Economics and Rural Healthcare - Presentation

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Economics and Rural Healthcare

Tim Putnam, DHA, FACHE. CEO Margaret Mary Community Hospital,. Batesville, Indiana. Economic Impact of Indiana’s Community Hospitals. Rushville . 230 Direct Jobs 370 Jobs total . $20 Million in payroll (Direct and Indirect).

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Economics and Rural Healthcare

Presentation on theme: "Economics and Rural Healthcare"— Presentation transcript:


Economics and Rural Healthcare

Tim Putnam, DHA, FACHE

CEO Margaret Mary Community Hospital,

Batesville, IndianaSlide2

Economic Impact of Indiana’s Community Hospitals


230 Direct Jobs 370 Jobs total

$20 Million in payroll (Direct and Indirect)

$7 Million in other/non-payroll spending



Economic Impact from the Hospital (all direct and indirect impact)


Impact on Rural Communities


Total Jobs Impact of Jobs

Salem 334 $25 Million

Winchester 316 $22 Million

Linton 354 $23 Million

Winamac 278 $18 Million

Tell City 387 $24 Million

Greencastle 405 $29 Million

Wabash 449 $33 Million

Angola 486 $31 Million



$34 Million

Crawfordsville 541 $47 MillionSlide4

Larger Communities

Community Jobs Job Impact

New Castle 800 $58 Million

Washington 509 $41 Million

Logansport 815 $58 Million

Franklin 926 $68 Million

Madison 1,294 $103Million

Marion 1,314 $101 Million

Jasper 1,770 $123 Million

Vincennes 2,194 $149 Million

Valparaiso 2,301 $154 Million

Richmond 2,746 $168 MillionSlide5

Healthcare Economics

Cost Shifting Issues

Medicare Patients (4 – 20%)



– 50% of Patients





%-15% of Patients

Charity and Bad Debt

100% loss,


– 10% of Patients

Remainder are Commercially Insured Slide6

Small Community




10 million in

Operating Expenses




Debt (8

% of Patients)

$ 800,000


Medicaid (15%)

$ 1,500,000

$ 900,000

Medicare (55%)

$ 5,500,000

$ 5,225,000

Commercial (22%)

$ 2,200,000

$ 3,520,000


$ 10,000,000

$ 9,645,000




Rural Specific Economics

Programs like Cardiac Surgery and Angioplasty are profitable (rarely performed in small community hospitals)

Generally older patient population with a greater percentage of Medicare (per capita income is $7,417 lower than urban)

Urban hospitals are paid at a higher rate by Medicare due to “Market Basket Adjustment”

Must care for whole population

(No institution to care for uninsured and Medicaid)Slide8

Rural Healthcare

Rural residents:

Use tobacco, alcohol more frequently

Have higher rates of Hypertension and Cardiovascular Disease

Have higher rates of Suicide

Higher death rates due to Trauma

More frequently on Medicare and MedicaidSlide9

Physician Shortage

20 - 25% of Population is rural

10 % of Physicians practice in rural areas

Less than 7% of Physicians completing residency training practice in a rural area

Physicians are trained primarily in Academic Medical Centers

Inadequate programs to incentivize physicians to work in rural areasSlide10

Community Hospital Closures

1980s & 1990s

35 to 40 Hospitals closed each year

Closure left a void that is virtually impossible to fillSlide11

Critical Access Hospitals (CAH)

Balanced Budget Acts 1997 and 1999

CAH program has over 1,300 hospitals to date

Since 1999 very few of these rural hospitals have closed

Exceptions are Oakland City and Huntingburg

Paid based on cost for MedicareSlide12

Accountable Care Act

Will Accountable Care Organizations inhibit collaboration and care coordination between institutions?

Expansion of Medicaid

Impact of Health Insurance ExchangesSlide13

Future of Rural Healthcare

17+% of GNP

Healthcare is too expensive

Urban Centers have the political clout and financial strength

CAH Program and other Rural provisions in jeopardy

Federally Qualified Health Center (FQHC)

Rural Health Clinics