Service Changes, Utilization, and Financial Performance After Critical Access Hospitals Join Hospital Systems

TL;DR

This study examines how joining a hospital system affects rural hospitals, finding reduced inpatient use but improved financial performance.

Contribution

The study provides new evidence on the financial and operational impacts of hospital system affiliation for rural critical access hospitals.

Findings

Joining a hospital system led to a 1.3% increase in financial profitability for critical access hospitals.

Inpatient utilization metrics like discharges and admissions decreased significantly after affiliation.

Most healthcare services offered by critical access hospitals remained unchanged after joining a system.

Abstract

Introduction: Rural hospitals continue to close at unprecedented rates. Joining a hospital system is one strategy some hospitals have taken to avert closure. The objective of this study was to evaluate changes in services, utilization, and financial performance after a critical access hospital (CAH) joins a hospital system.

Methods: This retrospective cohort study used American Hospital Association Annual Survey data and Centers for Medicare and Medicaid Services Provider of Services and Cost Reports data to evaluate changes after a CAH joined a hospital system between 2011 and 2021. To identify whether service provision by CAHs changes following hospital system affiliation, the proportion of CAHs offering each service before and after joining a system was evaluated. A multivariable, interrupted time series model was utilized to investigate changes in utilization and financial profitability up to five years prior to and after joining a system.

Results: A total of 202 CAHs joining a system during the study period were evaluated. Minimal changes in the types of services offered were identified following system affiliation. Specifically, among the 36 different healthcare services evaluated, 34 did not undergo significant changes upon network membership. After joining a hospital system, there was a reduction in the proportion of Medicaid discharges (7.4% vs. 8.2%, p<0.05), Medicare discharges (51.3% vs. 53.6%, p<0.001), average daily census (15 vs. 18, p<0.05), inpatient days (5,447 vs. 6,346, p<0.05), and total facility admissions (555 vs. 649, p<0.01) at CAHs. An increase of 1.3% in CAH profitability (p<0.001) was observed following hospital system affiliation.

Conclusion: While CAHs appear not to change the services provided after joining a hospital system, a reduction in inpatient utilization and an increase in financial profitability were observed. These findings have important implications for healthcare leaders and policymakers interested in ensuring rural communities maintain access to healthcare.

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