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Rural Hospital Flexibility Program Tracking Project

Executive Summary

Tracking Team Members from All Six Collaborating Centers

The U.S. Congress made an important decision to invest significantly in America's rural hospitals when it created the Rural Hospital Flexibility Program (Flex Program) as part of the Balanced Budget Act (BBA) of 1997. The Critical Access Hospital (CAH) Program is one of the central features of the Flex Program. The Federal Office of Rural Health Policy (FORHP) is the implementing agency for the grant portion of the program, and has contracted with five rural health research centers and the Rural Policy Research Institute (RUPRI) to track the program and document its successes and opportunities for improvement. The FORHP is also working in close partnership with state offices of rural health and related state-based entities, along with the Technical Assistance and Service Center, to ensure the success of the program.

In addition to the cost-based reimbursement aspect of the CAH program administered by Medicare, the second portion of the Flex Program is a 4-year $25 million per year grant program that is administered by FORHP. The goals of the program are to:

• Establish state-wide rural health plans;

• Assist hospitals interested in being designated and certified as CAHs;

• Develop and strengthen hospital networks;

• Improve quality of care; and

• Improve emergency medical services (EMS) in rural communities.

The grant program expires at the end of federal fiscal year 2002-2003, unless renewed by Congress. The goal of the Tracking Project is to maximize the effectiveness of the Flex Program by tracking and reporting implementation successes and problems. This is a report of the activities completed during the first two years of the Flex Program and the early results of those activities on the delivery of health care services in rural communities.

The pace of implementation of the Flex Program has increased dramatically during this second year. The number of CAHs has more than doubled in the past 12 months. Other critical Flex Program activities (beyond conversion) have also gained momentum. State rural health plan development, technical assistance for networks and emergency medical systems, and quality improvement initiatives have benefited many small rural hospitals across America-even if they have not yet converted to CAH status. 

This report relies on the following data gathering initiatives performed during the last year:

• A survey of 217 administrators at CAHs certified as of September 1, 2000 (conducted by University of Minnesota-UM);

• Continuous monitoring of activities in the states through e-mail and telephone contacts (University of North Carolina-UNC); 

• Data collected through site visits to states (12 in the first year and 9 in the second year) and hospitals (2 in each state each year), including follow-up contacts during the second year to sites visited in the first year (all centers);

• A survey of 471 physicians practicing in communities served by CAHs (conducted by Project HOPE's Walsh Center-HOPE);

• Compilation of information included in state applications for funding (University of Washington-UW); 

• Review of Medicare cost reports for CAHs (UNC); 

• Telephone interviews with 36 administrators of hospitals that had not converted to CAHs (UW); and

• Other small data-gathering activities such as e-mail communications and phone calls.

We worked with the Flex Program's Technical Assistance and Service Center (TASC) to understand the issues facing the states and the hospitals as they implement the Flex Program and to provide early feedback based on our tracking work. We produced Findings from the Field and a Year 01 monograph, and made many presentations at a variety of forums across the country, including a session in May on Capitol Hill to a group of policy makers and their staffs.

Over 400 hospitals have converted to CAH status to date, and 250-350 may convert over the next couple of years. Not every eligible hospital has elected to convert, but our analysis shows that most are engaged in thoughtful consideration and will move when and if the time is right.

Despite the limited resources available through the Flex Program, the Tracking Team reports significant changes in the rural health landscape attributable to this initiative. Offices of rural health across the country are infused with new resources and are using those funds to build infrastructure, forge relations with partners at the state level such as hospital associations, and strengthen or build new relationships with the hospitals in their states. Many hospitals told us of service expansions and gains in quality. By and large, CAH-affiliated physicians are highly supportive of hospital conversion.

Preliminary results from an analysis of data for the year 2000 seem to indicate that hospitals that chose to convert to CAH status were performing as well or better than other small rural hospitals on a number of financial indicators. This is significant because hospitals that chose to convert early tended to be in worse financial shape than their peer facilities. A thorough analysis of the financial status of CAHs both pre- and post-conversion will not be possible, however, until next year, when more recent cost report data will have been released by Medicare.

