If you'd rather be alone when you're sick, Paris Community Hospital can now accommodate you with its all new single-patient rooms that came with an $11 million remodeling job.

New construction also has been going on at the hospital in Gibson City, where a $7 million emergency department just opened.

Monticello's hospital has pricey new diagnostic equipment – and a new sleep lab where you can find out why you toss and turn all night.

To think: A decade ago, many small community hospitals like these were struggling just to pay the light bill. Today, many of Illinois' small-town hospitals not only have a brighter outlook, but are also adding new space and the kinds of services once only found at larger hospitals.

How can they afford it?

In the past decade, many of those hospitals have gotten a financial boost from a federal program that was launched in 1997 and is little known outside the health care industry.

The Critical Access Hospital Program was created to increase the profitability of small, rural hospitals by helping them break even on a substantial portion of their patient business – Medicare.

Critical access hospitals are reimbursed at a hair above their Medicare costs: 101 percent. Medicare pays other hospitals preset amounts for various procedures and hospitalizations, regardless of the cost involved.

Because the conventional payment system tends to work out better for higher-volume hospitals, smaller hospitals were losing money on Medicare patients before the critical access program came along, said Pat Schou, executive director of the Illinois Critical Access Hospital Network.

"Many were losing $500,000 a year," she said.

Changing demographics didn't help. Many small, rural hospitals are in communities where employers have left town, and the population has shifted to fewer younger families and more elderly residents.

That shift left rural hospitals with a dilemma: They still had to maintain the same expensive, around-the-clock services – but with fewer non-Medicare payers to share the cost.

Without a switch to cost-based payments, more than half of Illinois' hospitals that are now critical access sites would have closed – or would have been on the brink of closing by now, Schou said.

"Now they're getting at least their costs, so they can at least break even and they can be more balanced on what they charge their commercial payors," she said.

How much more?

Illinois' first two critical access hospitals were designated in 1999 in Carrollton and Monticello. There are now 51 in the state and nearly 1,300 nationwide.

Critical access hospitals were on track to receive $5 billion in Medicare payments in 2006, about $1.3 billion more than they did under their former payment system, according to the Medicare Payment Advisory Commission in a 2005 report to Congress.

On an individual basis, hospitals that converted to critical access status took in more than $3 million in Medicare payments in 2003 – $850,000 more than they would have received if their payments had risen at the same rate of hospitals that didn't convert.

And roughly all the increase came from higher payment rates, not higher patient volume, researchers found.

Higher Medicare payments had an almost immediate impact on Dr. John Warner Hospital in Clinton, which was struggling when it became a critical access hospital in March 2000, chief financial officer Donna Wisner said.

For the fiscal year ending April 30, 2000, the hospital lost $777,000 – even with two months of higher Medicare revenue on the books.

But with 12 full months of higher Medicare payments the next year, the hospital came out $450,000 ahead on its Medicare business, Wisner said.

Hospital officials in Clinton hadn't talked about closing before 2000, Wisner said, but clearly it couldn't continue sustaining $700,000 annual losses.

These days, the hospital is better able to keep up with necessary equipment purchases but hasn't been able to add much more, Wisner said.

The critical access program "put us in the situation where we're not losing money," she said, "but we still need to be very prudent with what we spend."

Who benefits?

Keeping critical access hospitals open and healthy benefits more than the elderly on Medicare, Schou said.

The hospitals have a domino effect on their local economies: providing jobs; keeping doctors in town; even enhancing the community's economic development draw because prospective employers like to locate in towns with medical services.

Face it: When you need an emergency room, you don't want to be 30 or 40 miles away, Schou said.

"Many (hospitals) are kind of the spoke in the community. They're important for long-term care facilities that are there, the schools, physicians living in your community," she said. "All those are necessary for keeping your community intact."

In Illinois, critical access hospitals had a $775 million impact in terms of payroll and purchases on the economies of 44 counties studied in 2005, according to a report released last summer by the Northern Illinois University Regional Development Institute.

Some of the benefit is coming from hospital construction and remodeling jobs. Projects planned for this year through 2011 will provide another $21.7 million in revenues and 1,100 construction jobs, NIU researchers projected.

The report also found critical access hospitals are significant employers in their communities, often among the top three.

They also can be significant employers for surrounding towns. Gibson Area Hospital and Health Services, for example, employs 350 people living in 50 different towns, hospital Chief Executive Officer Rob Schmitt said.

Monticello's John and Mary E. Kirby Hospital is Piatt County's second-largest employer, with a staff of about 150, CEO Steve Tenhouse said.

"Having a hospital in a county this size, a community this size, helps to attract business," he said. "It attracts people."

New life for hospitals

John Fajt, a four-decade veteran in hospital administration, remembers the grim prognosis for small hospitals like his in the years before critical access.

"They were slowly but surely expiring, dying, as the years went on, and the critical access program gave vitality to those organizations," he said.

Fajt, the Paris hospital's CEO for seven years, says critical access hospitals can pay competitive wages. As better credit risks, they have better access to capital. And, assured of breaking even on a substantial number of their patients, they can expand their missions in their communities and plan for the future.

Fajt said his own hospital was in sound financial shape even under the traditional Medicare payment system, thanks to good stewardship by the hospital board and strong community support.

But now it can offer so much more.

In addition to the new single-patient rooms, the Paris hospital has added parking space, new mechanicals and a new outpatient/medical office center. It also has a new wound care center and new digital radiology and is nearly finished converting to an electronic medical records system, Fajt said.

The single-patient rooms – intended to reduce infections and increase patient privacy – have been quite a hit, Fajt said.

"Our patients love being in a room by themselves," he said.

Busy in Monticello

The John and Mary E. Kirby Hospital has 16 beds and an average daily patient census of six. But don't be misled by those small numbers: Tenhouse said his hospital delivers a lot of care.

The hospital runs a rural health clinic in Atwood five days a week and a busy ambulance service.

It has a Carle Clinic branch next door and works closely with Carle Foundation Hospital in Urbana and other regional hospitals to bring in services and specialists it can't provide on its own.

Kirby Hospital's emergency room and convenient care center combined average 10,000 patients a year – and those are patients who otherwise would require a 25-mile drive to the nearest hospital, Tenhouse said.

Thanks to its stronger financial outlook these days, Kirby recently brought in a new 16-slice CT scanner used to diagnose a multitude of diseases and injuries and is set to start offering cataract surgery next month.

It's upgraded its telemedicine equipment used for consultations between patients at Kirby and doctors at other medical centers. And Tenhouse said he's looking at more outpatient services the hospital could add.

"Critical access was a real savior for us," he said.