Jeffrey Stensland , PhD

Phone: 202.220.3726
Fax: 202.220.3759
E-mail: jstensland@medpac.gov

MedPAC
601 New Jersey Ave. SE - Suite 9000

Completed Projects (4)
Publications (12)

Completed Projects (4)

Capital Needs of Small Rural Hospitals, Lead researcher
Research center: NORC Walsh Center for Rural Health Analysis
Funder: Office of Rural Health Policy (ORHP)
Topics: Capital funding, Hospitals and clinics

National Rural Hospital Flexibility Program Tracking Project: Analysis of the Financial Impact of Conversion on Critical Access Hospitals (CAHs) and the Medicare Program
Research center: University of Minnesota Rural Health Research Center
Funder: Office of Rural Health Policy (ORHP)
Topics: Critical Access Hospitals and Rural Hospital Flexibility Program, Health care financing

Rural Hospitals' Strategic Response to PPS for Outpatient, SNF, and HH Services, Lead researcher
Research center: University of Minnesota Rural Health Research Center
Funder: Office of Rural Health Policy (ORHP)
Topics: Health services, Home health, Hospitals and clinics, Long term care, Medicare Prospective Payment System (PPS)

What is Causing the Increase in Rural Hospital Costs?, Lead researcher
Research center: NORC Walsh Center for Rural Health Analysis
Funder: Office of Rural Health Policy (ORHP)
Topics: Health care financing, Hospitals and clinics

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Publications (12)

