Federal designation increases financial viability

In an effort to remain financially viable and continue its tradition of providing exceptional health care, the New Ulm Medical Center is attempting to gain the federal designation of a Critical Access Hospital (CAH).

Throughout Minnesota, 15 other small to mid-sized rural hospitals hope to gain this designation by the end of 2005.

Over the years, small, rural hospitals have continued to see their expenses exceed revenues due to the fact that Medicare reimbursement only covers 60 to 80 percent of the costs of caring for Medicare patients.

If the medical center’s application to be licensed as a CAH is accepted, the Medicare program would increase its rate of reimbursement to 101 percent.

“This designation would make us more financially vital,” said Lori Wightman, president of the medical center. “These additional revenues would allow us to invest in new technology, we can maintain our building and there might be opportunities to expand new services and programs or keep those programs we thought we wouldn’t be able to support.”

Statewide, 68 medical facilities have already been named CAHs since it was created by the Congressional Balanced Budget Act of 1997. The intent is to help smaller, community hospitals, many of whom treat a disproportionate number of Medicare patients due to the rural nature of their communities, recoup some of the dollars lost due to Medicare’s inequitable reimbursement.

For instance, Medicare reimburses the medical center the exact same amount to treat a pneumonia patient for three days or seven days, no matter what the costs are to provide the care.

But for CAHs, Medicare bases reimbursements on an alternative formula that is more reflective of the actual costs.

“This is an opportunity we need to take advantage of,” Wightman said.

In order to receive the additional reimbursement benefits, critical access hospitals must meet certain operational requirements, including:

• A commitment to provide inpatient care, 24-hour emergency care, laboratory services and radiology services – all of which are already provided by the medical center.
• Limiting the number of hospital beds to 25. On average, the medical center’s daily census is 18 patients.
• Maintaining an average hospital stay of four days. In New Ulm, patients stay an average of three days. Under no circumstance will a patient be discharged earlier than appropriate.
• Formalizing an agreement to transfer patients to a larger hospital, as necessary. A formal arrangement has been made with Abbott Northwestern Hospital, ensuring that patient care will not be disrupted. Physicians will continue working with their patients to determine which hospital best meets their needs and referral patterns will not change.

The Medical Center Board of Trustees approved the plan at its Aug. 4 meeting.

Carisa Buegler, manager of marketing, said during the board members’ conversation prior to approving the application, they discussed whether the new designation would fit with the medical center’s mission to ‘serve the community by providing exceptional care, as we prevent illness, restore health and provide comfort to all those who entrust us with their care’.

“The board felt that it is their responsibility to take advantage of the program for the community’s sake because it will strengthen the vitality of the organization and because it’s directly in line with the mission to provide that quality of care,” Buegler said.

The application process takes about four months and includes an inspection by the Joint Commission for Accreditation of Hospitals and approvals by the federal Centers for Medicare and Medicaid Services.

New Ulm Medical Center
1324 Fifth North Street
New Ulm, MN 56073
507-233-1000
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