States and hospitals are using Flex Program grants for EMS improvements to conduct needs assessments and engage in planning, provide training, move systems toward regional collaboration, and improve finances.

The Tracking Team's Year 02 report, covering the 2000-2001 federal fiscal year, has several key findings that have been categorized as follows:

• States' roles

• Hospital conversion

• Scope of services

• Quality of care

• Hospital administration

• Hospital finances

• Physician relationships to CAHs

• Strategic positioning

• Emergency medical service systems

• Networks

• Local networking

• Community development

• Non-conversion

• Continuing issues

The findings related to each of these are described below.

States' Roles

State-level implementation activities are changing in response to the evolving needs and circumstances of the Flex Program. In the first year of implementation, most states were focused primarily on developing policies and procedures for program implementation, communicating with hospitals and others about the program, and assisting with early conversions. With most of their "systems" in place, and conversions proceeding smoothly, many states seem to be moving to the "second generation"ⁱ of the Flex Program. Increasingly, these states are shifting their attention and priorities to a set of longer-term issues, including: 

• Honing state priorities for the program;

• Focusing on longer-term rural hospital and health systems performance issues by targeting technical assistance in areas such as strategic planning and quality improvement; and

• Beginning to focus on more difficult issues such as lasting structural improvement to rural EMS systems and the capital needs of rural hospitals.

With the conversion mechanics established, states continue to spend the bulk of their time and resources conducting a set of core conversion-related activities, including communication with and technical assistance for hospitals, building and sustaining coalitions of hospitals and related organizations, and trouble-shooting.

As the agenda for Flex Program implementation evolves, the states face a number of important challenges. These include preparing to meet the changing technical assistance needs of communities, while also balancing the state and federal priorities for network development, quality improvement, and EMS system enhancement.

Hospital Conversion

We continually gather data on hospital conversions, communities where CAHs operate, and hospital characteristics.

As of May 1, 2001, 401 hospitals in 38 states had been designated as critical access hospitals.ⁱⁱ Changes in the federal criteria for CAH eligibility, authorized by the Balanced Budget Refinement Act (BBRA) of 1999, expanded the number of facilities that could potentially participate in the program and may explain part of the steep rise in the number of certifications in 2000 and 2001.ⁱⁱⁱ Another explanation is that many states received approval from the Centers for Medicaid and Medicare Services (CMS) for their rural health plans in 2000, thus making hospitals in those states newly eligible for conversion. In the year since our last report to the FORHP, 231 hospitals have been certified as CAHs, more than doubling the total number designated as of May 1, 2000.

CAHs tend to be located in the most underserved areas, as 55 percent of these facilities are in counties designated as both a Medically Underserved Area (MUA) and a Health Professional Shortage Area (HPSA). Only nine percent of certified CAHs are located in counties with neither a HPSA nor a MUA designation. On average, there are 5.6 health care providers for every 10,000 people (which is equivalent to 1 provider for 1,786 people) in counties with CAHs versus 6.4 providers per 10,000 people (equivalent to 1 provider per 1,563 residents) in all rural counties with a hospital.

Based on bed size, CAHs are the smallest of the small rural hospitals. They also have a low average daily census (ADC) at 3.9 persons per day while other small rural hospitals have 7.3 persons per day and all rural hospitals have 24.0 persons per day. As for average length of stay (LOS), CAHs did not differ greatly from other small rural hospitals. For example, LOS for CAHs is 3.3 days while it is 3.4 days for other small rural hospitals.

Scope of Services 

Aside from limitations on length of inpatient stays and total number of beds, there is nothing in the federal eligibility requirements for Flex Program participation that requires or even implies downsizing. The Flex Program requires all CAHs to make available 24-hour emergency services and 24-hour nursing services, although they are not required to staff inpatient beds unless an inpatient is present.

