Topic
The article titled “Rural Hospitals’ Profitability: Which Special Programs Matter?” was written by Michael D. Rosko, Claudia Guerrazzi-Young, and Mona Al-Amin and posted in the Journal of Healthcare Finance. It addresses the issues of reimbursement of rural hospitals and seeks to evaluate which Medicaid programs help with the profitability of these hospitals and which ones make the situation worse (Rosko et al., 2023).
The longitudinal study analyzes the financial situation of over 2,200 hospitals over the course of seven years, between 2012 and 2019, and connects the financial performance of these hospitals to Medicare special programs in which they participate.
Findings
The article’s findings indicate that, in most situations, rural hospitals perform poorly compared to city hospitals, with the average deficit being around 7.4% compared to 1.5% of metropolitan hospitals (Rosko et al., 2023). When the programs were implemented, the budget deficit increased by 2.5% for rural hospitals versus 1.4% for city organizations (Rosko et al., 2023). The conclusion was that most Medicaid programs seeking to reimburse rural hospitals were worsening the situation. The article concluded that the government had to research different ways of helping hospitals and that the existing programs did not work.
The explanations for such results came from the fact that Medicaid, as is, did not fully encompass the hospitals in question, usually covering expenditures for in-patient services. Historically, these services have been notorious for creating lapses in payments, affecting hospitals’ operating and total incomes (Rosko et al., 2023). As such, when patients pay late, the refunds from the government come even later, and such a discrepancy affects the performance of the hospitals overall.
Another critical issue with rural hospitals compared to urban ones is connected to their clients’ general welfare state. People in rural areas are generally less wealthy when compared to those in metropolitan areas, while their health needs are either on par or exceeding due to exposure to hard labor, farming accidents, and the like.
As a result, they require more care while being able to afford less of it, which negatively affects rural hospitals (Rosko et al., 2023). Due to distances between settlements and healthcare organizations, rural areas are also more reliant on out-patient care, which is less covered by Medicaid compared to in-patient care (Rosko et al., 2023). Finally, the situation differs from one state to another since some areas do not accept Medicaid at all, and hospitals there remain unreimbursed.
At the same time, the implementation of Medicaid is associated with various bureaucratic expenditures and procedures. Doctors are being forced to try less effective drugs before moving on to better ones, as per the prescription of various agencies and insurance companies that get a say (Rosko et al., 2023). It could be one of the reasons why the programs turned out to be harming some of the hospitals instead of helping them, increasing ongoing costs while not providing much in terms of reimbursement.
Methodology Limitations
The methodology of the study, however, has several issues. While the methodology accounted for different types of hospitals, their leadership, missions, and objectives, it did not entirely encompass the overall economic situation and how it affected hospital performances (Rosko et al., 2023). It appears that between 2012 and 2019, all hospitals, no matter their location, suffered a decrease in profits over the years, regardless of the degree of affiliation with Medicaid. Thus, the degree to which these programs have failed is not entirely clear. However, it is obvious that in-patient programs alone are not enough to cover the entirety of services to make hospitals profitable. Medicaid has to reimburse all of the work provided by healthcare facilities to be effective.
Reference
Rosko, M. D., Guerrazzi-Young, C., & Al-Amin, M. (2023). Rural hospitals’ profitability: Which special programs matter? Journal of Health Care Finance, 49(1), 1-29.