BUSI 304 Week 8 Case Study 2 Example

Case Study 2: Should a Struggling Critical Access Hospital Become a Rural Emergency Hospital?

Case Summary

Mill Creek Memorial is a 25-bed critical access hospital, the only hospital in a rural county of 14,000 people. It averages four inpatients a day, has posted a loss five years running and has cash for about 60 days of operations. Its emergency department sees about 6,000 visits a year, and the nearest other hospital is 48 minutes away. The board is considering conversion to the Rural Emergency Hospital designation, which Medicare created in 2023. Under the designation, the hospital would stop admitting inpatients while continuing to run an around-the-clock emergency department and outpatient clinics, in return for higher outpatient payments and a fixed annual facility payment.

Question 1: What Is the Problem?

McLaughlin and McLaughlin (2015) emphasize that the way a problem is framed determines which solutions seem possible. Framed narrowly, Mill Creek's problem is financial: too few inpatients to cover the fixed cost of staffing beds around the clock. Framed from the community's perspective, the problem is how to preserve timely emergency care and basic services in a county where the alternative is nearly an hour away. A good decision must address both framings, since a financially sound plan that the community rejects will not succeed. A third framing, a workforce problem, also matters: the hospital struggles to staff inpatient nursing shifts for so few patients, and agency nurses cost far more than employees.

Question 2: Who Are the Stakeholders?

Residents, especially older adults and families without reliable transportation, depend on the emergency department and on local outpatient care. The hospital's 180 employees are among the county's largest workforce, and nurses who prefer inpatient work may leave if beds close. Local physicians want a place to admit patients nearby. The county government, which owns the hospital, faces both budget pressure and political pressure from voters. Medicare and Medicaid, as the main payers, shape the financial options. Regional health systems might see an opportunity to acquire the hospital or to receive its inpatients. Emergency medical services matter too: if inpatient care ends, ambulances will make more long transfers, taking crews out of the county for hours at a time unless transfer arrangements are planned in advance.

Question 3: What Are the Options?

Four options are realistic: (A) remain a critical access hospital and seek cost savings; (B) convert to a Rural Emergency Hospital; (C) join a regional health system as an affiliated critical access hospital; and (D) close. They should be compared on five criteria: emergency access, access to other local services, financial sustainability, quality and safety and community trust.

Question 4: What Does the Evidence Suggest?

Research on hospitals that have already converted describes Mill Creek closely. Van Sandt et al. (2026) found that converting hospitals had low inpatient volumes, occupancy and revenues, which positioned them to benefit financially from ending inpatient care. They also found that news coverage mostly emphasized the financial benefits, while many residents they interviewed viewed local care negatively and said they would rather travel elsewhere than use the converted local facility. Conversion can stabilize finances, but it can also cost community trust. If residents bypass the local emergency department for a distant one, the facility loses the volume that justifies its payments, and the county loses the very access the conversion was meant to protect. Any conversion plan therefore has to treat communication with residents as part of the strategy, not an afterthought.

Closure, option D, would carry the greatest harm. Zheng et al. (2026) found that hospital closures in Texas increased travel time to the nearest emergency department more often in small town and rural areas than in cities, and in time-sensitive emergencies minutes matter. For Mill Creek's county, closure would add nearly an hour to every emergency trip, a delay that matters most for heart attacks, strokes, serious injuries and complicated births.

Survival research supports option C as well. Al-Amin et al. (2026) studied 2,248 rural hospitals and found that critical access designation, having an emergency department, government ownership, system membership and stronger finances all reduced the likelihood of closure. Mill Creek already has the first three; joining a system would add the fourth. Option A, staying as is, depends on finding savings that five years of losses suggest may not exist. Their finding that higher staffing levels and longer stays were associated with closure also suggests why: an inpatient unit staffed around the clock for four patients carries costs that volume cannot cover.

Scoring the options, closure performs worst on access and trust. Remaining as is performs well on trust and access but poorly on sustainability. Conversion performs best on sustainability and preserves emergency access but loses inpatient care and risks trust. System affiliation performs well on most criteria if a partner is willing, but may take longer than the hospital's 60 days of cash allow. These judgments rest on evidence from other places, and Mill Creek's own data, such as how many inpatients could safely be cared for elsewhere, should be gathered before the vote.

Question 5: Biblical Integration

Scripture describes leaders as stewards who must give an account, and it calls the faithful to care for neighbors in need, as the Samaritan cared for the injured stranger on a lonely road (English Standard Version Bible, 2001/2016, Luke 10:33-34). For a rural hospital board, faithfulness means neither clinging to a model that will bankrupt the hospital nor abandoning the community to save money. Proverbs also teaches that plans succeed with many advisers (English Standard Version Bible, 2001/2016, Proverbs 15:22), which argues for involving residents in the decision rather than announcing it. A small hospital serves its community best not by keeping every service, but by keeping the ones its people cannot live without.

Question 6: Recommendation

I recommend option B, conversion to a Rural Emergency Hospital, pursued together with option C, an affiliation agreement with a regional system for transfers and specialty outreach. Conversion addresses the immediate financial crisis while preserving the emergency department that the county most needs, and affiliation gives patients who need admission a reliable path to a partner hospital. To protect community trust, the board should hold public meetings before deciding, explain clearly which services will remain and add outpatient services residents ask for, such as behavioral health or infusion. The hospital should measure emergency department volumes, transfer times, outpatient visits, finances and community satisfaction twice a year through the end of the second year and publish the results. If emergency volumes fall sharply or transfer times prove unsafe, the board should revisit the decision and seek guidance on what Medicare's rules allow for resuming inpatient care.

Conclusion

Mill Creek's decision reflects a national problem: small rural hospitals built for inpatient care in an era when most care is outpatient. The Rural Emergency Hospital designation offers a path that preserves what rural communities need most, emergency care close to home, if hospitals use it transparently and with their communities rather than for them.

References

Al-Amin, M., Li, K. J., Rosko, M., & Guerrazzi-Young, C. (2026). Rural hospitals closures and conversions: The role of organizational characteristics and market forces. Journal of Health Organization and Management. Advance online publication. https://doi.org/10.1108/JHOM-07-2025-0429

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

McLaughlin, C. P., & McLaughlin, C. D. (2015). Health policy analysis: An interdisciplinary approach (2nd ed.). Jones & Bartlett Learning.

Van Sandt, A., Line, K., Gruber, A., Meier, C., Carpenter, C., & Loveridge, S. (2026). Rural emergency hospitals: Emerging patterns of adaptation and community perception. Journal of Rural Health, 42(1), e70112. https://doi.org/10.1111/jrh.70112

Zheng, H., Horel, S., & Blackburn, C. C. (2026). Hospital closures increase emergency care travel time: Rural-urban disparities. Inquiry, 63, 469580261454514. https://doi.org/10.1177/00469580261454514