Rural Health Office Held No Panacea for Hospitals

WASHINGTON —  Federal officials said Thursday they will create an Office of Rural Health within the Public Health Service, but indicated the new agency will not be a panacea for financially troubled rural hospitals.

Even with changes next year in the Medicare reimbursement system, many small rural hospitals are likely to continue having financial problems, Dr. David Sundwall, administrator of the Health Resources and Services Administration, told the House Select Committee on Aging.

Closings in some areas could leave residents with “a severe loss of access to both in-patient and emergency services,” he said.

But Sundwall said the Health and Human Services Department’s role in assuring such services “must be viewed within the overall context of the department’s continued commitment to constrain rising federal health care expenditures.”

Offer Basic Services

Asked by committee Chairman Edward R. Roybal (D-Los Angeles) to explain what he meant, Sundwall replied: “We clearly have no intention of getting out of the business of buying health services (through Medicare and Medicaid). . . . We can’t provide the entire array of services in rural areas that we do in urban America, but basic primary and preventive services should be available.”

Sundwall said the new Office of Rural Health would monitor rural health issues, serve as an information clearinghouse and coordinate government and private efforts in the field.

He added that the office would not have the authority to write or change regulations on Medicare reimbursement. But he said the office would review proposals by the Health Care Financing Administration and make its own recommendations on various issues.

Lawmakers and several witnesses noted problems with the current two-tiered Medicare reimbursement rate for urban and rural hospitals. Some reforms were enacted last year, but they said inequities remain.

Udell LaVictoire, an official with the American Assn. of Retired Persons in Oklahoma, recommended higher doctor and hospital reimbursement rates combined with mandatory physician participation in Medicare.