What is the impact of health reforms on uncompensated care in critical access hospitals? A 5-year forecast in Washington State.

CONTEXT

The 2008 financial crisis had a far-reaching impact on nearly every sector of the economy. As unemployment increased so did the uninsured. Already operating on a slim margin and poor payer mix, many critical access hospitals are facing a tough road ahead.

PURPOSE

We seek to examine the increasing impact of uncompensated care on the revenues earned by Washington's critical access hospitals; to forecast uncompensated care to the year 2014; and to forecast the financial impact on rural hospital uncompensated care of HR 3590, the Affordable Care Act (ACA).

FINDINGS

For critical access hospitals in the state of Washington, total uncompensated care increased by almost $16 million, a 22% increase from 2008 to 2009. By 2014, total uncompensated care is forecast to more than double from 2009, totaling $174 million annually without health reforms. Using the Urban Institute's Health Insurance Policy Simulation Model, uncompensated care is forecast to fall by $106 million in 2014, thereby reducing the uncompensated care percentage from 5.31% to 2.07%.

CONCLUSIONS

Policy makers and health care managers should note that a substantial portion of the newly insured from the ACA will most likely be Medicaid participants. Given this source of lower revenue per case, critical access hospital administrators should seek additional public and private sources of revenue. Most importantly, rural hospital managers must maintain or improve their cost efficiency, while serving the needs of their rural population as we move closer toward the implementation of health reforms.