Value of Rural Hospitals Linked to ED Utilization

Any comparisons of urban and rural healthcare costs come freighted with caveats.

For starters, rural hospitals usually cannot provide the array of specialized and expensive care seen in larger urban hospitals, making per-patient cost comparisons difficult. There can also be stark differences in patient populations. And rural hospitals do not enjoy the economy of scale and leverage with vendors and insurance companies that are seen in larger urban hospitals.  Critical access hospitals get higher reimbursements from the federal government for care delivery, further muddying comparisons.

Still, there is a nagging perception out there that the 1,700 or so management teams at rural hospitals across the nation don't provide the same level of care delivery value as urban hospitals. 

A study by Portland, ME-based consultants iVantage Health Analytics challenges that perception.

"We just keep seeing the data repeat the fact that on the measures the industry is looking at--safety, process, outcomes, satisfaction, the big value measures--we don't see gigantic differentiation between urbans and rurals," says iVantage Executive Vice President John R. Morrow.

Lower costs for rural care
The study says cost per Medicare beneficiary is 3.7% lower overall for rural vs. urban beneficiaries, which would represent about $7.2 billion in annual savings if the average cost per urban beneficiary were equal to the average cost per rural beneficiary. Medicare already benefits from $2.2 billion of lower beneficiary costs for care delivered to rural beneficiaries vs. urban.

"When we look at Medicare costs per beneficiary for inpatient outpatient and physician care the cost per beneficiary we see rural costs are 2.7% lower than urban costs," Morrow says. "That doesn't include just the costs incurred in the rural setting. That is cost assigned to the beneficiary. So when the patient goes to Boston for a hip replacement those costs are assigned to his home, not where he had the care."

Access to physicians
In addition, the study found that in rural hospitals physician services payments are 18% lower, and hospital service payments are 2% lower, but outpatient service payments are 14% higher for Medicare beneficiaries. Morrow says that may be due largely to the use of the emergency department for non-emergency care.

"The big issue in rural care that people are stuck on is the access issue," Morrow says. "People talk about there not being any primary care and some of the evidence in our study points to the fact that people go to the rural emergency department during normal daylight business hours at a much higher rate than at all hospitals. We also see the severity level of patients in the rural EDs being lower than that of patients attending any emergency department. That supports the idea that in rural America people use the ED for primary care."

Efficient ED care
Morrow agrees that the ED is an expensive option for non-emergency care. But he says his study found that rural ED patients see a physician 30% faster and spend about 33% less total time in the ED than urban ED patients. In addition, rural ED visits result in less than half the hospital admissions than in other national benchmark reports of all hospitals.

"We are able to document that people get seen quickly," he says. "It may cost more, but they get to see a physician faster than if they were in an urban setting and they spend less time in the ED. Maybe the rural ED has figured out how to solve for the lack of primary care access. That may not be a bad thing. It's just different from what everyone else is saying."

Morrow says that the case against ED utilization may be relying too much on data collected at urban hospitals and projected onto every hospital regardless of its size, status, or mission.

"The data we see from large urban areas if you apply it nationally would be a bad thing," he says. "So there is an effort to keep people out of the ED. OK, that may be true but in rural settings it is not such a negative. What is the alternative? Loading up rural America with primary care physicians?"

Morrow says ACO designers would be well served to re-examine the role that rural hospitals play in managing patient population health.

"They have had to do it because they have a more non-transient population base," he says. "If you are an ACO or a mother ship hospital in a suburban setting there is something to be learned from the rural hospital that is your feeder hospital. This generalization that rural hospitals are crap it doesn't play out in the data. They are doing what they do pretty well.