Mergers key to community hospital survival

As community hospitals around the country fall victim to declining volumes, shrinking patient care reimbursement and other financial woes, more organizations consider giving up their independent status to align with larger entities to survive.

In Virginia, Community Memorial Healthcenter will join Virginia Commonwealth University Health System (VCU), the biggest health safety-net provider in the state, to help improve its bottom line and maintain quality care access throughout the region, according to the Richmond Times-Dispatch.

"It is impossible to be a stand-alone rural hospital depending on Medicare, Medicaid and uninsured patients," W. Scott Burnette, Memorial Healthcenter's president and chief executive officer, told the newspaper. Another biting issue is the large number of uninsured, poor and elderly patients in the community, especially since Virginia legislators have not approved Medicaid expansion--10 percent of patients rely on Medicaid, 10 percent have no insurance and 67 percent rely on Medicare.

The hospital affiliation is the latest example of what Thomas A. Massaro, M.D., a retired pediatrician at the University of Virginia who teaches health policy at the university's law school and the Darden School of Business, called "an irreversible trend toward consolidation" in the state's health system that began long before passage of the Affordable Care Act in 2010, according to the article.

Although the number of acute care hospitals that were members of the Virginia Hospital & Healthcare Association remained the same throughout the past 15 years--about 100--the amount of member health systems dropped from 75 to 27, the Times-Dispatch reported.  

Community Memorial expects $2.7 million in Medicare cuts next year and $2.9 million in 2016, but projects about $974,000 in new revenue through federal funds that will expand coverage next year to offset the cuts and almost $2 million in 2016, according to the article.

"It's very, very difficult for independent hospitals nationwide, especially in rural areas, given the financial situation in healthcare," said Sheryl Garland, vice president of health policy and community relations at VCU.

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