Rural hospitals can be subdivided into several categories or classifications, for instance: sole community hospitals (SCH), Medicare-dependent hospitals, and rural referral centers. In this section, it is necessary to discuss their peculiarities. At first, we need to mention that the funding provided to each of these institutions as well as their financial reporting standards differ from one another. This is one of the reasons why the status of the medical organization plays such a significant role.
At first, we should speak about sole community hospitals. A rural medical institution can obtain this status if it is only within a radius of thirty-five miles. In fact, distance is not the only criteria; the organization can belong to this subgroup if its market share constitutes no more than 25 percent. SCHs are at a very advantageous position: they are virtually allowed to set the payment rate for a given year. The thing is that while making their income statement, such institutions are authorized to use historic data, for instance, their operating expenses over three or four years. On its basis, they can determine fees charged the patients.
In contrast, Medicare-dependent hospitals possess the following characteristics. They comprise no more than one hundred beds and sixty percent of hospital patients are dependent on Medicare. As well as SCHs they are permitted to use the payment rates of 1982 or 1987 if it exceeds the federal payment rate. Nonetheless, unlike SCH this adjustment is only 50 percent. Therefore, rural hospitals are more willing to receive the status of SCH as it is more profitable. Finally, we need to discuss rural referral centers (RRCs). They specialize in a certain field of medicine such as neural surgery, the treatment of cancer, so, the physicians from other hospitals can refer their patients to them. The qualifications for this status are as follows:
- The number of beds is 275;
- The minimum percentage of Medicare patients is 50 %. RRC receives additional reimbursement from Medicare.
Thus, in this section, we have shown that the category ascribed to a medical institution can have a profound effect on its profitability, fees, reporting standards, and so forth. Each of the classifications has its advantages but the SCH is the most beneficial.