Hospitals in rural Georgia haven’t taken advantage of a policy change intended to let them save money. According to Ray Henry of the Associated Press, the change allowed unprofitable hospitals to limit services to emergency room care and some outpatient services. It would apply to hospitals serving counties with a population less than 35,000 people that were no more than 35 miles away from a full service hospital.
From the beginning, though, there was a question over whether the plan would actually save any money.
Analysts have cautioned that the demographics of rural Georgia make it difficult for a hospital to break even, much less turn a profit. Rural areas tend to have higher-than-normal levels of poverty, large pools of uninsured people and too few patients.
Industry data show that an emergency room needs 35 to 40 visits daily to break even, said Charles Horne, an accountant for Draffin & Tucker LLP, who modeled the performance of a freestanding emergency room in Georgia.
His models showed the facilities would suffer losses ranging from $400,000 to $1.2 million. Those figures did not include the cost of a hospital building and other equipment expenses.
Emergency rooms are expensive for hospitals to operate because they have to remain open 24 hours a day, and there has to be staff on hand in case of, well, medical emergencies. In addition, emergency rooms are required by federal law to treat anyone walking in the door, no matter whether they can pay or not. And for many who are covered by insurance, the reimbursement for services provided to them is less than the cost of providing those services, especially in rural areas.
Just over a year ago, we talked about how changes brought on by the Affordable Care Act could affect charity and rural hospitals. The standalone emergency room rule change was one possible idea to address the issue. Unfortunately, it doesn’t appear to have had the desired result.
Two weeks ago, legislators at the Biennial listened to a panel discussion about the merits of setting up standalone treatment centers in order to cut overall healthcare costs. It’s an issue related to the policy change made in order to prop up rural hospitals. From the Morris News coverage of the panel discussion:
Hospital executives say they depend on the law that requires a state certificate of need before any health facility can open. Removing it would jeopardize an estimated 19 rural hospitals that are on the verge of closing, such as Putnam General Hospital in Eatonton.
“You take all the requirements off of hospitals to be open 24/7 and never being able to turn away a patient like these treatment centers enjoy, then our costs will go down,” said Gregory Hearn, the CEO of Ty Cobb Healthcare System in Royston.
How to lower overall healthcare costs while ensuring that all Georgians have access to the treatment they need is a challenging issue that could take up legislators’ time when the General Assembly meets in January. And that’s before the U.S. Supreme Court issues a decision on King v. Burwell, a case that could have a major effect on the viability of the Affordable Care Act.
It’s an issue that bears watching.