The CAH Death Spiral

Despite the benefits of the Rural Hospital Flexibility Act, many CAHs find themselves in what health care CPAs call the “death spiral.” Symptoms of a hospital in dire situations include:

• Poor liquidity
• Small amount of depreciable assets
• Aging facility
  

When a hospital is in this self-liquidation mode, recovering is difficult at best and impossible at worst. Although rural communities are known for their resiliency, survival continues to be a day to day struggle for many CAHs.

Recovery requires increased admissions and outpatient volume. Hospitals must recruit quality physicians, add new services and attract a larger share of the health care market. These goals typically are not possible without access to the capital necessary to replace outdated facilities.

Unfortunately, this is true even though rural hospitals provide a quality of nursing care that is unmatched by larger urban hospitals.

The question is:  “How does a hospital get beyond these barriers?”

“Drumright Regional Hospital has been great for the community; we now have access to quality care while at the same time the construction of the new hospital has energized the community. I continue to be amazed at how much more utilization there is in the new facility compared to our old hospital, which eventually closed.” 

- The Honorable Cleo Ramsey, Former Mayor of Drumright, Drumright, Oklahoma