Insight
June 26, 2020

The paradox of critical access hospitals

How is it that critical access hospitals score so highly on some metrics on the Lown Index and poorly on others? Here are some potential explanations behind these patterns.

By Judith Garber

Key Takeaways

  • Critical access hospitals (CAH) are very small rural hospitals that provide essential health services to the community.
  • On the Lown Index, critical access hospitals have higher rankings on average in patient satisfaction, pay equity, and avoiding overuse, compared to non-critical access hospitals.
  • However, critical access hospitals also have worse rankings in patient outcomes. This may be driven by disparities in financial resources and staffing, or because CAHs care for sicker patients with less access to regular health care.

In the past decade, 7 percent of rural hospitals closed, and about one in four are currently in danger of closing. The Covid-19 crisis may make things even worse for rural hospitals, many of which are ill-equipped to handle a flood of critically-ill patients or test for the virus on a large scale.

Small rural hospitals that provide essential health services to the community, designated as “critical access hospitals” by the Centers for Medicare and Medicaid Services (CMS), receive financial benefits from Medicare that can help them cope with these challenges. 

Yet an analysis by the Lown Institute Hospitals Index shows that despite the extra funding, critical access hospitals still lagged behind larger urban hospitals on many fronts, and may require more support to achieve better health outcomes (see Table below).

Table: Average rankings on all components for critical access hospitals

Critical access hospitals Not critical access
Number of hospitals 728 2634
Overall Lown Index ranking 2220 1494
Clinical outcomes percentile 23.79% 67.24%
Patient safety percentile n/a 50%
Patient satisfaction percentile 77.20% 43.31%
Community benefit percentile 40.44% 52.64%
Pay equity percentile 72.99% 43.64%
Inclusivity percentile 45.68% 51.19%
Avoiding overuse percentile 71.26% 44.31%

The good news first: Critical access hospitals have particularly high scores on the Lown Index for patient satisfaction, pay equity, and avoiding overuse, compared to non-critical access hospitals. However, they have slightly worse community benefit and inclusivity scores on average compared to non-critical access hospitals. More concerning, critical access hospitals have extremely low rankings in clinical outcomes compared to larger urban hospitals.

How is it that critical access hospitals score so highly on some metrics and poorly on others? Here are some potential explanations behind these patterns. 

The lack of regional competition could explain high scores in pay equity and avoiding overuse for critical access hospitals. “Competition for talent” is one of the main justifications behind rising CEO salaries at nonprofit hospitals. And research from the Johns Hopkins School of Public Health found that higher rates of overuse are associated with more hospital competition in a region. This makes sense because hospitals facing competition may try to attract patients or boost their revenue by increasing the volume of services, even if those services aren’t always necessary. 

How is it that critical access hospitals score so highly on some metrics and poorly on others?"

The small size of critical access hospitals could also be a reason why they excel on certain Lown Index rankings. Some speculate that lower patient volume and lower levels of noise at rural hospitals make it easier for staff to keep the hospitals clean and quiet, and respond to patients’ needs, which may be reflected in higher patient satisfaction scores. Smaller hospitals are also more likely to have staff that live in the same community as their patients, and have social connections to them. Smaller hospitals have less capacity to perform unnecessary services like MRIs for a head injury, using once-a-week mobile services, for example, which could explain their high rankings for avoiding overuse. 

However, the small size and remote location of critical access hospitals may also contribute to their subpar clinical outcomes. Critical access hospitals have fewer financial resources and less specialized staff compared to larger hospitals. Patients may also arrive at the hospital sicker because they have to travel farther to access health care in rural areas, and may delay a visit to the doctor that could have prevented a stay in the hospital. Finally, the low volume of procedures done at these hospitals could increase the rate of complications during surgeries, resulting in worse clinical outcomes. For surgeons it is well known that practice makes perfect, and the more procedures a surgeon performs a month, the greater his or her proficiency. 

Critical access hospitals have slightly worse rankings compared to non-critical access hospitals in both inclusivity and community benefit. Critical access hospitals by default are the only hospitals in their community, so one would imagine they would have better inclusivity rankings than non-critical access hospitals. However, there are many reasons why patients with lower incomes and education levels in rural areas would avoid going to the hospital altogether, including concerns about the cost of going to the hospital, difficulties accessing transportation to the hospital, and getting time off work to go. 

If we want all patients to have the best possible outcomes, we should consider giving critical access hospitals additional support."

Critical access hospitals may be limited in their ability to provide charity care and other community benefits because of their more vulnerable financial situation. Unlike larger urban hospitals, critical access hospitals likely do not have the resources to manage extensive community benefit operations, and may require technical assistance to implement more effective financial aid policies and community benefit strategies.

If we want all patients to have the best possible outcomes, we should consider giving critical access hospitals additional support. CMS could offer critical access hospitals funding and administrative support to invest in safety and quality initiatives, and collaborate with other CAHs in the region on best practices. Some services, such as elective surgeries that critical access hospitals perform only rarely, should probably be left to larger hospitals where the surgery is performed more often. Telemedicine, especially during Covid-19, could be an important way for these hospitals to expand access to specialty and complex chronic care. Expanding Medicaid in all states would increase access to care for many people in rural areas, and could also make critical access hospitals more financially stable.