Idle Space is Costing Critical Access Hospitals Money

Wednesday, July 10, 2019

We have a behavioral health outpatient solution for your hospital.  

Just like any business, Critical Access Hospitals (CAHs) have overhead and indirect costs, such as plant operations, administration and housekeeping. These costs are not directly related to any specific service. Unique to CAHs, Medicare will reimburse these costs directly proportional to the percent of Medicare patients utilizing a specific service located in the owned hospital space. When a CAH has owned, idle space (square footage with no operational program), they are unable to get reimbursed by Medicare for overhead and indirect costs associated with this space.

Example of Critical Access Hospital Overhead and Indirect Costs
If a CAH has 1,500 square feet of owned, idle space, the overhead and/or indirect costs (i.e. capital, plant operations, housekeeping, administration and general, and medical records) typically range from $75,000 to $150,000 per year. By placing a high Medicare utilizer (90% or more) program in the unused space, the hospital will be able to get reimbursed correspondingly for overheads and/or indirect costs.

An Outpatient Program Solution
Diamond Healthcare offers a Structured Outpatient Program (SOP) designed for older adults who can benefit from group formatted behavioral health services. The SOP strikes the right balance of meeting a rural health community's behavioral health needs and practicing good financial stewardship.

Example Critical Access Hospital Outpatient Program 

Model Program Structure:

  • Treatment modalities focus on patients 55 and older
  • 50 admissions per year
  • Patient census of 6 per day
  • Patient attends programming 5 days a week
  • 30-day length of stay

Based on the above information, this type of program could potentially generate revenues between $500,000- $650,000 and an estimated contribution margin of $75,000 - $100,000.

Download our SOP FAQ's

Let's Talk

Diamond Healthcare can help determine the need in your community, determine financial feasibility, and provide a turnkey solution. Call 800.443.9346 or contact us to schedule a 10-minute call.

Diamond Healthcare has nearly 35 years in behavioral health consulting and management experience across the US. We partner with hospitals and healthcare systems to develop and implement an integrated continuum of care that addresses the behavioral health needs of patients throughout the organization and its affiliates.