Three-fourths of CAHs have outpatient rehabilitation, specialty clinics, radiology, laboratory, and swing beds, and at least half have inpatient rehabilitation, and inpatient and outpatient surgery. Relatively few CAHs (27%) offer obstetric services. The service most commonly eliminated after conversion was home health, largely due to BBA reimbursement restrictions that occurred simultaneous to conversion. 
We found very little evidence of services being dropped as part of the CAH conversion. On the contrary, we found evidence of expansion of existing services, especially outpatient specialty clinics, outpatient surgery, radiology and laboratory services. 

Nearly a quarter of responding CAHs have expanded their laboratory and radiology services. The new opportunity to recover capital costs through cost-based reimbursement allows CAHs with relatively small capital needs to finance new construction or acquisition from loans and be reimbursed after submitting Medicare cost reports. 

The number of hospitals offering outpatient surgery did not change much from pre- to post-conversion, but a surprising number of hospitals expanded their surgical services. Site visit teams saw many hospitals expanding the use of specialty clinics. 

We found some evidence that hospitals more recently converted to CAH status differ from earlier converters in scope of services, and specifically, in being more likely to offer surgery, obstetrics and intensive care. We also found that network affiliations have contributed to the expansion of services.

Quality of Care 

Quality of patient care is one of the five principal goals of the Flex Program. We had anticipated, however, that states and hospitals might not address this goal until later, given the challenges of the goals of conversion and network development. Unexpectedly, we found that CAHs and states identified substantial interest and involvement in quality assurance and quality improvement (QA/QI) activities despite the short time since conversion and the limited number of CAHs that were accredited. The timing of the Flex Program fortunately coincided with overall hospital industry trends to reinvigorate quality activities.

CAHs face substantial challenges in pursuing quality initiatives by themselves. The Flex Program encourages CAHs to use linkages with external entities to support their quality-related efforts, and we found good evidence of the value of linkages with support hospitals, state hospital associations and peer review organizations (PROs). Our survey data reveal the majority of CAHs used network relationships with their affiliate or support hospital to stimulate new QA/QI activities but less than one-fourth of CAHs developed relationships with their local PRO beyond those required by the federal government. 

Hospital Administration 

Because the Flex Program requires implementation in each participating rural hospital, strong hospital administration is vital to the success of CAHs. Individual hospital administrators and their governing boards are responsible for the success or failure of America's rural hospitals. In contrast, it is the rare urban or suburban hospital that sinks or swims on the performance of a single administrator.

Administrator turnover was found to be associated with being in a financial loss position, as well as a serious barrier to strategic decision making and stability. Almost a third of CAHs had more than two administrators in the past five years. Hospitals with lower turnover tended to be in communities that were rated "supportive" by the administrators. Communities that support their hospitals with tax dollars have lower turnover in their hospital administration, as well. 

Hospital Finances

An analysis of the financial performance of CAHs was conducted in several ways. The 40 CAHs visited in Years 01 and 02 completed questionnaires to help us understand their financial condition. The telephone survey of CAH administrators documented their estimates of both anticipated and realized improvements in Medicare payments. Lastly, Medicare cost reports were analyzed for rural hospitals between 1996-2000 (data for the year 2000 was available for approximately 13% of all rural hospitals). Financial ratios were calculated for groups of hospitals to allow comparisons of hospitals that elected to convert from PPS to cost-based CAH reimbursement, to their non-converting peers, to the former Primary Care Hospitals (PCHs), and to other larger rural facilities.

Responses to the telephone survey of CAH administrators confirm that the expected benefit from cost-based reimbursement was the chief reason that hospitals considered participating in the Flex Program. Substantial increases in Medicare payments were projected by financial feasibility studies that had been conducted by hospitals prior to making the decision to convert, and the amounts of projected increased revenue were frequently as great or greater than the administrators' estimates of their net operating losses in recent prior years.

