Swing-Bed Considerations for Rural Hospitals in providing Skilled Nursing Care

By January 19, 2017Newsletter Article

By: Charles Lewing, Ward Memorial Hospital

Abstract

Swing-beds are one approach to addressing two problems in rural communities: the shortage of nursing home beds and the decline in rural hospital occupancy. In the past, swing-bed demonstration hospitals have shown the greatest potential for quality improvement compared to nursing homes in providing a continuum of care.

 

Background

A national swing-bed program was first authorized in the 1980 Omnibus Budget Reconciliation Act allowing Medicare reimbursement of swing-bed care in rural hospitals with fewer than 100 beds. The term “swing bed” is used to describe the level of care hospitalized patients receive once they are no longer in need of acute care. Swing bed admissions are limited to patients who require some level of skilled nursing care and are currently in a hospital acute care bed. Patients cannot be admitted to a swing bed from either the community or a skilled nursing facility unless they have spent three days in an acute care hospital bed for related needs within the past 30 days. Swing beds are generally limited to 40 days per patient under state law .

Rural hospital leaders may be quick to blame Medicare and federal regulations for their collective financial crisis, but the biggest reasons so many rural hospitals are in danger of closing is because they simply do not have enough inpatients . Since the passage of ACA there has been a further downward utilization trend and subsequent cash flows issues in small rural hospitals. Increased out of pocket expenses for healthcare, associated with high deductible health plans, have increased significantly over the past few years. With this declining inpatient census at rural hospitals, comes the opportunity to promote and refine existing swing-bed programs.

Implications

Rural hospital leaders are quick to blame Medicare and federal regulations for their collective financial crisis, but the biggest reasons so many rural hospitals are in danger of closing is because they simply do not have enough inpatients. Leveraging these empty beds for swing bed utilization two major considerations:

1) To what extent should there be a level playing field between swing beds within Critical access hospitals and free standing Nursing homes? Swing beds have shown that small and resource poor hospitals can evolve to provide swing bed services at added margin. Patients benefit by being exposed to higher levels of care at closer proximity to hometowns. The swing-bed program seems to work best for patients who require short-stay, medically intensive services in small rural hospitals that can recruit the necessary specialized staff . For example, a Rural Hospital that has an outpatient that has a robust outpatient physical therapy department would be able to deliver these services to swing-bed patients. However, rural hospitals would not necessarily be able to provide other indirect aspects of care such as activities or social services, that one would fine in a more traditional nursing home environment.

2) Should there be equal payment for equal services or should emphasis be put in maximizing participation by Critical access hospitals? An OIG report issued in March of 2015 concluded that Medicare could have implemented a site-neutral reimbursement policy between freestanding nursing homes and Swing beds was flawed . Reasons flawed is that OIG report significantly over estimated potential Medicare savings by relying on the simplistic formula of Average CAH payment per swing bed day – Average SNF payment per bed day X Number of CAH Swing Bed Days. This simple per diem method ignores the fixed cost transfers between services and therefore over estimates the Medicare savings of removing swing beds from cost based reimbursement. In other words, the fixed costs associated with the acute care unit do not change when you remove swing beds from the equation. The fixed cost is simply transferred to other departments, mostly acute care. The fore the same fixed costs are now spread over fewer patient days resulting in a higher cost per patient day .

Summary

The swing-bed program seems to work best for patients who require short-stay, medically intensive services in small rural hospitals that can recruit the necessary specialized staff. It is not a program for all post-acute patients, particularly long-stay patients, or for all small rural hospitals with excess capacity. Nevertheless, by incentivizing rural hospitals to use their excess capacity to meet community needs at a moderate cost, swing beds do represent a useful approach to rural health policy.

Charles Lewing is the CFO of Ward Memorial, a Critical Access Hospital in rural West Texas.

1 Minnesota Department of Health “Swing Bed Usage and Access to Post Acute Care in Rural Minnesota”01/31/2007

2 W. Myers “Commentary: Why Rural Hosptials are closing” North Carolina Health News 07/24/2015

3 Richardson and Kovner “Swing-Beds Current Experience and Future Directions” Health Affairs 11/26/2016

4 Parrish, Turner et al “Impact of Swing Beds” National Rural Health Association Policy Paper approved February 2016 by the Rural Health Congress

5 Parrish, Tuner et al. 02/2016