Shift to outpatient, emergency services keeps rural hospitals afloat

Editor's Note

More CEOs are considering rural emergency hospital (REH) designation, according to a February 12 article in Becker’s Hospital CFO Report.

In January 2023, REH was established as a new Medicare provider type to enable struggling rural hospitals to continue operating with outpatient and emergency services only, instead of closing. Within 13 months, 19 hospitals converted to the new designation, Becker's reports. The 20^th is pending, and even more hospital leaders are considering making the switch this year, Becker's reports.

By relinquishing their inpatient beds and focusing on outpatient and emergency department services, REHs receive a 5% increase in Medicare payments as well as an average facility fee payment of about $3.2 million a year. However, the article also details why discontinuing services is such a difficult decision in less-populated communities where patients are more likely to have complex needs, lack insurance, and face transportation and other barriers to care. For hospitals, staffing difficulties amplify the financial challenge.