Analysis of financial ratios shows that profitability for all types of rural hospitals decreased over the study period, but that the group of hospitals that chose to convert tended to have even lower operating margins than other rural hospitals. In measures of liquidity or of labor efficiency there was little difference through 1999 between the median values of CAH converters and those of other small rural hospitals, nor was there much change over time in these indicators. Several ratios for the converting CAH facilities appeared to improve, however, in 2000.

Primary Care Hospitals (a precursor status to CAH) from the early demonstration states continue to be severely financially distressed. They scored worse than later-converting CAHs (as a group) on nearly every financial indicator and in nearly every year of the study.

Physician Relationships to CAHs

Project HOPE's Walsh Center conducted a mail survey of physicians who are affiliated with one of the 158 CAHs that had been designated prior to April 2000. Survey data indicate that most affiliated physicians (about 70%) support the facility's decision to become a CAH - a finding that is consistent with the claim of the typical CAH administrator, during the Tracking Team site visits, that the medical staff is supportive of conversion. Survey results suggest that some of this support stems from perceived effects of the CAH on stability of the community's health care infrastructure. In addition, about 27 percent of affiliated physicians indicated that the CAH conversion affected the community's ability to attract other physicians; of these, 70 percent believed that conversion improved the community's ability to attract physicians.

Survey data suggest that conversion per se does not appear to have affected the day-to-day practice of medicine by physicians who affiliate with a CAH. Most physicians reported no changes in the volumes of in- and outpatients, nor did most physicians report perceived changes in inpatient outcomes and outcomes of emergency room (ER) patients that could be attributed to conversion. Conversion has not been painless, however. During interviews with a number of administrators, many indicated to Tracking Team members that utilization review activities have been implemented after or immediately prior to conversion. A number of surveyed physicians indicated that their practice was adversely affected by challenges from CAH administration to limit treatment of certain types of conditions at the CAH (12% of CAH-affiliates), and a larger number reported unhappiness with challenges by CAH administration to reduce inpatient length of stay (28%).

Strategic Positioning 

During the first year of our effort, we documented numerous examples of CAHs responding to stressful market conditions with expansive, rather than defensive strategies.

The CAHs we visited reported that the major strengths of their "infrastructure" rest with their governance. By far the most frequently noted strength in the "internal process" area was the quality of care. In rank order, the site-visited CAHs felt that their major strengths in the "customer area" were their relations with the state office of rural health, relations with the state hospital association, and outpatient visits. The financial perspective of the Balanced Scorecard (see Chapter 3F) was reported as the lowest area of strength.

The top problem named by the CAHs was "insufficient inpatient census." Over half of the site-visited CAHs reported that recruitment and retention of their labor force was a major problem.

One of the major indications of the extent of an organization's strategic positioning efforts is its strategic plan. Two-thirds of the 33 CAHs in the case study reported having a formal, written strategic plan. Only one strategic initiative area was cited by half or more of the site-visited CAHs: modernizing facilities and equipment.

Emergency Medical Service Systems 

The federal grant program associated with the Flex Program authorizes use of these funds for improvements to rural EMS systems, and FORHP requires states to address EMS improvements in their annual applications for grant funding. Apart from such grant-funded EMS projects, it is also possible that hospital conversion to CAH status may, in and of itself, bring about changes in the community's EMS system or in the CAH's provision of emergency services. For these reasons, we tracked changes in rural EMS systems associated with the Flex Program grants and with CAH conversions. Data were drawn from the telephone survey of certified CAHs, review of state grant applications, follow-up phone calls with sites visited during Year 01 of the Tracking Project, and new site visits conducted during the current year.

