A limited-service rural hospital model: the freestanding emergency department

A rural hospital that has been downsized to a freestanding emergency department is an important model in that it offers a possible solution to a community's need to have emergency-care services locally available. This model could include other important local services, such as skilled-nursing and outpatient services. This study looks at the financial feasibility of a rural hospital shutting down acute-care services and maintaining emergency services. Expenses were determined, and changes to revenue and expenses were estimated. Reimbursement was assumed static. Medicare cost reports and hospital financial disclosure reports were used in investigating three model categories: an urgent-care clinic with emergency services; a hospital-based emergency department with an outpatient clinic; a hospital-based emergency department with an outpatient clinic and a hospital-based skilled-nursing facility. Even with best-case assumptions regarding continued reimbursement, results show only a small increase in net income and, in two cases, large losses compared with the size of the hospital operations. A subsidy would be required from the community or an affiliated hospital or network for the model to remain financially stable. The regulatory barriers to implementation are noted, as well as the potential problems with the human aspects of implementation--staffing, recruitment and retention, professional education and quality. If the model rural hospital is an affiliate or partner with one or more health care facility, which could assist with financial and staffing needs, it may be feasible.