Rural Hospitals:

Federal Leadership and Targeted Programs Needed

HRD-90-67: Published: Jun 12, 1990. Publicly Released: Jun 12, 1990.

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Pursuant to a congressional request, GAO identified and reviewed programs targeted at assisting rural hospitals.

GAO found that: (1) multiple, interrelated factors contributed to the financial distress of at-risk rural hospitals; (2) at-risk rural hospitals had low patient volume, limited services, less technology, and higher costs per discharge; (3) there were many federal initiatives addressing at-risk rural hospitals, but, despite those efforts, many rural community hospitals were financially distressed; (4) problems remained because of shortcomings in program design, inadequate targeting, insufficient publicity, and ineffective monitoring; and (5) the lack of centralized information on the initiatives' outcome has prevented hospital and state officials from building on successes and avoiding failures.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: The issue has been preempted by a broader debate on health care reform. The issue of rural hospitals is likely to be dealt with in fiscal year 1993 as part of a much broader reform package.

    Matter: If congressional intent is to preserve rural residents' access to hospital care, Congress should require that essential hospitals that are financially at risk be given priority when applying for federal grants designed to assist rural hospitals.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Additional resources are not likely to be allocated in the near future, due to the significant budget constraints being experienced by HHS.

    Recommendation: To improve the coordination of federal, state, and hospital efforts and ensure that some entity with a broad perspective of the problems of rural hospitals can perform a substantive oversight and advisory role, the Secretary of Health and Human Services should ensure that ORHP is given the resources to evaluate the individual and combined impact of federal efforts to assist rural hospitals.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: The state offices of rural health programs have been developed. ORHP received more funding for this effort in the 1991 budget.

    Recommendation: To improve the coordination of federal, state, and hospital efforts and ensure that some entity with a broad perspective of the problems of rural hospitals can perform a substantive oversight and advisory role, the Secretary of Health and Human Services should ensure that the Office of Rural Health Policy (ORHP) is given the resources to serve as a focal point of information on state and local initiatives.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Not Implemented

    Comments: HCFA does not agree with the recommendation and no action is likely to be taken.

    Recommendation: To realize the full potential of the only federal initiative that targets essential rural hospitals in all states, the Secretary of Health and Human Services should direct the Administrator, HCFA, to, when awarding grants, include an evaluation factor that considers whether applicants are site community hospitals and, if so, whether they are financially distressed.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Not Implemented

    Comments: The Department of Health and Human Services (HHS) apparently requires congressional direction to revise its criteria to include measures of financial distress.

    Recommendation: To realize the full potential of the only federal initiative that targets essential rural hospitals in all states, the Secretary of Health and Human Services should direct the Administrator, HCFA, to monitor financial information on SCH to identify those in financial distress and ensure that they are assisted, as warranted, in applying for special payment provisions, grants, and other Department of Health and Human Services programs aimed at assisting rural hospitals.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Not Implemented

    Comments: No action is intended by HCFA because it believes it is not necessary.

    Recommendation: To realize the full potential of the only federal initiative that targets essential rural hospitals in all states, the Secretary of Health and Human Services should direct the Administrator, HCFA, to explore methods for refining current sole community hospitals (SCH) eligibility criteria to better ensure that hospitals providing essential services to their community are eligible for SCH designation.

    Agency Affected: Department of Health and Human Services

  6. Status: Closed - Not Implemented

    Comments: HCFA took limited action in early 1990 to clarify instructions for applicant hospitals. This action does not meet the recommendation, but the Department of Health and Human Services is not likely to go further.

    Recommendation: To realize the full potential of the only federal initiative that targets essential rural hospitals in all states, the Secretary of Health and Human Services should direct the Administrator, Health Care Financing Administration (HCFA), to develop instructions to guide potential sole community hospitals through the application process.

    Agency Affected: Department of Health and Human Services

 

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