Achieving Equity in Medicare DSH Payments to Rural Hospitals: An Assessment of the Financial Impact of Recent and Proposed Changes to the DSH Payment Formula
Date: 05/2002
Examines how Benefits Improvement and Protection Act revisions to the qualifying and distribution formulas of the Medicare disproportionate share hospital (DSH) program are likely to affect rural hospital financial performance as measured by hospital operating and total margins. Also considers the effect of establishing a uniform DSH formula. The study shows that paying rural hospitals based on the rules used for urban hospitals would produce financial benefits that could improve access to care in rural communities. Notably, nearly one-fifth of financially distressed rural hospitals could have remained "in the black" and an even greater proportion could have received additional funds to cover costs incurred by treating indigent members of the community if rural hospitals had been paid in 1998 under the same DSH formula. Among the chief economic winners would be the smallest rural hospitals, which generally are in worse financial condition than other hospitals. Findings suggest that elimination of rural and urban disparities in DSH payment could strengthen the rural health care safety net. Report available on request.
Capital Needs of Small Rural Hospitals
Date: 05/2002
Examines the capital situation of rural hospitals with fewer than 50 beds to determine the total cost of bringing each facility into compliance with current laws, as well as the facilities' cost of borrowing and ability to borrow. Key results include: 38 percent report having deficiencies that, by law, require renovation or remodeling; the median cost of correcting those deficiencies is $1,000,000; most hospitals will need to, and have the ability to, borrow funds to correct the deficiencies; and the hospitals that report being unable to obtain loans tend to be older, low-volume hospitals with operating losses. Study concludes that due to the poor financial condition of hospitals that lack the ability to borrow, a new federal loan program does not appear to be the answer to their capital needs. Rather, improving access to capital depends on improving hospital profitability. The authors offer three options. 1) Medicare policy could provide hospitals in regions with very few patients an adjustment that would allow low-volume hospitals to earn a profit on Medicare patients. 2) Medicare policy could be adjusted to allow Medicare to directly pay a portion of hospitals' charity care and bad debt burdens. 3) Policy makers could set up a technical assistance program operated at the state level to assist rural hospitals in improving their financial condition.
Financial Benefits of Critical Access Hospital Conversion for FY 1999 and FY 2000 Converters
Date: 01/2004
Discusses the impact of conversion to Critical Access Hospital (CAH) status on the financial condition of rural hospitals one and two years after conversion. CAHs pre- and post-conversion revenues are compared, and CAH revenues are compared to small rural hospitals that did not convert to cost-based Medicare reimbursement.
Financial Effects of Critical Access Hospital Conversion
Date: 01/2003
Describes how the first wave of conversions to Critical Access Hospital (CAH) status affected rural hospitals? financial performance and organizational structure.
Financial Incentives for Rural Hospitals to Expand the Scope of Their Services
Date: 06/2002
This paper examines the financial incentives that rural hospitals have to conduct surgery and treat more complex medical conditions. The objective is to evaluate whether rural hospitals that offer broader services are more profitable than hospitals with very limited inpatient services. A low-volume adjustment considered by the Medicare Payment Advisory Commissions (MedPAC) is discussed.
Financial Viability of Rural Hospitals in a Post-BBA Environment
Date: 10/2000
This paper evaluates the financial viability of rural hospitals under the Balanced Budget Act of 1997 (BBA) and the Balanced Budget Refinement Act of 1999 (BBRA) Medicare payment policies. Estimates the number of hospitals that will become Critical Access Hospitals (CAHs) and estimates the number of beds at each hospital.
Rate of Return on Capital Investments at Small Rural Hospitals
Date: 01/2003
Examines whether the aging of rural facilities, a major problem among rural hospitals, is due to a lower rate of return on capital investment at these hospitals. This paper also investigates whether membership in a hospital system improves access to capital and results in the updating of buildings and equipment. The study found that hospitals generally do no use system membership to overcome access to capital problems, most likely because investments are not readily available along this pathway. The study also found that hospitals generate 50 cents for every dollar invested in facility improvement. Although this is a way to generate revenue, the small hospitals will typically not be able to recover the costs spent in the improvement. These findings suggest that small hospitals, particularly the smallest and most rural hospitals, would need grants in order to adequately cover the costs of facility improvement.
Rural Hospitals' Ability to Finance Inpatient, Skilled Nursing, and Home Health Care
Date: 10/2001
Surveys 448 rural hospitals to see how they are restructuring in light of the Balanced Budget Act of 1997. Among its findings: the most popular strategy for small rural hospitals is to convert to Critical Access Hospital status-35 percent of those surveyed have done so; despite the closing of some facilities, the vast majority of rural patients still have access to one or more skilled nursing facilities and one or more home health agencies; and to help preserve access to care, policy makers should consider paying a portion of the bad debt and charity care expenses that Critical Access Hospitals incur when treating non-Medicare patients.
Understanding Rural Hospital Bypass Behavior
Date: 06/2002
This study provides a descriptive analysis of rural hospital bypass behavior. Focuses on the extent to which patients admitted from rural areas are bypassing local facilities and whether there are changes in bypass patterns over time.
Variance in the Profitability of Small-Town Rural Hospitals (Full Report)
Date: 02/2002
Documents the variance in profitability among small-town rural hospitals and evaluates the characteristics that distinguish highly profitable small-town hospitals from struggling ones. It also reports on strategies that small-town hospital administrators are using to achieve financial success and discusses public policy priorities for assisting small-town hospitals in rural America. Among the findings are that patient volumes appear to explain a significant portion of the difference in small-town hospital profitability. No small-town hospital with fewer than 300 admissions was able to generate significant profits and no small-town hospital with more than 2,500 admissions generated significant losses. Among the hospitals with between 300 and 2,500 admissions, there is a wide variance in profitability. The case studies suggest that lower staffing levels and higher levels of visiting specialists can improve profitability. They also suggest that bad debt burdens can create significant financial strain. Report available on request.
Variance in the Profitability of Small-Town Rural Hospitals (Policy Brief)
Date: 04/2002
This policy brief discusses why some rural small-town hospitals are financially successful and others struggle with persistent financial difficulties.
Why do Rural Primary-Care Physicians Sell Their Practices?
Date: 06/2000
This study evaluates why rural primary care physicians sell their practices. Examines the factors that led independent physicians to sell their practices to either non- local buyers, local hospitals or local physicians.

