Critical access hospitals, which turned 25 in 2022, are vital to providing health care in rural areas; Kentucky has 28 of them

Update 1/3/2023: This story has been updated to correct the number of Critical Access Hospitals in Kentucky to 28. 

By Melissa Patrick
Kentucky Health News

Critical access hospitals celebrated their 25th anniversary in 2022. The designation was created to ensure the financial viability of the nation's small, rural hospitals. Kentucky has 25 28 of them, and at least one health official says they may be more important now than ever. 

"I could even make the argument, they're more important today than they were 25 years ago just simply because the stress and strain that's been put on the healthcare system in general gets tougher every year," said Hal Clark, vice-president of the Kentucky Hospital Association's solutions and member-services group. 

Barbourville ARH Hospital serves mainly Knox County.

Barbourville ARH Hospital CEO Charles Lovell also pointed to the value of CAHs, noting that during the pandemic they had to turn offices into patient rooms because there were so many patients and larger hospitals couldn't accepts transfers. More recently, he said, they have been near capacity because of respiratory illness.

"We are the lifeline for many of those patients," he said. "I just want people to realize that even though critical-access hospitals are smaller hospitals inside, we're not smaller in the care and the quality of care that we provide." 

The CAH designation came about after the closure of more than 400 hospitals during the 1980s and 1990s. The legislation that created the designation, spearheaded by Montana Sen. Max Baucus, was aimed at reducing the financial vulnerability of rural hospitals and improving quality, while also improving access to health care by protecting essential services for rural communities. 

Two key requirements for a CAH is that it have no more than 25 acute-care inpatient beds and be more than 35 miles from another hospital, with some exceptions. In return, CAHs are reimbursed at 101% of the costs reported to Medicare for inpatient, outpatient, laboratory and therapy services, as well as post-acute care in the hospital's swing beds, which are beds that allow for the care of acute patients as well as those who need skilled, longer-term care.

Lovell also spoke about how important expansion of the Medicaid program has been to the viability of rural hospitals. More than 400,000 Kentuckians gained health insurance coverage through Medicaid after the state expanded the program in 2014 to people who earn up to 138% of the federal poverty level, under the Patient Protection and Affordable Care Act.

"We, as hospitals, are fortunate that Kentucky adopted Medicaid expansion," Lovell said, calling it a "financial windfall" because it led to more of their patients having health insurance. He said 80% of the Barbourville hospital's revenue comes from Medicare and Medicaid. 

Clark, of the hospital association, called CAHs "an absolutely critical piece of the puzzle" when it comes to taking care of rural Kentuckians and said the state would be in a tough position without them. 

"If those hospitals were to close, in an under-served, very rural part of our state, then patients that needed to access health care are going to have to drive very long distances to receive care," he said. "That could mean the difference between life and death for some people. And so it's very important that those services remain viable and remain available to people in rural parts of our state." 

Further, he said, transportation remains a huge barrier to getting care for many Kentuckians in rural areas and CAHs provide much needed services close to home. 

These small hospitals are also important economic engines in their communities, Clark said. Hospitals are often one of the largest employers in rural communities, with some of the best-paying jobs. 

Rural hospitals continue to experience financial, operational and staffing challenges, and whether they have one patient or 25, they must remain fully operational, said Lovell. 

But Lovell said his hospital is not considering converting to the new "rural emergency hospital" program that allows hospitals with 50 or fewer inpatient beds to convert to outpatient-only service.

"As health care evolves, we may have to look at things differently," he said. "But we all want to be around 25 years from now." 

Clark said none of the qualifying rural hospitals in Kentucky are actively pursuing then new option, but  KHA has encouraged them to be aware of the program and to know it is an option going forward.

Emily Baumgaertner of The Washington Post wrote recently about the program, "The government’s reasoning is simple: Many rural hospitals can no longer afford to offer inpatient care. A rural closure is often preceded by a decline in volume, according to a congressional report, and empty beds can drain the hospital’s ability to provide outpatient services that the community needs. But the new opportunity is presenting many institutions with an excruciating choice."