Rural hospital group nets $1.6 million for Georgia rural hospitals

by | April 2, 2007 12:00 am

In an effort to stem the damaging financial tide that currently overwhelms many rural hospitals in Georgia, the Center for Rural Health, an affiliate of the Georgia Hospital Association (GHA), recently netted more than 30 rural hospitals in the state an additional $1.6 million in annual funding from the federal government. The successful initiative was part of an audit to update the “Area Wage Index,” (AWI) a complex formula developed by the federal government to determine the amount that hospitals will be paid for treating Medicare patients.

Twenty-one Georgia rural hospitals participated in the audit, which commissioned each hospital’s salary and wage data in an attempt to uncover any underreported data to the federal government. Once the study was complete, the hospitals resubmitted their new data and became eligible for higher Medicare reimbursements. The cost of the $70,000 audit was paid by the participating hospitals and GHA.

“It proved to be tremendous return on investment for all participating hospitals and ensures that from now on, these hospitals will be getting paid exactly the amount they are entitled from the federal government,” said Center for Rural Health Executive Director Rhett Partin who led the effort. “During a time when rural hospitals are faced with so many financial challenges, the timing of this effort couldn’t have been better.”

The AWI was created by the federal government in the 1980s to better align federal payments to hospitals with the price of hospital labor in various markets. Typically, AWI values for hospitals in large, urban areas are higher than those in smaller, rural areas leaving rural hospitals with smaller overall payments for Medicare patients. The Center for Rural Health effort raised the AWI for participating hospitals by 2 percent.

“Rural hospitals are extremely appreciative of the Center for Rural Health’s leadership on this important project,” said Center for Rural Health Board Chairman Chuck Orrick, who is administrator of the 65-bed Donalsonville Hospital in Donalsonville. “Hundreds of thousands of Georgians depend on rural hospitals for their health care needs and it is imperative that Georgia’s rural hospitals continue to work through the Center to find ways to ensure that we can continue to be there 24 hours a day, seven days a week.”

In a recent GHA study, it was learned that Georgia’s rural hospitals have created more than 42,000 full-time jobs in the state and have generated a total economic impact of nearly $3.4 billion. But still, as the state’s uninsured population continues to skyrocket, payments for Medicare and Medicaid continue to be slashed at the state and federal levels leaving many hospital administrators in rural areas wondering if these important pieces to Georgia’s health care system can remain economically viable. Presently, 76 percent of all rural hospitals in the state have negative profit margins in their core function- providing patient care.

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