Critical access hospitals are an essential vehicle for delivering patient care to local residents of rural, outlying areas. Their importance was in legislation that Congress passed in 1997 which established a payment system specific to critical access hospitals (25 beds or less in a rural location). The purpose of this bill was to ensure residents of rural areas would have adequate access to hospital care by improving Medicare reimbursements to those facilities.

Slightly over a quarter of all U.S. hospitals are designated critical access hospitals. About 60% of hospitals classified as “rural” are also designated critical access*. The four states with the highest number of these facilities are Iowa, Kansas, Minnesota, and Texas. This is a sizable market where a tremendous amount of care is delivered. Yet given the size of this market, many of these institutions feel under-resourced and underfunded, for a variety of reasons.

In our next post we’ll take a look at the pressures that critical access hospitals are experiencing when it comes to implementing health IT in their hospitals.

*Assuming a total of 5,000 U.S. hospitals

Chris O’Neal is Managing Partner at KATALUS Advisors. KATALUS Advisors is a strategic consulting firm focused on the healthcare vertical. We serve healthcare technology vendors, hospitals, and private equity groups in North America, Europe, and the Middle East. Our services span growth strategies in new and existing markets, M&A due diligence, market analysis, and advisory services. www.KATALUSadvisors.com