Regional Hospitals and Health Care Costs and Health Care Reform and Hospitals and Health Care & Life Sciences and Health Care & Insurance

Q&A

February 11, 2013

Don Kelso is executive director of the Indiana Rural Health Association. The trade group is trying to help its members navigate the changes coming from health care reform and the financial pressures being created by federal budget cuts. The association recently launched a service for its members called SuiteStats, which is data-management software to help hospital executives identify areas ripe for cost-cutting.

IBJ: What disadvantages do rural health care providers have now compared with their larger peers in urban areas?
 
A: Reimbursement for hospitals is changing. I think SuiteStats is a fairly good tool as we move to that end. iVantage [the Maine-based company that makes the software], they take the general ledger for the hospitals that they’re working from and download it, so the hospital leadership can look at their data and they can call up a code. Like pneumonia. They can look at a lot of data so they can know the total it took to take care of you and break it down by the various components. Then it compares your hospital to other hospitals that are like you. As you look at these cost data, it points out quality issues. With physicians, it’s hard to make them change, but they do respond to data.
 
IBJ: Is this a way to help them stay independent?
 
A: That, and also the local economics. I live in Washington [where Daviess Community Hospital is located]. If this hospital fails or, for the most part goes away, it’s just going to kill this community financially. Because it’s probably $30 million to $40 million just in payroll. Plus the brain drain. The physicians, they’re some of the most analytical in the community, and they sit on boards and community organizations. If I live here, I may have to go to Bloomington or Evansville to get my appendix taken out.
 
IBJ: In the past five years, many rural hospitals have merged with larger systems because of financial pressures. Do you foresee that merger trend continuing?

A: The larger systems are less likely now to take on these failing rural hospitals, because it’s adding up on their balance sheets. I’m seeing less interest in takeovers now by larger hospitals.

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