Economics and Rural Healthcare

1. Economics and Rural Healthcare Tim Putnam, DHA, FACHE CEO Margaret Mary Community Hospital, Batesville, Indiana

2. Economic Impact of Indiana’s Community Hospitals Rushville 230 Direct Jobs 370 Jobs total $20 Million in payroll (Direct and Indirect) $7 Million in other/non-payroll spending Total Annual Economic Impact from the Hospital (all direct and indirect impact) $33,192,217

3. Impact on Rural Communities Community Total Jobs Impact of Jobs • Salem 334 $25 Million • Winchester 316 $22 Million • Linton 354 $23 Million • Winamac 278 $18 Million • Tell City 387 $24 Million • Greencastle 405 $29 Million • Wabash 449 $33 Million • Angola 486 $31 Million • Rochester 556 $34 Million • Crawfordsville 541 $47 Million

4. Larger Communities Community Jobs Job Impact • New Castle 800 $58 Million • Washington 509 $41 Million • Logansport 815 $58 Million • Franklin 926 $68 Million • Madison 1,294 $103Million • Marion 1,314 $101 Million • Jasper 1,770 $123 Million • Vincennes 2,194 $149 Million • Valparaiso 2,301 $154 Million • Richmond 2,746 $168 Million

5. Healthcare Economics • Cost Shifting Issues • Medicare Patients (4 – 20%) loss • 40 – 50% of Patients • Medicaid 35+% loss, • 8%-15% of Patients • Charity and Bad Debt 100% loss, • 5 – 10% of Patients • Remainder are Commercially Insured

6. Small CommunityHospital with $10 million in Operating Expenses

7. Rural Specific Economics • Programs like Cardiac Surgery and Angioplasty are profitable (rarely performed in small community hospitals) • Generally older patient population with a greater percentage of Medicare (per capita income is $7,417 lower than urban) • Urban hospitals are paid at a higher rate by Medicare due to “Market Basket Adjustment” • Must care for whole population (No institution to care for uninsured and Medicaid)

8. Rural Healthcare • Rural residents: • Use tobacco, alcohol more frequently • Have higher rates of Hypertension and Cardiovascular Disease • Have higher rates of Suicide • Higher death rates due to Trauma • More frequently on Medicare and Medicaid

9. Physician Shortage • 20 - 25% of Population is rural • 10 % of Physicians practice in rural areas • Less than 7% of Physicians completing residency training practice in a rural area • Physicians are trained primarily in Academic Medical Centers • Inadequate programs to incentivize physicians to work in rural areas

10. Community Hospital Closures • 1980s & 1990s • 35 to 40 Hospitals closed each year • Closure left a void that is virtually impossible to fill

11. Critical Access Hospitals (CAH) • Balanced Budget Acts 1997 and 1999 • CAH program has over 1,300 hospitals to date • Since 1999 very few of these rural hospitals have closed • Exceptions are Oakland City and Huntingburg • Paid based on cost for Medicare

12. Accountable Care Act • Will Accountable Care Organizations inhibit collaboration and care coordination between institutions? • Expansion of Medicaid • Impact of Health Insurance Exchanges

13. Future of Rural Healthcare • 17+% of GNP • Healthcare is too expensive • Urban Centers have the political clout and financial strength • CAH Program and other Rural provisions in jeopardy • Federally Qualified Health Center (FQHC) • Rural Health Clinics