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Home Topics Centers Researchers Research Alerts Other Resources Search		Jeffrey Stensland , PhD Phone: 202.220.3726 Fax: 202.220.3759 E-mail: jstensland@medpac.gov MedPAC 601 New Jersey Ave. SE - Suite 9000 Completed Projects (4) Publications (12) Completed Projects (4) Capital Needs of Small Rural Hospitals, Lead researcher Research center: NORC Walsh Center for Rural Health Analysis Funder: Office of Rural Health Policy (ORHP) Topics: Capital funding, Hospitals and clinics National Rural Hospital Flexibility Program Tracking Project: Analysis of the Financial Impact of Conversion on Critical Access Hospitals (CAHs) and the Medicare Program Research center: University of Minnesota Rural Health Research Center Funder: Office of Rural Health Policy (ORHP) Topics: Critical Access Hospitals and Rural Hospital Flexibility Program, Health care financing Rural Hospitals' Strategic Response to PPS for Outpatient, SNF, and HH Services, Lead researcher Research center: University of Minnesota Rural Health Research Center Funder: Office of Rural Health Policy (ORHP) Topics: Health services, Home health, Hospitals and clinics, Long term care, Medicare Prospective Payment System (PPS) What is Causing the Increase in Rural Hospital Costs?, Lead researcher Research center: NORC Walsh Center for Rural Health Analysis Funder: Office of Rural Health Policy (ORHP) Topics: Health care financing, Hospitals and clinics [ back to top ] Publications (12) Achieving Equity in Medicare DSH Payments to Rural Hospitals: An Assessment of the Financial Impact of Recent and Proposed Changes to the DSH Payment Formula Date: 05/2002 Examines how Benefits Improvement and Protection Act revisions to the qualifying and distribution formulas of the Medicare disproportionate share hospital (DSH) program are likely to affect rural hospital financial performance as measured by hospital operating and total margins. Also considers the effect of establishing a uniform DSH formula. The study shows that paying rural hospitals based on the rules used for urban hospitals would produce financial benefits that could improve access to care in rural communities. Notably, nearly one-fifth of financially distressed rural hospitals could have remained "in the black" and an even greater proportion could have received additional funds to cover costs incurred by treating indigent members of the community if rural hospitals had been paid in 1998 under the same DSH formula. Among the chief economic winners would be the smallest rural hospitals, which generally are in worse financial condition than other hospitals. Findings suggest that elimination of rural and urban disparities in DSH payment could strengthen the rural health care safety net. Report available on request. Capital Needs of Small Rural Hospitals Date: 05/2002 Examines the capital situation of rural hospitals with fewer than 50 beds to determine the total cost of bringing each facility into compliance with current laws, as well as the facilities' cost of borrowing and ability to borrow. Key results include: 38 percent report having deficiencies that, by law, require renovation or remodeling; the median cost of correcting those deficiencies is $1,000,000; most hospitals will need to, and have the ability to, borrow funds to correct the deficiencies; and the hospitals that report being unable to obtain loans tend to be older, low-volume hospitals with operating losses. Study concludes that due to the poor financial condition of hospitals that lack the ability to borrow, a new federal loan program does not appear to be the answer to their capital needs. Rather, improving access to capital depends on improving hospital profitability. The authors offer three options. 1) Medicare policy could provide hospitals in regions with very few patients an adjustment that would allow low-volume hospitals to earn a profit on Medicare patients. 2) Medicare policy could be adjusted to allow Medicare to directly pay a portion of hospitals' charity care and bad debt burdens. 