Virginia Research Day 2021

The Value Surgical Services Bring to Critical Access Hospitals Nathanael N. Hoskins, OMS-III 1 , Marco A. Cunicelli, OMS-IV 1 , Wade Hopper, OMS-II 2 , Robert Zeller, OMS-I 2 ,

Ning Cheng, PhD 3 , and Tom Lindsey, DO, FACOS 2 1 Edward Via College of Osteopathic Medicine – Virginia Campus, Blacksburg, VA 2 Edward Via College of Osteopathic Medicine - Carolinas Campus, Spartanburg, SC 3 Edward Via College of Osteopathic Medicine - Auburn Campus, Auburn, AL

RECOMMENDATIONS FOR THE FUTURE

INTRODUCTION

RESULTS & SIGNIFICANCE

• A positive correlation was found between the number of surgical services offered by a CAH and the net income of that hospital (Figure 1 and Table 1). For every additional surgical service provided by a CAH, there was a mean profit increase of $778,442 ( P = <.0001). • A positive correlation was found between the number of surgical services offered by a CAH and the net percent income/loss of that hospital (Figure 2 and Table 2). CAHs without surgery programs (n=100) showed a mean net loss of –0.41%, while CAHs with surgery programs (n = 200) showed a mean net income of 1.61%. For every additional surgical service provided by a CAH, there was a mean net income increase of 0.82% ( P = 0.0381). ➢ 2/3 of the CAHs offered ≥ 1 surgical services. The most common services were urology (97%), orthopedic surgery (36%), and general surgery (22%).

• Future attempts to optimize policies which subsidize CAHs should consider the cost-effectiveness of surgical programs at these hospitals. Policymakers and healthcare systems should consider programs to recruit, train, and retain rural surgeons and surgical services for CAHs.

METHODS • A cross-sectional study was conducted on hospital cost using the publicly reported data by the American Hospital Directory (AHD) in August 2020. 6 • Using a 95% confidence interval (z=1.96, e=0.05), 80% power, α=0.05, population proportion of 50% (p=0.5), and a population size (N) of 1350, it was determined a sample size (n) of 300 would sufficiently represent all CAHs (Equation 1). ➢ 300 out of 1350 Critical Access Hospitals in the U.S were randomly selected for the study via Excel. 7 • To evaluate cost relative to the presence of surgical services, a multivariate linear regression model was created for each dependent variable relative to the independent variable of surgical services offered per CAH. ➢ Dependent variables included net income and net percent income. • An R 2 coefficient and a P-value were derived from each plot. All P-values were 2-sided and P <= 0.05 was set as the significance threshold. • Data were stored in a Microsoft Excel spreadsheet and statistical analysis was conducted by a biostatistician with Statistical Product and Services Solutions (SPSS) Statistics. Equation 1: Sample Size Calculation • In 1997, the United States federal government created the Critical Access Hospital (CAH) program as part of the Balanced Budget Act. 1 ➢ This program was designed to support rural hospitals which serve populations lacking healthcare availability and emergency services by increasing financial incentives from the federal government. • The incentives have helped sustain profitability and quality of care at CAHs. The CAH designation provides a hospital significant financial supplementation through guaranteed mortgages, access to pre-allocated grant money, increased Medicare reimbursement, and inclusion in the 340B Drug Pricing Program. 1,2 From 2011-2017, nonprofit rural CAHs were shown to be more profitable than rural hospitals lacking CAH designation. • Twenty-nine percent of all hospitalizations in the United States include a surgical procedure, and hospitalizations that involved surgery accounted for nearly half of all hospital revenue in 2011. 3 • Other articles have observed a direct correlation between the profitability of rural hospitals and their surgical volume. 4,5 ➢ Presently, no study has analyzed the relationship between net income and the number of different surgical services offered at CAHs. This study aims to quantify the value that surgical services bring to CAHs.

• If the National Health Service Corps (NHSC) program were expanded to include surgeons, it could ease the costs of starting and maintaining surgery programs among rural hospitals. Further studies could be conducted to analyze the benefit of surgical recruitment programs for CAHs and if these programs impacts the fiscal success of the facility.

Figure 2: Critical Access Hospital Percent Income/Surgical Specialty Offered

Figure 1: Critical Access Hospital Net Income/Surgical Specialty Offered

• Partnering with healthcare systems could help to financially support CAHs as evidenced by prior studies showing that this can improve clinical performance and quality metrics. 9

SIGNIFICANCE Table 2

CONCLUSION

Table 1

REFERENCES 1. American Hospital Association. Critical Access Hospitals: Legislative and Regulatory History. https://www.aha.org/2006-02-27- critical-access-hospitals. Published 2006. 2. CAH Vision Committee. Critical Access Hospitals: Planning for the Future. Illinois Crit Access Hosp Netw . 2010;(May). 3. Bai G, Yehia F, Chen W, Anderson GF. Varying Trends In The Financial Viability Of US Rural Hospitals, 2011-17. Health Aff . 2020;39(6):942-948. doi:10.1377/hlthaff.2019.01545 4. Karim SA, Holmes GM, Pink GH. The effect of surgery on the profitability of rural hospitals. J Health Care Finance . 2015;41(4):1-16. 5. Pink GH, Holmes GM, Thompson RE, Slifkin RT. Variations in financial performance among peer groups of critical access hospitals. J Rural Heal . 2007;23(4):299-305. doi:10.1111/j.1748-0361.2007.00107.x 6. American Hospital Directory (AHD). ahd.com. 7. Flex Monitoring Team. Critical Access Hospital Location List. https://www.flexmonitoring.org/data/critical-access-hospital- locations/. 8. United States Census Bureau. 2010 Census Urban and Rural Classification and Urban Area Criteria. 9. Joynt KE, Harris Y, Orav EJ, Jha AK. Quality of care and outcome in critical access rural hospitals. JAMA - J Am Med Assoc . 2011;306(1):45-52. • CAHs play an essential role in ensuring access to healthcare for individuals living in rural areas. CAHs face unique financial adversities including variable occupancy rates and high proportion of Medicare/Medicaid patients. • Among CAHs, net percent profitability is directly correlated to the number of surgical services offered. Hospitals providing three or more surgical services showed tighter group variance, thus more predictable profits than those offering less. • These findings indicate that CAHs would financially benefit from offering new surgical services or expanding existing ones. Public policies and administrative strategies that supplement surgical services are in the best interest of CAHs.

• The economic health of rural hospitals effects the health of rural Americans. Almost 1/5 th of the American population is considered rural. 8 Some rural hospitals know the fiscal benefit surgeons add but cannot recruit them due to a lack of funding and surgical workforce in rural areas. • This novel study illuminates an existing trend in which surgical services augment the profits of CAHs. Furthermore, it demonstrates that not having a surgery department, or having one that is underdeveloped, can be an economic disadvantage. • Furthermore, having multiple surgery services does seem to afford some protection against profit loss. Group variance tightened as the number of surgical services offered increased (Figure 2). There were no net losses >10% among CAHs with two or more surgical services. ➢ This may provide a buffer against the variability imposed by a low population density in the rural areas which the CAHs serve as CAHs not offering surgery were more susceptible to drastic fluctuations in profit. • While the expense of maintaining multiple surgery programs does impose some ceiling on the profitability of large hospitals, it makes up for it by providing a high profit floor. None of the CAHs offering three or more surgical specialties suffered net losses exceeding 2.5%. Net percent earnings among CAHs become more predictable as the number of surgical services increases.

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