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APD Faces Potentially ‘Catastrophic’ Status Change

Shirley Gibbs of Enfield, fluff's Doris Edison's hair in Edison's room at Alice Peck Day Memorial Hospital in Lebanon, N.H., on Oct. 4, 2013. Edison ran Doris' Beauty Shop in West Lebanon, N.H., and gave Gibbs her first job as a hair stylist in 1966. Now, Gibbs runs her own salon and was happy to stop by to wash and style Edison's hair at the hospital. 
Valley News - Sarah Priestap

Shirley Gibbs of Enfield, fluff's Doris Edison's hair in Edison's room at Alice Peck Day Memorial Hospital in Lebanon, N.H., on Oct. 4, 2013. Edison ran Doris' Beauty Shop in West Lebanon, N.H., and gave Gibbs her first job as a hair stylist in 1966. Now, Gibbs runs her own salon and was happy to stop by to wash and style Edison's hair at the hospital. Valley News - Sarah Priestap Purchase photo reprints »

Lebanon — Obamacare and the new insurance marketplaces dominated headlines last week, but there’s another health reform being debated that officials at small hospitals, and especially one in Lebanon, are watching anxiously.

Alice Peck Day Memorial Hospital currently qualifies as a “critical access hospital,” a federal designation that entitles small rural hospitals to higher Medicare reimbursements. But as the federal government looks for ways to cut costs, the White House and federal agencies are considering changes to the program that could eliminate APD’s designation, and thus lower the amount of money it is paid.

If APD loses its critical access status, officials estimate it would have a $7 million impact on APD’s $50 million budget and force hospital leaders to make difficult decisions about what services to provide.

“It is incredibly concerning,” said Evalie Crosby, APD’s chief financial officer. “The loss of critical access hospital status, when you’re talking about one-seventh of our budget — I don’t think it’s overstating to say it’s potentially catastrophic.”

The proposals to rein in funding for small hospitals come during a time of transition for hospitals everywhere, as providers come under pressure to lower health costs.

Last week, St. Joseph Hospital in Nashua laid off 18 people, cutting a total of 54 positions from its staff, and Exeter Hospital eliminated 28 full-time positions while cutting hours for 17 others.

But more than adjusting staff levels, hospitals such as APD are also thinking about how to deliver care differently.

Since last year, the Lebanon hospital finished the first phase of a $17 million renovation, had a change in leadership and embarked on a strategic planning process that will set the vision for the 81-year-old institution even as it adjusts to provisions of federal health reform.

But the uncertainty around the Medicare reimbursements has made it difficult to plan for the future, APD officials said.

To be considered a critical access hospital, providers have to meet certain requirements, including having fewer than 25 beds and being located in a rural region. There is also a “distance requirement” to be located more than 35 miles from another hospital, or 15 miles in areas with mountainous terrain.

APD is just four miles from Dartmouth-Hitchcock Medical Center.

Prior to 2006, states were allowed to exempt certain hospitals from the distance requirements by tagging them “necessary providers.” Alice Peck Day is among them.

Even though states no longer have this authority, institutions with the necessary provider designation have kept the exemption unless they change locations.

But recently, federal officials have been discussing cutting Medicare payments to hospitals that don’t meet the distance requirements.

In 2011, President Obama proposed reducing reimbursements and eliminating the critical access certification for hospitals fewer than 10 miles from another. The president’s budget for the 2014 fiscal year has made the same recommendation, estimating the savings would be $1.4 billion over 10 years.

This year, the federal Centers for Medicare and Medicaid Services have been taking a closer look at the distance and rural requirements as well, a move that has concerned small hospital administrators, including Valley Regional in Claremont and Mt. Ascutney in Windsor.

A report in August by the Office of Inspector General found that two-thirds of the nation’s 1,300 critical access hospitals would not meet the program’s location standards. The OIG report recommended removing exemptions from distance requirements for hospitals.

Only two of 13 critical access hospitals in New Hampshire — The Memorial Hospital in North Conway and Upper Connecticut Valley Hospital in Colebrook — qualify under the pure definition with the 35-mile requirement, said Paula Minnehan, vice president of finance and rural hospitals for the New Hampshire Hospital Association.

But being just four miles from Dartmouth-Hitchcock Medical Center, APD is the most vulnerable provider in the state.

It is the only one that is within 10 miles of another New Hampshire provider, she said.

Nobody knows what will end up in the federal budget being fought over now, Minnehan said, and questions remain about whether the mileage requirement extends across borders. If so, Valley Regional and Mt. Ascutney may be affected by their proximity across the state line.

The savings achieved by eliminating the critical access designation for rural hospitals would not be worth the damage inflicted on rural communities, Minnehan said.

Meanwhile, APD officials have been watching anxiously as they plan for the future.

“That’s a very significant threat to us,” said Sue Mooney, APD’s president and CEO.

“It absolutely is a big piece driving the strategy thinking. You don’t want to wait to lose critical access status to start to say, ‘What are we going to do about that?’ ”

Chris Fleisher can be reached at 603-727-3229 or cfleisher@vnews.com.

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