Health Law (HL)

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Survival of the Commonwealth’s Rural Hospital System

By Lorianne Maria Sainsbury-Wong posted Fri July 11,2014 06:36 PM


Low Medicare and Medicaid reimbursement rates, increased uncompensated care to residents, and rising medical costs are factors contributing to the decreased sustainability of community hospitals.  Some hospitals had previously invoked protections as federally designated critical access facilities, under the Balanced Budget Act of 1997, which provides increased Medicare reimbursement rates; however, many hospitals in disadvantaged geographic areas of the Commonwealth are vulnerable to financial crisis.  That is due in part to lower patient volume, less medical expertise in specialized procedures, limited access to state-of-the-art technology, fewer patients with private insurance and an increase in patients with public coverage, underinsurance, or the uninsured.  Moreover, the Affordable Care Act (ACA) subjects hospitals to rate reimbursement decreases, while encouraging hospitals to integrate systems, control costs, and improve patient care.  Small hospital financial considerations, therefore, may include hospital closure, reduction in or elimination of less profitable services, or merger and affiliation with greater market-sharing facilities. 

To communities, the loss of a local hospital can devastate public safety and economic survival -- e.g., the recent North Adams Regional Hospital medical crisis. While the ACA mandates residents to obtain and maintain healthcare insurance, it also compels providers to evaluate programs and to reduce healthcare expenditures while improving the quality of services rendered.  Moreover, the ACA’s accountable care organizations and the Commonwealth’s Chapter 224 of the Acts of 2012 galvanize medical providers to improve the quality of healthcare services while minimizing cost.  To rural hospitals, the solutions are more frequently becoming mergers or affiliations with larger hospitals that have improved access to physicians, specialty services, updated technology and equipment, and reduced administrative outlay.


Let's consider what is now before us – Partners Healthcare System and the Massachusetts Attorney General Office’s proposed settlement agreement with respect to Partner’s acquisition of South Shore Hospital and Hallmark Health Corp.    Such commandeering healthcare transitions would ultimately have long term public repercussions not only on the local communities involved but also throughout the Commonwealth.  Private and public insurers, employers, and consumers may inevitably be compelled to cover the ‘cost’ of an increasingly, anti-competitive healthcare industry.