- Associated Press - Saturday, December 20, 2014

ATLANTA (AP) - Months after Georgia allowed struggling rural hospitals to scale back their operations to save money, not a single facility has signed on.

Gov. Nathan Deal’s administration intended that unprofitable rural hospitals could scale back their services and just offer emergency care and a few outpatient services. Public health officials said reduced care was better than no care at all if a rural hospital closed.

Hospital executives were skeptical the plan would save much money. This fall, financial consultants told a state committee that freestanding emergency rooms would probably take a loss, likely discouraging any hospital from pursuing it.

“We haven’t been able to make the finances of it work,” said Jimmy Lewis, CEO of HomeTown Health, a network of rural hospitals. “There was never any enthusiasm right after it came out.”

The rule change applied to any hospital serving a county of less than 35,000 people, including hospitals that have been closed for up to a year. A freestanding emergency room could be no more than 35 miles from a general hospital and would have to offer around-the-clock care. They could provide out-patient surgical treatment and basic obstetric and gynecological care.

“Despite the fact that no one has applied, it’s still out there as an available option for facilities to consider,” said Jeremy Arieh, a spokesman for Georgia’s Department of Community Health. In addition to supporting the rule change, Deal appointed a committee to study how to stabilize local hospitals.

Analysts have cautioned the demographics of rural Georgia make it difficult for a hospital to break even, much less turn a profit. Rural areas tend to have higher-than-normal levels of poverty, large pools of uninsured people and too few patients. Industry data show an emergency room needs 35 to 40 visits daily to break even, said Charles Horne, an accountant for Draffin & Tucker LLP who modeled the performance of a freestanding emergency room in Georgia.

His models showed the facilities would suffer losses ranging from $400,000 to $1.2 million. Those figures did not include the cost of a hospital building and other equipment expenses.

Besides having too few patients, almost half would be covered by government-run insurance programs that pay nonhospital emergency rooms a less-generous fee designed to support a doctor’s office, which is less expensive to run. Hospitals get bigger payments since they have to offer more services and therefore incur more expenses.

“We’re still going to have the underlying socio-economic issues,” Horne said during a November presentation. “People will still lack health insurance, or if they do have it, it will be bare-bones coverage. And they’ll have difficulty in paying the bills.”

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Follow Ray Henry on Twitter: https://twitter.com/rhenryAP.


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