3) Policy makers could set up a technical assistance program operated at the state level to assist rural hospitals in improving their financial condition. Financial Benefits of Critical Access Hospital Conversion for FY 1999 and FY 2000 Converters Date: 01/2004 Discusses the impact of conversion to Critical Access Hospital (CAH) status on the financial condition of rural hospitals one and two years after conversion. CAHs pre- and post-conversion revenues are compared, and CAH revenues are compared to small rural hospitals that did not convert to cost-based Medicare reimbursement. Financial Effects of Critical Access Hospital Conversion Date: 01/2003 Describes how the first wave of conversions to Critical Access Hospital (CAH) status affected rural hospitals? financial performance and organizational structure. Financial Incentives for Rural Hospitals to Expand the Scope of Their Services Date: 06/2002 This paper examines the financial incentives that rural hospitals have to conduct surgery and treat more complex medical conditions. The objective is to evaluate whether rural hospitals that offer broader services are more profitable than hospitals with very limited inpatient services. A low-volume adjustment considered by the Medicare Payment Advisory Commissions (MedPAC) is discussed. Financial Viability of Rural Hospitals in a Post-BBA Environment Date: 10/2000 This paper evaluates the financial viability of rural hospitals under the Balanced Budget Act of 1997 (BBA) and the Balanced Budget Refinement Act of 1999 (BBRA) Medicare payment policies. Estimates the number of hospitals that will become Critical Access Hospitals (CAHs) and estimates the number of beds at each hospital. Rate of Return on Capital Investments at Small Rural Hospitals Date: 01/2003 Examines whether the aging of rural facilities, a major problem among rural hospitals, is due to a lower rate of return on capital investment at these hospitals. This paper also investigates whether membership in a hospital system improves access to capital and results in the updating of buildings and equipment. The study found that hospitals generally do no use system membership to overcome access to capital problems, most likely because investments are not readily available along this pathway. The study also found that hospitals generate 50 cents for every dollar invested in facility improvement. Although this is a way to generate revenue, the small hospitals will typically not be able to recover the costs spent in the improvement. These findings suggest that small hospitals, particularly the smallest and most rural hospitals, would need grants in order to adequately cover the costs of facility improvement. Rural Hospitals' Ability to Finance Inpatient, Skilled Nursing, and Home Health Care Date: 10/2001 Surveys 448 rural hospitals to see how they are restructuring in light of the Balanced Budget Act of 1997. Among its findings: the most popular strategy for small rural hospitals is to convert to Critical Access Hospital status-35 percent of those surveyed have done so; despite the closing of some facilities, the vast majority of rural patients still have access to one or more skilled nursing facilities and one or more home health agencies; and to help preserve access to care, policy makers should consider paying a portion of the bad debt and charity care expenses that Critical Access Hospitals incur when treating non-Medicare patients. Understanding Rural Hospital Bypass Behavior Date: 06/2002 This study provides a descriptive analysis of rural hospital bypass behavior. Focuses on the extent to which patients admitted from rural areas are bypassing local facilities and whether there are changes in bypass patterns over time. Variance in the Profitability of Small-Town Rural Hospitals (Full Report) Date: 02/2002 Documents the variance in profitability among small-town rural hospitals and evaluates the characteristics that distinguish highly profitable small-town hospitals from struggling ones. It also reports on strategies that small-town hospital administrators are using to achieve financial success and discusses public policy priorities for assisting small-town hospitals in rural America. Among the findings are that patient volumes appear to explain a significant portion of the difference in small-town hospital profitability. No small-town hospital with fewer than 300 admissions was able to generate significant profits and no small-town hospital with more than 2,500 admissions generated significant losses. Among the hospitals with between 300 and 2,500 admissions, there is a wide variance in profitability. The case studies suggest that lower staffing levels and higher levels of visiting specialists can improve profitability. They also suggest that bad debt burdens can create significant financial strain. Report available on request. Variance in the Profitability of Small-Town Rural Hospitals (Policy Brief) Date: 04/2002 This policy brief discusses why some rural small-town hospitals are financially successful and others struggle with persistent financial difficulties. Why do Rural Primary-Care Physicians Sell Their Practices? Date: 06/2000 This study evaluates why rural primary care physicians sell their practices. Examines the factors that led independent physicians to sell their practices to either non- local buyers, local hospitals or local physicians. [ back to top ]