Sequestration harms rural providers
As we head into our first full week of sequestration, many in Washington are seemingly ho-hum about the repercussions of the cuts. In fact, just yesterday, the House of Representatives released its spending request for the remainder of this year (a continuing resolution for funding for the remainder of FY2013), and sequestration cuts were included in the proposal. An attitude in DC is growing that the cuts just aren’t that big of a deal: If partisan bickering prevents a thoughtful budget plan, the hatchet-approach cuts, though not ideal, are better than no cuts at all. This is a dangerous situation for rural safety net providers and the rural communities they serve. Small rural hospitals and health provider groups operate at the narrowest of financial margins – NRHA has long argued that a two-percent across the board cut to Medicare providers disproportionately harms rural providers and will cause damaging repercussions. The data backs this up. An independent company that tracks financial quality of U.S. hospitals, iVantage Health Analytics, conducted a recent analysis of the impact of sequestration on rural hospitals by measuring patient revenue, impact of operating profit margin and job loss results. The study concluded that sequestration will result in over $482 million in lost Medicare revenue for rural hospitals, averaging -6.27% in profit margin. In fact, nearly twice as many rural hospitals would switch to negative financial margins as urban hospitals. Such losses will force many rural hospitals to reduce staff and services to Medicare beneficiaries. A loss of revenue to a rural hospital directly equates to a loss of revenue for the entire rural community. Over 2000 job losses in rural America are projected due to sequestration. That’s significant - - a rural hospital is often the largest or second largest employer in a rural community. If the hospital suffers, the rest of community suffers due to loss of direct revenue, and also the inability to retain or recruit not only health care providers but other businesses. Rural hospitals are safety net providers. Rural populations are older and poorer than their urban counterparts. Additionally, they are more likely to not have private health insurance and have a higher percentage of chronic disease such as heart disease and diabetes. Sequestration cuts are a big deal in rural America. Rural safety net providers should be carved-out of sequestration cuts to protect the 62 million rural patients they serve.