Isolated yet opportunistic

Rural hospitals smartly respond to industry-wide challenges

As rural health care systems continue to face physician shortages and budget cuts, many wonder if the small-town community hospital can survive. The entire industry is in a state of flux, and nationwide trends — like flatlining reimbursement rates in the face of efficiency and technology investments — are hitting rural areas particularly hard, as facilities in isolated places have always operated in a more precarious financial position than those in urban locales.

"When you have a small budget and you take a 5 percent cut, you're cutting to the bone right away," says Joellen Edwards, president of the Rural Health Association of Tennessee. "Our organization supported health care reform. We felt like it was absolutely necessary to improve access to care. But some of the provisions can really hurt small, rural or critical access hospitals more than they hurt large medical centers."

Access to health care in rural areas has been a major issue for decades, but physician shortages are becoming increasingly dire. An Academic Medicine study published in September 2013 found that among 200 of the nation's graduating medical institutions, only 4.8 percent of graduates went on to practice in rural areas, a rate the study called not just ineffective in addressing shortages, but unsustainable overall.

Additionally, the shift to value-based reimbursement is often perceived as having an unfair burden on small and rural providers, as meeting quality and coordination metrics require a sophisticated infrastructure and management staff. The environment of increased regulatory responsibilities is leading physicians nationwide to opt out of private practice. This has particular consequences on strained rural facilities, which have even fewer resources to implement system overhauls such as ICD-10.

"It's just harder to meet those requirements when there's one physician, a nurse practitioner and a front office person," Edwards says. "They have less insured patients, less funding, less technologically prepared personnel. It's a whole different ball game."

Despite ongoing budget concerns, rural hospitals are frequently critical economic engines in the areas they serve and necessary care access points, so health systems are beginning to reevaluate their business models. Many non-urban hospitals are developing partnerships with other outpatient providers, specialists or health systems to increase services and improve future sustainability.

"A big driver has been the weak economy and the lack of necessary capital investment, which is leading to a lot of hospitals struggling financially," says Bill Jolley, vice president of rural health issues for the Tennessee Hospital Association. "But how do systems maintain a medical presence? Certainly they are operating very efficiently for the type of care that's most relevant. The things they can provide, they provide really well."

Vanderbilt University Medical Center and LifePoint Hospitals subsidiary Sumner Regional Medical Center announced earlier this year one such clinical partnership to expand services for the Gallatin-based hospital, including on-site pediatrics and a teleneurology program. Telehealth has become an increasingly common solution to physician shortages, making it easier for rural populations to access a range of specialists.

These days, Dr. Gregg Perry, director of psychiatric services at Knoxville-based Cherokee Health System, sees all of his patients via telemedicine. Doctors in the Cherokee system treat patients across rural East Tennessee, and technology improvements have significantly increased access throughout the region.

"The last time we recruited a doctor to live in a particularly rural area near the Kentucky border was 1999, and he left after one year," Perry says. "It's very difficult to recruit, especially specialties, in remote areas. Through telehealth, we can continue to offer a high quality of care that we would just not be able to offer otherwise."

The technology has improved significantly, says Perry, who has been practicing telemedicine for 15 years. It has also become more affordable — Cherokee can set up high-quality, remote telemedicine sites for less than $10,000. A nurse practitioner or other clinician is a part of the session at the remote site to oversee both the visit and the equipment, and the system has had great success in patient satisfaction.

"Would they prefer to see someone live? Most people probably would," Perry acknowledges. "But when they simply aren't available in person but they can be seen through telemedicine, they adapt to it very quickly. Many of them are nervous at first. But once we start, it's like any other exam."

The Rural Hospital Association successfully introduced legislation in Tennessee this year requiring insurers to reimburse for telehealth visits, Edwards says, and the organization continues to advocate for the federal government's prioritization of IT funding for small, rural hospitals. Through telehealth and other on-site clinical partnerships, hospitals can alleviate some of the pressures that strain their resources.

"Many hospitals are looking for affiliations and partnerships because of the dramatic influx of change,” says Marty Rash, CEO of Brentwood-based RegionalCare Hospital Partners. “I've been doing this since 1978 and this is the most change I've seen in my career."

The company operates eight hospitals with a regional influence model built through partnerships with both small, rural hospitals as well as larger facilities, such as the University of Alabama Health System, to ensure the next level of care is accessible and coordinated.

"Our hospital is the middle ground between the large care center and the small community hospital," Rash says. "We view ourselves as needing to form partnerships both ways."

The partnership model increases the availability of services for patients in non-urban settings, but it also streamlines the coordination process. The information flow will continue to be important as hospitals nationwide emphasize consistency throughout care episodes.

"We're looking for ways to better facilitate that integration and continuity of care for the patient, so the care is delivered in a better manner," Rash says. "It ensures relevance for everyone. From both a payer standpoint and community standpoint, people know we have that next level of care available."

Despite advancements, rural health care remains in a precarious place, with many facilities still in danger of closing. In the coming years, non-urban facilities will have to be particularly efficient and creative.

However, through improving technology, clinical affiliations and other modern partnership models, rural hospitals can better situate themselves to improve access and achieve future sustainability.