Report to Congress: evaluation of the Grant Program for Rural Health Care Transition

Health Care Financing Review, Winter, 1992

The following summary is of a report from the Secretary of Health and Human Services released to Congress on December 22, 1992.

Legislative mandate

Section 4005(e) of the Omnibus Budget Reconciliation Act of 1987 states, in part:

"(1) The Administrator of the Health Care Financing Administration, in consultation with the Assistant Secretary for Health (or a designee), shall establish a program of grants to assist small rural hospitals and their communities in the planning and implementation of projects to modify the type and extent of services such hospitals provide ....

(8) The Administrator shall report to Congress at least once every 6 months on the program of grants established under this subsection.

Overview

The report was prepared by the evaluation contractor, Mathematica Policy Research, Inc. It is based on background reports and monitoring reports submitted by the 1989 and 1990 grantee hospitals for the period of September 30, 1991, through March 31, 1992, and by the 1991 grantees for the period from September 30, 1991 through December 31, 1991. As the sixth report on the Grant Program for Rural Health Care Transition, this report provides:

* The services implemented by the 1989 grantees and an overview of their progress in the 30 months since they received their grant awards.

* The nature and progress of the consortium projects funded in 1989 and 1990.

* A description of the 1990 grantees' progress after 18 months of the program.

* A description of the 1991 grantees' progress after 3 months of the program.

The following provides summary highlights of the report:

* Over 60 percent of the patient services implemented by the 1989 grantees are outpatient services, 11 percent are inpatient services, 10 percent are transportation services, and the remainder are well-patient /social services. Almost all of the inpatient projects (7 out of 9) developed inpatient mental health services. The most frequently implemented outpatient services are physician services, home health agencies and hospices, and diagnostic services. Grantees reported on the number of patients using 54 of the 79 patient services implemented. Over 13,000 patients per month now receive services at their local hospital who otherwise would have had to travel for the service or done without.

* The 1989 grantees whose goal was to recruit and retain physicians have mostly done so, although their recruiting success has barely increased their staff size. During the first 2 years of the program, 104 physicians have been recruited by the 53 grantees. Despite this success, 75 percent of these hospitals are still recruiting physicians, and 28 percent are recruiting three or more physicians. This high level of recruiting effort is necessitated by the loss of physicians during the period. The large turnover in physician staff has resulted in an average net gain of only .45 physician per grantee.

* A similar theme on the difficulties of physician recruitment and retention pervades the progress and implementation of the 1990 and 1991 grants. These recruitment projects were among those most likely to be behind schedule. The evaluator conducted telephone interviews of 20 hospitals that experienced both startup problems with their projects and had negative operating margins in 1990, expecting to find a financial correlation. None of the hospitals interviewed said that this was the case. They indicated that their projects were behind schedule because of problems recruiting health professionals and organizational instability due to their small size.

* The grantees attribute their recruiting delays to the shortage of health care professionals, especially physicians, who are willing to practice in rural areas because of the heavy on-call burden and comparatively low salaries. Many hard-pressed hospitals are employing alternative strategies to address their health professional needs. Some hospitals are downsizing their facilities, and others are opting to recruit foreign-born health care professionals. Almost one-half of the 1991 grantees interviewed have at least one foreign-born physician on staff, and one-quarter of the hospitals are either downsizing or considering downsizing their facility.

* Since the start of the Rural Health Care Transition grants, the Health Care Financing Administration has awarded 41 grants to consortia, making this program the largest funder of rural health consortia. Among the 1990 grant winners, 60 percent of the funded consortia were newly established to apply for this grant program, as compared with 36 percent of the 1989 consortia. This growth in new consortia suggests that rural hospitals increasingly view consortia as an opportunity for enhancing financial stability and are thus working to develop new alliances.

A report on the progress of the grantees will be prepared every 6 months of the program. The seventh report on the grant program will describe the final results of the 1989 grantees, as well as the continuing progress of the 1990 and 1991 grantees based on the hospitals' monitoring reports and site visits.