More small rural hospitals in Oklahoma are joining larger systems

The number of Oklahoma's rural hospitals managed locally is shrinking. As health care grows more complicated and expensive, more and more of Oklahoma's rural hospitals are joining large health systems, which some say offer stability and resources to suffering institutions.
by Jaclyn Cosgrove Modified: October 13, 2012 at 1:20 am •  Published: October 15, 2012

In the 1980s, the way hospitals were reimbursed through Medicare changed. Before the early 1980s, hospitals were reimbursed dollar for dollar, Slabach said. If a service cost $100, the hospital got $100.

But in the 1980s, health care costs started to increase rapidly. In an attempt to cut costs, policymakers revised the Medicare reimbursement system, and hospitals started to be paid on a diagnosis basis.

If a patient came in with an illness that had a $5,000 reimbursement, and it cost the hospital $2,000 to treat the patient, the hospital made money. But if it cost $10,000, the hospital lost money, Slabach said.

“It is not meant for a small-volume facility ... to succeed under that system,” Slabach said. “It's based on the law of averages. If you don't have very many patients to spread your losses and gains on, then over time, you're going to always lose.”

The critical-access hospital program allowed small hospitals to go back to the dollar-for-dollar reimbursement system, he said. This slowed the closure rate and kept many facilities from closing.

It remains unclear what impact the 2010 Affordable Care Act, also known as Obamacare, will have on rural hospitals, he said.

Health care continues to become more and more complex, and as health care reaches that level of complexity, it's almost impossible for a rural community to have the resources available to meet the demands and requirements on its own, said Di Smalley, the regional president of Mercy's west communities.

“Joining a system makes sense for a rural community,” she said. “It provides access to a number of areas that a small community might not otherwise have access to or couldn't afford to have on its own.”

Matt Robison, the vice president of government affairs for the State Chamber of Oklahoma, said businesses look at two main things when choosing a location: access to health care and access to education.

If a community loses its hospital, it loses a major resource for economic development. And when a health system locates within a community, it adds stability to the future of that hospital, he said.

“It's not just one hospital relying on the health care of simply that one community,” Robinson said. “It's an entire network throughout the state helping to stabilize the hospital in any one community.”

Working together

In the 27 years that O'Connor has worked at Choctaw Memorial Hospital, two health networks, Integris and Quorum, have managed Choctaw County's hospital.

O'Connor said outside networks are not geared to a rural hospital's needs. Although Choctaw Memorial doesn't have a neurosurgeon or heart surgeon regularly at the hospital, its focus is keeping care within the community.

It recently joined the Southeast Oklahoma Rural Health Network, a collaboration of several rural hospitals in that area of Oklahoma. The network started as a health information exchange and developed into a way these hospitals can work together to provide resources that they might not be able to afford on their own.

O'Connor said she sees this type of collaboration as the future of rural health care in her community. Having a board and administrators who live in the community is important for the sustainability of a rural hospital, she said.

“We're not always about making $3 million or $4 million on a service,” she said. “I'm about building the business. Yes, we've got to eventually make a profit, but you build the business first, you offer the services, you provide good services, and you take care of your people.

by Jaclyn Cosgrove
Medical and Health Reporter
Jaclyn Cosgrove writes about health, public policy and medicine in Oklahoma, among other topics. She is an Oklahoma State University graduate. Jaclyn grew up in the southeast region of the state and enjoys writing about rural Oklahoma. She is...
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