Data from the survey of certified CAHs showed that there have been few changes in local EMS systems, or in CAHs' provision of emergency services, following conversion to CAH status. Most EMS changes observed under the Flex Program, therefore, are likely to be the product of the grant-funded state initiatives rather than the CAH conversions alone. Approximately three-quarters of the CAH administrators surveyed felt the local EMS system was currently working well. They did, however, frequently cite problems with recruitment and retention of EMS personnel, inadequate funding/reimbursement, and lack of training opportunities as significant problems facing their EMS systems. Thus, state initiatives to address these problems would seem to be particularly appropriate uses of Flex grant funds.

Review of the states' grant applications for Year 02 revealed significantly more attention and funds for EMS initiatives than in Year 01 of the grant program. More states are now moving into the "second generation" of the Flex grant program, with state plans completed and the CAH conversion process well in hand. Increased attention it now turning to other aspects of the Flex Program-including rural EMS improvements. States planned to spend between $3 and $4 million of the Year 02 grant funds on EMS projects (see Appendix B). 

Many states are using Flex "mini grants" specifically for EMS improvement projects. In most cases, these grants are made directly to CAHs, but a small number of states are explicitly distributing funds directly to EMS systems or other non-CAH entities.

In keeping with the flexibility afforded to the states in the use of Flex grant funds, we observed much variation in the states' EMS initiatives. Nonetheless, some activities were common to a large number of states. Training initiatives-including clinical training in all aspects of emergency care for EMS personnel, hospital personnel, and medical directors, as well as training in management, billing, and data entry-were the most popular EMS activities carried out by the states. EMS needs assessments were another popular activity in Year 02, either as a continuation of assessments begun earlier or as a new activity. The states vary in the degree of central control they maintain over the assessment process as well as in the degree to which decisions about subsequent activities are made by the state or left to the discretion of communities. Some states are using the Flex Program funds as a "carrot" to encourage local collaboration by requiring relevant parties to cooperate on a common EMS project in order to receive grant funds.

Other activities proposed by a large number of states included the establishment of pre-hospital data collection systems and the purchase of computer hardware and software (to support the data systems, distance learning programs, and/or billing systems). Several states are using Flex Program funds to support the implementation of EMS billing systems. Still other states are using funds to further the development of regional EMS systems or to encourage additional integration of the local ambulance service and the CAH, including CAH ownership of the ambulance service.

The second year of the Flex Program grants has brought increased attention to rural EMS initiatives and, in many states, is fostering stronger working relationships between the state office of EMS and other state bureaus. In some states, new working relationships have also been forged at the local level between EMS interests, hospitals, and other local stakeholders, further strengthening the rural health care infrastructure. Efforts to involve all key players from the very early stages, and to build consensus for common goals, appear to be very important to the successful design and implementation of EMS initiatives. It is also clear that fundamental change will take more time. While it may not be realistic to expect sweeping improvements in time to inform the upcoming reauthorization decision, the next year will be critical as states continue to develop substantial EMS improvement projects and document their early successes.

Networks 

A condition of state participation in the Flex Program is that the state must establish at least one rural health network. The network must contain at least one CAH and at least one other acute care hospital with which the CAH has established an affiliation agreement for transfer and referral arrangements. Although the federal law and regulations could be interpreted as requiring only one network per state, we found that the majority of participating states require network formation for every CAH they certify. 

Network development activities exhibit a range of forms and functions, with the majority representing horizontal (hospital-to-hospital) linkages. Networking activities tend to be more evident in states that were devoting resources to networking before the Flex Program was launched.

All but one of the CAHs we surveyed had an affiliation agreement with another hospital. Forty-five percent of the CAHs in the phone survey were owned or leased by a system or under a management contract. The five most frequently identified activities conducted by networks include patient transfer agreements, quality assurance or improvement activities, referral arrangements, specialty services and administration (in that order). There was a dramatic increase in the activities from pre-CAH to post-CAH status.

Local Networking

Our survey and site visits lead us to conclude that relatively little formal networking is taking place between CAHs and local non-hospital providers. Fewer than one-third of surveyed administrators said they met monthly with other community health care providers, and almost seven percent said they "never met" with these people.

