Northern Illinois University

NIU Office of Public Affairs


News Release

Contact: Diana Robinson, NIU Regional Development Institute
(815) 753-0955

June 22, 2006

Rural 'critical access' hospitals in Illinois grow
stronger with federal assistance, NIU study shows

Program saves lives, breathes economic life into counties

Springfield, Ill. — A federal program that guarantees reasonable reimbursement for Medicare patients is saving and improving the participating rural hospitals while invigorating their local economies, a Northern Illinois University study released today shows.

The Critical Access Hospital Program translated to a $775 million economic impact in 44 counties throughout Illinois during 2005 alone.

Thirty-four of the state's 51 “critical access hospitals” provided input for the NIU Regional Development Institute report, which was presented today in Springfield at the Illinois Hospital Association's Small and Rural Hospitals 27th annual meeting in conjunction with the Illinois Critical Access Hospital Network.

“NIU's report really helps us to tell our story and show the tremendous strength of the program,” said Pat Schou, executive director of the Illinois Critical Access Hospital Network. “If you don't tell your story, you don't demonstrate your value and can be taken for granted. We can't be taken for granted. These small hospitals are still fragile.”

“This study documents the value of the federal CAH program to rural Illinois and how vital our 51 small rural hospitals (CAHs) are to their communities,” said ICAHN President Nancy Newby, CEO for Washington County Hospital in Nashville, Ill. “Had it not been for the CAH program, more than half of our 51 CAHs would have closed or been near closing.”

Created by Congress in 1997, the Critical Access Hospital Program essentially means two things: residents of rural areas are assured access to modern and quality health care close to home while the hospitals literally stay in business and experience a cash flow thanks to the Medicare reimbursements and rising demand, use and service charges.

Thus far, 1,279 hospitals throughout the United States have been designated.

By agreeing to limit their number of patient beds and to provide around-the-clock emergency care, the hospitals qualify for federal reimbursements of 101 percent of their reasonable health care costs. This reimbursement rate means an extra margin of revenue that allows these small, financially vulnerable hospitals to keep their doors open.

While not a windfall, the program does allow hospitals to raise staffing levels and salaries, attract better practitioners, enhance and expand services, purchase modern equipment and make much-needed capital improvements to keep pace with changing needs.

Escalating hospital expenditures and employee salaries pump more money into their communities while more jobs are created for local residents, who are hired for capital projects or for permanent positions on the staff.

And for the rural elderly – the least able to afford health care or to travel far for it – the program has an impact beyond measure.

“This program saves lives,” said Harry Wolin, administrator and chief executive officer of Mason District Hospital in Havana, Ill. “There are people who are alive today because of this program. That's how important this is to the people in our rural communities. If they had to travel the extra distance to get to an urban center, they would not make it.”

It's also saved the hospital, Wolin said.

Mason County, along the Illinois River in the rural west-central part of the state, is home to about 18,000 people.

“Whether or not Mason District Hospital would be here today without this program is very much open to question,” Wolin said. “The federal government is spending additional dollars it wouldn't otherwise have spent on rural health care. Those funds make a difference in our communities.”

Among the report's other key findings:

  • The CAH Program resulted in immediate and sustained improvements in revenues for almost every hospital that participated in the study and in improved profitability for the majority of hospitals. However, a number of hospitals still struggle financially.
  • CAH designation enabled many hospitals to add clinics and needed patient and community services and address deferred capital improvements, including a number of life/safety projects and routine repairs.
  • In 2005, CAH facility renovations and expansions resulted in an estimated additional $11.2 million in revenues to the county and short-term employment for about 570 construction workers. Capital improvements planned for 2007 through 2011 will produce an estimated additional $21.7 million in revenues and about 1,100 construction jobs.

The report was funded by the Illinois Department of Public Health Center for Rural Health and the Medicare Rural Hospital Flexibility Grant Program. Copies of the report are available online at http://icahn.org and http://www.rdiniu.org. NIU also can provide spreadsheets on specific hospitals and their 2005 financial impact on host counties.

For more information, call NIU's Regional Development Institute at (815) 753-1403 or ICAHN at (815) 857-2999.

# # #