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Does 'Independence' Truly Matter?

Carrie Vaughan, for HealthLeaders Media, August 20, 2008

One thing that community hospitals have in common—at least if they want to be successful in the years ahead—is a strong tie to the community. Most of these facilities exist because the community built them. That connection is what helps keep many of these small-town hospitals open amid declining reimbursement rates and the rising ranks of the uninsured. What the community thinks matters. And many communities place a high value on local autonomy because they are invested—either through taxes or donations—in the local hospital. They want to ensure that their hospital has their best interests at heart.

But maintaining independence is becoming increasingly difficult for smaller community hospitals. One of the biggest threats in today's market is increased competition from larger health systems that are expanding their reach into suburban and rural markets. This competition is forcing some community hospitals like Northern Hospital in Mount Airy, NC, and Hugh Chatham Hospital in Elkin, NC, to compete with larger hospital systems. Northern Hospital, which is spending $22 million to more than double its space for operating rooms and outpatient care, and Hugh Chatham, which is spending $41 million to increase capacity in its emergency room, are expanding their facilities so that they can treat more patients locally (complex cases will still be transferred to nearby tertiary systems).

Not all community hospitals have the resources to expand or modernize their facilities. Still, viewing a merger or affiliation with a large system as strictly a last resort may not be the best strategy. I've spoken to many hospital executives who say that independence is a state of mind. They maintain that it really doesn't matter if you are independent, partnered with a management company, affiliated with another hospital, or part of a hospital system, as long as you are meeting the needs of your community. What matters is that you have the resources required to update your facility, invest in new technologies, improve quality, or expand services.

If you can maintain independence and still meet the needs of your community, great. But if you are struggling financially and watching patient volumes slowly decline, you may want to think about joining or partnering with a health system sooner than later.

Not all partnerships are created equal. Some affiliations allow the community hospital to maintain a local board with reserve powers and independent decision making, while others do not. Waiting until you need a system to save your hospital from closing is not a good position to be in. It limits your choices and makes it more difficult to find a system that is a good fit for your facility and community.

Regardless of what option you choose to strengthen your hospital financially, experts contend, community support is a must. You need to maintain that connection to the community. Craft an elaborate communication strategy so that members of the community understand what is going on and why. And above all, try to build a consensus in the community that the path your hospital is taking is the best one.

Editor's note: This is my last column for HealthLeaders Media Community and Rural Hospital weekly. I'd like to thank all of the readers for the great feedback. I'll be taking over our leadership newsletter, HealthLeaders Media Corner Office, starting Friday. John Commins will be writing the Community and Rural Hospital eNewsletter.


Carrie Vaughan is editor of HealthLeaders Media Community and Rural Hospital Weekly. She can be reached at cvaughan@healthleadersmedia.com.


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