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Rural Health in Oregon

Of the 62 Oregon community hospitals, 33 are in small and rural communities. These hospitals provide essential health care services to more than one million Oregonians and are the cornerstones within the communities they serve. For most areas, they are the largest employer, offering family-wage jobs and economic stability in their towns, while providing essential health services. However, rural hospitals face many special operational challenges.
Oregon’s small and rural hospitals are experiencing unprecedented changes in health care delivery and reimbursement, as the short- and long-term effects of the COVID-19 public health emergency overhaul the health care system. With shifts to more outpatient care and new payment systems, Oregon’s small and rural hospitals have had to rethink their health care delivery and reimbursement structures. Rural hospitals in Oregon are actively focused on the Triple Aim goals of better care, better health, and lower cost while maintaining the highest levels of quality care.

For information about the proactive transformation work of Oregon’s small and rural hospitals, click here

For information about OAHHS’ Small & Rural Hospital Committee, click here.

Rural hospitals in Oregon are divided into three categories – Type A, Type B, and Critical Access Hospital. These designations help determine how hospitals get reimbursed for the care they provide to Medicare and Medicaid patients. Here’s an overview of how these programs work:

What are Type A & B designations?

The state of Oregon designates rural hospitals based on their size and location. Type A and Type B hospitals must have 50 or fewer inpatient beds.  Type A hospitals are located more than 30 miles from another acute care facility, while Type B hospitals are located less than 30 miles from another acute care facility.  As Type A and Type designation are specific to the state of Oregon, a rural hospital can be a Type A or B hospital and a Critical Access Hospital.

The state designation of Type A or B provides Medicaid reimbursement up to 100 percent of the cost of caring for a patient for some rural hospitals.  Hospitals located in sparsely populated and remote frontier counties, are guaranteed to retain cost-based reimbursement from Medicaid. In the past, Oregon’s Type A and B hospitals all received cost-based reimbursement from Medicaid, but changes ushered in under Oregon’s Coordinated Care Organization legislation led to some hospitals moving away from cost-based reimbursement under Medicaid. Since 2014,  a state actuarial review evaluates the unmet need and challenging financial circumstances of Type A and Type B hospitals -- among other characteristics – to determine which will retain cost-based reimbursement for Medicaid for the next two years.

These rural designations significantly improve the bottom line for many fragile community hospitals. Many rural hospitals lack the operating margins needed to replace or update facilities, purchase necessary health information technology, and make upgrades. Along with tackling financial challenges, small rural hospitals must sustain a highly trained workforce, including medical providers. Even with strong recruitment efforts, rural hospitals have difficulty attracting and retaining skilled workers. Rural hospitals provide a proportionally higher volume of Medicare and Medicaid services.

What is the Critical Access Hospital Program?

Twenty-five of Oregon’s 33 rural hospitals are Critical Access Hospitals (CAHs), which is a federal program designed to improve rural health care access and reduce hospital closures. To be designated as a CAH, a hospital must meet certain requirements.  All CAHs have 25 or fewer inpatient beds, are located more than 35 miles from another hospital, maintain an average length of stay of 96 hours or less for acute care patients, and provide 24/7 emergency care services.

For their Medicare patients, CAHs receive cost-based reimbursement. As the name implies, cost-based reimbursement pays hospitals what it costs to care for a patient. Oregon’s rural hospitals have long depended on cost-based reimbursement from Medicaid and Medicare to remain viable. Prior to the CAH program and cost-based reimbursement, several rural hospitals around the country shut their doors as a result of inadequate reimbursement.

Oregon’s 33 Small and Rural Hospitals

Asante Ashland Community Hospital, Ashland (Type B)
Blue Mountain Hospital, John Day (Type A)
Columbia Memorial Hospital, Astoria (Type B)*
Coquille Valley Hospital, Coquille (Type B)*
Curry General Hospital, Gold Beach (Type A)*
Good Shepherd Health Care System, Hermiston (Type A)*
Grande Ronde Hospital, La Grande (Type A)*
Harney District Hospital, Burns (Type A)*
Lake District Hospital, Lakeview (Type A)*
Legacy Silverton Medical Center, Silverton (Type B)
Lower Umpqua Hospital, Reedsport (Type B)*
Mid-Columbia Medical Center, The Dalles (Type B)
PeaceHealth Cottage Grove Community Medical Center, Cottage Grove (Type B)*
PeaceHealth Peace Harbor Medical Center, Florence (Type B)*
Pioneer Memorial Hospital, Heppner (Type A)*
Providence Hood River Memorial Hospital, Hood River (Type B)*
Providence Newberg Medical Center, Newberg (Type B)
Providence Seaside Hospital, Seaside, (Type B)*
Saint Alphonsus Medical Center, Baker City (Type A)*
Saint Alphonsus Medical Center, Ontario (Type A)
Samaritan Lebanon Community Hospital, Lebanon (Type B)*
Samaritan North Lincoln Hospital, Lincoln City (Type B)*
Samaritan Pacific Communities Hospital, Newport (Type B)*
Santiam Memorial Hospital, Stayton (Type B)
Southern Coos Hospital and Health Center, Bandon (Type B)*
St. Anthony Hospital, Pendleton (Type A)*
St. Charles Madras, Madras (Type B)*
St. Charles Medical Center, Redmond (Type B)
St. Charles Prineville (Type B)*
Tillamook Regional Medical Center, Tillamook (Type A)*
Wallowa Memorial Hospital, Enterprise (Type A)*
West Valley Hospital, Dallas (Type B)*
Willamette Valley Medical Center, McMinnville (Type B)

Other Medicare Payment Designations for Rural Hospitals

Because of their size, modest assets and financial reserves, demographics, fragile economies and higher proportion of Medicare patients, rural hospitals often rely on the predictability and stability of Medicare payments. Some rural hospitals receive payment adjustments through programs authorized by Congress, which may help address the potential financial volatility association with rural, geographically isolate, and low volume hospitals.

These designations include sole community hospitals and low-volume hospitals.  More information on these programs can be found here.