• Small, Rural Hospitals Tackle the Challenge of Scale

    Jan 31, 2013

    Evaluating specialty services, adding primary care physicians, and partnering with larger health systems, are targeted strategies some small, rural hospitals are using to achieve greater scale.


    Leaders in small, rural hospitals recognize that emerging value-based payment models will have a significant impact on their organizations, according to the latest research report from HFMA’s Value Project. Small, rural hospitals face a number of unique challenges in the move toward improved value, including limited scale, which restricts their access to affordable capital and their ability to take advantage of population management initiatives. However, some small, rural hospitals are tackling the challenge of limited scale with the following strategies.

    Right-Size Specialty Services

    Rural facilities are reevaluating the need for specialty services in their communities as part of their organization’s strategic planning efforts. For example, Franklin Memorial, Farmington, Maine, underwent a strategic planning process through which it recommitted to offering some specialty services. Wayne Bennett, the hospital’s CFO, says competitive dynamics, including the emergence of value-based payment, have made it imperative that the hospital deliver these specialty services efficiently and effectively.

    As a result, Franklin Memorial has engaged in an intensive effort to bend its cost curve by assessing overhead costs associated with quality management, case management, utilization review, and documentation, as well as taking another look at vendor contracts and the use of supplies. “We are trying to figure out how to streamline and reengineer our delivery of specialty services,” Bennett says. “I think there’s a lot of opportunity to improve value in this area.

    In addition to determining what level of specialty services is realistic and appropriate for community needs, rural hospitals also are assessing how best to deliver these services. Some organizations have opted to provide certain specialty services through telehealth partnerships. For example, Copper Queen Community Hospital, Bisbee, Ariz., has established telehealth arrangements for cardiology services and strokes and is working on a burn program.

    For services provided by specialists in the community, some organizations have established suites where visiting specialists (who usually come from regional, tertiary care facilities or larger, multispecialty clinics) can see patients when they are in town, making it easier for these specialists to conduct pre- and post-operative patient visits. Franklin Memorial has dozens of physicians—mostly specialists from outside areas—who have admitting privileges. Andalusia Regional Hospital in southern Alabama has 52 physicians on its courtesy staff, and a number of specialists—representing cardiology, urology, pulmonology, neurology, nephrology, oncology, and ophthalmology—hold periodic clinics at the hospital in a strategic partnership with a neighboring system.

    Increase the Organization’s Primary Care Base

    Adding one or two primary care physicians to a rural hospital can significantly affect care delivery, mainly because of the physicians’ importance in managing patients in a value-based payment environment and the power they hold in coordinating care with specialists. Attracting and using physician extenders also can help rural hospitals bolster their primary care base.

    Crete Area Medical Center, a 24-bed critical access hospital in Crete, Neb., has taken the additional step of organizing its four physicians and three mid-level providers into patient-centered medical homes. This strategy will help the facility more effectively address underlying population care issues, such as chronic disease management. As Bryce Betke, Crete’s CFO, noted, “We are doing this to position for the future.”

    Network with Larger Health Systems

    Rural hospitals may have an opportunity to network with larger, neighboring health systems, many of which are likely to be interested in generating more referrals from rural areas. These types of strategic partnerships could better position the rural facility to gain access to specialists within the community, leverage capabilities of the system, and participate in a broader continuum of care.

    For example, Crete Area Medical Center aligned with a larger health system in 2001, leveraging the health system’s expertise in Lean process improvement, patient-centered medical homes, and quality performance measurement, including readmissions, infections, medical errors, and harmful events, says CFO Bryce Betke.

    Franklin Memorial has three larger systems nearby. A subcommittee of board members is charged with determining whether Franklin Memorial should align with any of these systems, and, if so, which one. A potential advantage to Franklin Memorial of this type of alignment is augmenting the availability of specialists from the larger systems in Franklin Memorial’s community.

    Networking with a larger health system provides the rural facility with the opportunity to participate in a broader continuum of care. For example, the network could complement the primary and long-term care provided by the rural facility with secondary and tertiary services. This type of affiliation could provide access to longitudinal patient data that enables total health management across the care continuum. It might also present opportunities to participate in population risk-based payment arrangements.

    By ensuring the right mix of specialists in the community, increasing their primary care base, and networking with larger systems, small, rural hospitals can improve coordination of care, enable the development of population care capabilities (such as chronic disease management), and better position their organizations for value-based payment.

    This article is excerpted from HFMA’s The Value Journey: Organizational Road Maps for Value-Driven Health Care.