CAHs whose administrators meet with local providers at least monthly enjoy higher community support generally than those who meet less frequently (70% of frequently-meeting CAHs report their communities as "highly supportive" vs. 50% of administrators who meet less often). We also found that CAH administrators who meet at least monthly with other local providers are more likely to enjoy tax support (two-thirds of those who meet frequently get tax money; more than three-quarters of administrators in communities without tax support don't meet regularly with local non-hospital providers).

Community Development

While the FORHP has not established "community development" as one of its five main goals for the Rural Hospital Flexibility Program, it has certainly encouraged states to support such activity in rural communities, and it has funded efforts at the local, state and national levels to promote it. Here, we define community development efforts as those activities that actively engage community members ("stakeholders") in decision making related to local health care. 

Of 30 state offices of rural health responding to an e-mail survey, 83 percent indicated that they were using some of their Flex Program grant dollars to conduct, facilitate or promote community development activities in CAH locales. Two-thirds of these state offices reported that "many" communities were, indeed, taking advantage of conversion as an opportunity to engage in community development, and 86 percent of the states were convinced these activities were valuable.

Non-Conversion 

We interviewed 47 state Flex Program coordinators (part of UNC's regular data collection activities) and called 36 administrators of "non-converted" hospitals. With very few exceptions, we believe hospitals made the decision to convert or not after rational and thoughtful study of the issue. All of the non-converted hospital administrators we interviewed had gone through financial feasibility studies and weighed the financial pros and cons of conversion. 

Early in the Flex Program, state grantees compiled lists of hospitals that appeared to be eligible for CAH conversion. Because states used different criteria to identify their potentially eligible hospitals, some lists included hospitals that were only marginally likely to convert. Because the program offered cost-based reimbursement that would (presumably) bolster the hospitals' financial performance, the assumption was that all qualifying hospitals should convert to CAH status. Our analysis has shown, however, that the CAH program does not necessarily offer benefits to all eligible hospitals, and that many should not convert. Prime reasons include unwillingness to downsize and the lack of anticipated financial benefit in many cases.

Conversion will remain an opportunity that works for some small rural hospitals and not for others. In all likelihood, some converters will drop CAH status as their operations change, and some non-converters may later make the decision to convert to CAH status if they find evidence that conversion would be in their best interest. Federal policy makers should keep in mind that this program will remain a targeted opportunity and not all small rural hospitals will convert.

Continuing Issues

America's small rural hospitals have largely benefited from the Flex Program, whether they converted to CAH status or not.^iv There are, however, some continuing challenges for CAHs and the Flex Program, which include:

The Number of Participating Hospitals:  Some states seem to have a looser policy of including all eligible rural hospitals, while other states have more strict program entry requirements. This range of approaches leads to a variety of hospital profiles in the program.

Capital Expansion:  Many of America's small rural hospitals were built with the support of 1946-1970s era Hill-Burton Act funds. These facilities are collectively beginning to show their age and obsolescence. During the 1997-2000 period of the CAH program, participating hospitals' average age of plant was about 12 years, although a more desirable number is 9 or 10.^v Improved cash flow may allow participating hospitals to improve their facilities, but policy makers may want to consider whether cost reimbursement is the best vehicle for supporting capital improvements. Perhaps a directed capital program with more explicit rules and policies (and for which additional aging hospitals could qualify) would be a more straightforward approach.

Medicaid and Indian Health Service:  The lack of cost-based reimbursement from Medicaid is proving to be a barrier to CAH conversion in some states. Only 19^vi states have implemented cost-based payment for CAHs under their Medicaid program. Payments from the Indian Health Service (IHS) are not cost-based. Enhanced Medicaid and IHS payments for inpatient and outpatient services could contribute significantly to improving the financial viability of many CAHs, especially those offering obstetric services. 

