HSN/476 Week 4: Health Policy and Regulation, sample paper

A New Kind of Rural Hospital: How the Rural Emergency Hospital Designation Travels From a 2020 Federal Law to the Night Shift on a 25-Bed Unit

[Student Name]

University of Phoenix

HSN/476: Healthcare Policy and Financial Management

Week 4 Assignment

[Instructor Name]

[Date]

The hospital, its board discussion and its figures are a composite written for a model paper.

Health policy often feels distant from a hospital unit, something decided in Washington and felt only as new forms. This paper follows a recent federal policy that could end my unit's existence: the rural emergency hospital designation. Tracing it from law to regulation to payment to the bedside shows the chain the course calls the interrelationship among policy, legislation, regulation, finance and practice.

The Problem the Law Addressed

Rural hospitals have closed at a steady pace for more than a decade, often because low patient volumes cannot cover the fixed cost of keeping inpatient beds staffed. When a rural hospital closes, its emergency department closes too, and residents lose the nearest place to go for a heart attack, a stroke or a serious injury. Congress created the rural emergency hospital designation to offer an alternative to closure: a hospital could stop providing inpatient care, which is where most of its losses occur, and keep its emergency department and outpatient services open with more reliable payment.

From Law to Regulation

The designation was created by the Consolidated Appropriations Act of 2021 and took effect on January 1, 2023. Congress set its basic shape: eligible hospitals are critical access hospitals and small rural hospitals, the designated hospital provides emergency and outpatient services but no inpatient care, and it receives higher outpatient payment plus a fixed monthly facility payment. The Centers for Medicare and Medicaid Services then wrote the regulations that turn the law into requirements, including conditions of participation for staffing the emergency department around the clock, a transfer agreement with a level I or level II trauma center, and a limit on how long patients can stay, an annual average of no more than 24 hours per patient. The law decides that a new kind of hospital exists; the regulation decides what that hospital must do every night.

From Regulation to Payment

The payment design is the heart of the policy. A rural emergency hospital receives its usual outpatient payments with a 5% increase and a monthly facility payment intended to support the fixed cost of keeping an emergency department open. For a small hospital losing money on inpatient care, the facility payment can mean financial stability. For a critical access hospital, however, the calculation is different, because critical access hospitals are already paid close to cost for inpatient, outpatient and swing-bed care (Medicare Payment Advisory Commission, 2023). Giving up cost-based inpatient and swing-bed payment in exchange for the facility payment may or may not leave the hospital better off, depending on its volumes and payer mix.

Research on eligible hospitals shows why the choice is not simple. Chatterjee et al. (2022) compared the characteristics, finances and services of hospitals eligible for the designation with those that were not, and eligible hospitals differed on these dimensions, which suggests that the designation will suit some rural hospitals better than others.

From Payment to the Bedside

At my hospital, the board has asked the administration to study conversion. The effect on nursing would be large. The inpatient unit, with its acute and swing-bed patients, would close. The 5 to 9 patients a day who now recover near their families would go to the regional hospital 60 miles away, and swing-bed patients who need rehabilitation after a hospital stay would have to find skilled nursing beds elsewhere, which are scarce in our county. Some inpatient nurses would move to the emergency department, which would need to hold patients awaiting transfer, sometimes for many hours, and to an expanded outpatient infusion and observation service. Others would lose positions.

Nursing practice would change too. Emergency nurses would care for patients who would previously have been admitted, keeping them safe while a transfer is arranged in bad weather, and the 24-hour average length of stay would put pressure on transfer decisions. Transfer agreements would become a daily part of care, and the nurses making transfer calls would need clear protocols.

What Conversion Would Do to Nursing Costs

Because nurses account for so much of what a hospital spends, with registered nurse labor alone about a quarter of hospital expenditures nationally (Welton, 2011), closing an inpatient unit removes the largest single block of the hospital's expense. That is the financial logic of the designation. For a critical access hospital, though, a large part of that nursing cost is currently returned through cost-based payment, so removing it also removes revenue. The net effect depends on the Medicare share of inpatient and swing-bed days, the commercial rates the hospital receives and how many inpatient nurses would move into emergency and outpatient roles rather than leave. A nurse leader who knows these figures can keep the board from treating the closure of the unit as pure savings.

Questions a Nurse Leader Should Ask

Before the board decides, a nurse leader can make sure the analysis includes more than finance. What happens to patients who now use swing beds, and where will they go? How long will patients wait in the emergency department for transfer beds, and how will they be staffed while they wait? Which nursing roles will be kept, retrained or lost? What will the community lose if the hospital no longer admits patients, and what would it lose if the hospital closed altogether? These questions do not have a single answer, but asking them is how nurses take part in a policy decision rather than simply living with its result.

Conclusion

The rural emergency hospital designation shows the chain the course describes. A federal law responded to rural hospital closures, federal regulations set the requirements, a payment design created the incentive, and at a hospital like mine the result could be the closure of an inpatient unit and a new kind of nursing in the emergency department. Week 5 will ask what position a nurse should take on this kind of reform and how to advocate for it.

References

Chatterjee, P., Klebanoff, M. J., Huang, Q., & Navathe, A. S. (2022). Characteristics of hospitals eligible for rural emergency hospital designation. JAMA Health Forum, 3(12), Article e224613. https://doi.org/10.1001/jamahealthforum.2022.4613

Medicare Payment Advisory Commission. (2023). Critical access hospitals payment system (Payment basics).

Welton, J. M. (2011). Hospital nursing workforce costs, wages, occupational mix, and resource utilization. Journal of Nursing Administration, 41(7/8), 309-314. https://doi.org/10.1097/NNA.0b013e3182250a2b