/CIO Roundtable — November 18-19, 2015 — Chicago. Please call 800-417-2035 to register. 12 High-deductible plans have exploded in popularity in recent years as they are an attractive option for low and middle income consumers due to their relatively low monthly premiums. Additionally, more employers are offering these types of plans to their employees. In 2006, only 4 percent of employed Americans were covered by high-deductible health plans, and that number skyrocketed to 20 percent in 2014, according to the annual health census published by America's Health Insurance Plans. Although patients are the ones enrolling in plans that require them to pay more for their care, it is ultimately up to providers to collect that payment, and community hospitals, many of which are located in areas with high per- centages of low-income patients, are feeling the squeeze of these plans. This issue has captured the attention of community hospital leaders. In the annual American College of Healthcare Executives survey, 67 percent of the community hospital CEOs who responded identified bad debt, including un- collectable emergency department expenses and other charges, as one of the their top financial concerns. Addressing the bad debt problem To help prevent bad debt levels from rising, there are a number of steps com- munity hospitals can take, beginning with reducing unnecessary ER visits. A survey released in May from the American College of Emergency Physi- cians showed 75 percent of ER physicians reported an increase in visits to their ER since Jan. 1, 2014. Two of the major forces behind the surge in ER use are closely tied together — the primary care physician shortage and implementation of the PPACA. American College of Emergency Physicians President Mike Geradi explained the issue to USA Today in May by stating, "There simply aren't enough pri- mary care physicians to handle all the newly insured patients." Additionally, some physicians will not accept Medicaid because of its lower reimbursement rates, leaving some patients with no choice but to go to the ER for care. A February report from the Commonwealth Fund found newly insured Americans are expected to account for only a 3.8 percent increase in primary care visits and that existing provider capacity should be sufficient to handle that growth. However, in areas where people use more healthcare services and in areas that traditionally have low physician numbers, such as rural ar- eas, action will have to be taken to keep ER visits from surging. Although some of the main forces behind the rise in ER use will have to be addressed from a national level, community hospitals can take action to help lower use. For instance, some newly insured patients are going to the ER for care because that is where they have always went for medical treatment, ac- cording to Ms. Arduino. "Community hospitals must work with these people to redirect them," she says. Changing patient behavior is extremely difficult, but by communicating with patients, especially those that are frequent ER users, about other non-emergency care settings, community hospitals can make strides in decreasing ER use. Improving billing practices to increase collections is another method of ad- dressing the bad debt problem. "Community hospitals must have flawless revenue cycle processes in place to prevent revenue seepage," says Dr. Till- man. "That requires a strong hospital-wide focus and adequate investment of resources in all three stages of the revenue cycle." However, this is not an option for financially distressed community hospitals. Short of a system update, there are other smaller changes facilities can make, such as collecting from patients at the point of service. Providers are signifi- cantly less likely to collect from a patient after care has been given and the pa- tient returns home; therefore, collecting while the patient is still at the facility can have a positive effect on a community hospital's finances. Community hospitals must take action The financial pressures community hospitals across the nation are facing are serious, and overcoming these issues will require putting new processes in place and thinking outside of the box. "The healthcare industry has not been kind to community hospitals over the past several years and there is no indi- cation that the industry will be any less cruel on these organizations during the next several years," says Mr. Charleston. "Survival in this world will take decisive and creative action." n In the search of a definition, we turned first to the American Hospital Association, which has one of the most generous definitions for community hospitals: all nonfederal, short-term general, and other special hospitals. "Community hospitals in- clude academic medical centers or other teaching hospitals if they are nonfederal short-term hos- pitals," according to AHA. The AHA used to have an even broader definition of what a community hospital is — before 1972, the definition even in- cluded prison and college infirmaries. Other organizations define the term differently and more narrowly. Truven Health Analytics, for example, divides hospitals into five comparison groups when forming its 100 Top Hospitals list: major teaching hospitals, teaching hospitals, large community hospitals, medium community hos- pitals and small community hospitals. A hospital is put into one of the community hospital group- ings if it is not classified as a teaching hospital — meaning it does not have an intern- and resident- per-bed ratio of at least 0.03 or involvement in at least three GME programs overall. Similarly, for the 100 Great Community Hospitals list we put together here at Becker's Hospital Re- view, we define community hospitals as those that have fewer than 550 beds and minimal teaching programs. While those definitions serve a purpose — orga- nizations need to classify hospitals in some way — the broader definition of what a community hospital is goes beyond bed size and teaching sta- tus and into various factors, including location, governance structure, the role it plays in a town's economy and the role it plays in increasing care access, among others. Geographic location Typically, a community hospital is located in a smaller town, away from a large metropolitan area. However, small cities are not the only place a community hospital can be found, according to Joe Lupica, chairman of Newpoint Healthcare Advisors. "A big city can have community hospitals in it, but they have to serve a market segment distinct from a major tertiary care center," he says. The AHA concurs, as it breaks down its definition of community hospital into two groups: rural com- munity hospitals, with a count of 1,971, and urban community hospitals, which clock in at 3,003. Governance structure Most experts agree that for a hospital to fit the com- munity hospital bill, it needs to be governed locally. Cindy Matthews, executive vice president of Com- munity Hospital Corp., says she finds community hospitals have local leaders serving on the board, like bankers, insurance providers, the school su- perintendent and others who are invested in the future of the community. CHC owns, manages and consults with community hospitals across the country. "We look at [community hospitals] as governed by people who live in the community." Mr. Lupica believes a community hospital can even be part of a larger health system as long as the sys- tem's governance is something he calls "enlightened." "If they are enlightened, [the system leaders] will understand the advantages of letting a community hospital have some leeway to be a real community hospital and not be governed by dictators in an office tower downtown," he says. Partnerships Perhaps in years past, independence played an im- portant role in the definition of a community hos- pital. But as the nature of healthcare has changed, and community hospitals are forming affiliations with larger systems while still maintaining their community roots. The AHA counts 1,582 commu- nity hospitals as being in a network, or as part of a group of hospitals, physicians and other providers, insurers or agencies working to coordinate care. The Modern Definition of a Community Hospital (continued from cover)

• Cover