Hospital leaders praise rural emergency hospital option, warn Medicaid and Medicare rates have not kept pace

Beau Ryle, president and CEO of the Arkansas Hospital Association, and Jody Entred, executive vice president, told the committee that hospitals face sharp cost pressures and workforce shortages that are forcing operational changes.

"We represent the Arkansas Hospital Association, over a hundred member hospitals across the great state of Arkansas," Ryle said. He told lawmakers labor costs rose more than 30% in the last year and supplies and pharmaceuticals increased by 20–30%, while Medicare and Medicaid payment rates have not kept pace.

Entred described the federal rural emergency hospital Medicare designation and a state bill filed by Representative Johnson and Senator Irvin that would let hospitals change licensure to that designation. She said the designation requires hospitals to relinquish inpatient beds, formalize transfer agreements with higher-level trauma centers and would provide a monthly Medicare stipend plus an approximate 5% outpatient reimbursement enhancement in the prospective payment system. The state bill would also align commercial and Medicaid payments for such hospitals with critical access hospital payment standards.

Hospital witnesses cautioned that the designation is a tradeoff, not a universal fix: communities must weigh losing local inpatient capacity against preserving emergency and outpatient services, and economic-development considerations (businesses favor locations with hospitals that have inpatient beds) add complexity.

In audience Q&A, members asked about rural recruitment and how the designation would work in population-loss areas; presenters said only a handful of hospitals in Arkansas would meet the designation's criteria (communities under 50,000 people and small-bed hospitals) and that any change would require a transparent community assessment and robust transfer systems.

Ryle and Entred also raised concerns about rural service-line reductions—particularly birthing services—and said fewer than 40 hospitals in the state currently deliver babies, making distance and transportation real access issues for rural pregnant residents.

Presenters pledged to provide the committee the hospital association's rate-review materials and the Global Data workforce report for follow-up. No legislative action occurred during the meeting.