Swing Beds:  The swing bed component of the CAH program allows small rural hospitals to move patients into skilled-nursing-facility type "swing beds." This provision benefits Medicare patients by avoiding transfers, and provides the hospital an opportunity to continue to serve these patients after discharge from an acute bed. The requirement that a 146-question Minimum Data Set (MDS) form (with multiple sub-questions) be completed for each of these patients was proving to be a significant burden; however, it was recently announced that CMS will now accept an abbreviated version of the MDS for swing beds. Additionally, some states require certificate of need applications for CAHs who did not already have these swing beds in place, delaying or stopping the hospital's conversion.

Distinct Part Units:  Another significant barrier to conversion-especially in the southern states-is the requirement that special inpatient care service unit beds be counted as part of the facility's total bed count. Those units-usually geriatric psychiatric or rehabilitation programs-often disqualify otherwise eligible small rural hospitals from CAH program participation (it makes their bed counts and-more importantly-lengths of stay too high).

Ambulance Rules:  Cost-based reimbursement for ambulance systems owned and operated by CAHs is available only if they are 35 miles from another ambulance system. This rule may need to be refined to account for special circumstances such as travel conditions and types of services being provided by competing ambulance providers. There are cases where hospital-owned ambulance systems cannot meet the mileage requirement and are therefore at risk of financial failure. This provision may also be a deterrent to CAH acquisition of local ambulance services, since any new entrant could jeopardize cost-based reimbursement. Exceptions to the mileage requirement, however, would need to be tightly crafted to create the intended policy effects.

Workforce: A chronic and critical problem facing rural hospitals is the recruitment and retention of nurses, technicians, midlevel practitioners, and physicians. Our site visits confirmed that conversion to CAH status is not a cure for this problem, although increased cash flow has allowed CAHs to pay more competitive wages.

Meaningful Networks:  There are incentives in the CAH program for hospitals to create relationships with hospitals in other communities to facilitate patient transfers and referrals, support QA/QI activities, share the burdens of administration, enhance purchasing power, and bring specialists to rural communities. Movement toward integrating health systems vertically within communities, however, has not taken place in most communities. As this was not an explicit policy goal of the Flex Program, there are no explicit incentives to bring together hospitals, nursing homes, ambulances, or mental health services into more efficient delivery systems within single communities. As CAHs mature, the need for and likelihood of vertical linkages could increase. Likewise, current linkages between CAHs and their referral hospitals could be strengthened in many ways as the network relationship matures.

There has been remarkable progress in the Flex Program to date. Conversion to Critical Access Hospital status seems to have helped over 400 hospitals improve financial performance, address quality issues, and network with other hospitals. States are also making progress on improvements to their rural EMS systems. However, America's small rural hospitals still face many significant challenges to their survival.

Next:  Introduction

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Footnotes

ⁱ States had predictable patterns during the conversion phase of the program, but this next phase of the Flex Program involves more complex activities aimed at tackling the other goals of the program. We are calling this next phase the "second generation." 

ⁱⁱ The total number of critical access hospitals changes continuously; for the most current information on CAHs, please refer to the Tracking Team's Web site: http://www.rupri.org/rhfp-track. 

ⁱⁱⁱ The BBRA provision believed to have the greatest influence on the number of hospitals eligible for CAH status is the change from a 96-hour limit on individual patient stays to an annual 96-hour average patient length of stay.

^iv Eligible hospitals are conducting financial feasibility studies, usually fully paid from Flex Program grants, that have the potential to improve financial strategies even if the hospital does not convert. Additionally, some eligible hospitals are participating in EMS improvement activities, sending staff to statewide CAH meetings, and engaging their boards and communities in explicit discussions about hospital roles, scope of services, and missions. 

^v Zismer D, & Hoffman D. A 10-Point Strategic Checklist for Rural Health Care Systems. Journal of Rural Health. 

^vi The total number of states with Medicaid cost-based reimbursement has changed since the writing of this report; for the most current information on Medicaid cost-based reimbursement and the states, please refer to the Tracking Team's Web site: http://www.rupri.org/rhfp-track/. 

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