CONCORD, N.H. (AP) – Three small New Hampshire hospitals are enjoying a construction boom thanks to a federal program aimed at maintaining access to health care in rural areas.
New London Hospital started a $21 million renovation project last month – the smallest of the three approved this year. Huggins Hospital in Wolfeboro will spend $51.6 million replacing most of the facility built in 1923. Between $20 million and $52.2 million in renovations are planned at Monadnock Community Hospital in Peterborough.
A few years ago, it would have been difficult to imagine New London Hospital getting loans for the renovation. Financial missteps and an elderly patient population meant years of deficits for the rural hospital.
These days the hospital looks like a solid investment, in part because of new management that reduced costs and restructured relationships with doctors.
Hospital administrators say they could not have done the projects without help under the federal critical access program. The program was designed to address financial troubles particular to rural hospitals, which tend to be older and smaller than their counterparts in cities and suburbs.
For example, small community hospitals must keep their emergency rooms open 24 hours a day, but see fewer patients than a large urban hospital.
The federal Medicare system further strains the hospitals’ finances since its flat-fee reimbursement isn’t enough for hospitals seeing few patients to cover staffing and fixed expenses. Rural hospitals also tend to see a disproportionate share of the state’s elderly population, which means more of their patients pay with Medicare.
Research from the New Hampshire Center for Public Policy Studies found that Medicare’s rates only come to about 83 percent of the cost for providing services at the state’s larger hospitals that have higher patient volumes.
The federal critical access program helps shore up the smaller hospitals by allowing them to bill Medicare for 101 percent of their treatment costs.
The difference helps make up for the lower volume of patients.
Between 2000 and 2003, before the state’s rural hospitals converted to critical access, they lost money each year on average, according to the center.
The critical access program requires that hospitals to be far from another hospital, have fewer than 25 inpatient beds and have an average stay of less than four days.
The center’s research suggests that the program has made a difference. Of the 13 hospitals that enrolled, only one was still in the red, according to a 2005 study.
Bruce King, chief executive officer of New London Hospital, estimates the program has meant an additional $1.5 million a year in income to the hospital.
“In the past, we’d been going from year to year, and it’s been a struggle,” said Peter Gosline, the president and chief executive officer of Monadnock Community Hospital, which converted to critical access status in 2004. “This helps us stabilize it.”
The federal program also is helping the hospitals fix up aging facilities. Loans can count on federal Medicare payments to cover a significant percentage of the renovation.
“Obviously, the lenders are going to be looking at that favorably,” said Daniel O’Neill, Huggins Hospital’s vice president for finance.
The project will add more space for outpatient treatment and will expand specialty services. Patients will have more privacy.
New London Hospital will convert patient rooms to make them private and will increase space for physician offices and specialty services, like oncology and cardiac care.
Hospital administrators said that quality was a key consideration in their redesigns, but they also thought new facilities would be key to their survival. New buildings will allow them to keep pace with new technologies and treatments, but they will also help persuade local patients to choose them instead of traveling to urban hospitals for routine care, they said.
“People are just going to look at rundown facilities and make the judgment that these clinicians are no good,” King said. “How do you argue with that?”.
Information from: Concord Monitor, http://www.cmonitor.com