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Analysis

Financial Survival Tips for Rural Providers

By Christopher Cheney  
   February 29, 2016

With hospitals leading the charge, rural healthcare providers are finding pathways to success in population health and risk-based contracting with payers.

Like neighboring farmers banding together to raise a barn over a weekend, rural hospitals are banding together to raise their value-based healthcare capabilities as quickly as possible.

"The hospitals typically have the resources to build an ACO in a rural market. It's prohibitive for rural doctors. You would have to partner with several tiny practices," says Lynn Barr, chief transformation officer at the National Rural Accountable Care Consortium.

NRACC is a nonprofit based in Nevada City, NV. It organized 23 rural Medicare Shared Savings Program ACOs in 2015, including 147 community and critical access hospitals in nine states. This year, NRACC plans to nearly double the number of rural ACOs participating in MSSP and plans to operate ACOs in 32 states.

NRACC ACOs are serving 500,000 Medicare beneficiaries in rural communities, Barr says. The figure accounts for about 5% of Medicare's rural patient population and rural ACOs operating outside NRACC serving at least as many Medicare beneficiaries.    

An effort to launch an ACO in the North Country of New Hampshire reflects the key role hospitals are playing in adoption of value-based healthcare models in rural markets, she says. The new ACO, which is launching this year, includes a handful of rural hospitals, including Berlin-based Androscoggin Valley Hospital, a 25-bed critical access hospital.

By banding together, the hospitals will be serving about 10,000 patients, which should be sufficient scale to make the new ACO financially sustainable, Barr says. "It took five hospitals to get there, but now they're all in an integrated network. Now, we can go to Medicaid, we can go to Blue Cross, and we can enter risk-based contracts."

The new ACO is building on collaboration among four North Country hospitals that began in earnest with an affiliation deal in July 2014. In addition to Androscoggin Valley, the other members are Littleton Regional Healthcare, Upper Connecticut Valley Hospital in Colebrook and Weeks Medical Center in Lancaster. To lead their integration efforts, the foursome has created a parent organization, North Country Healthcare. The fifth member of the new ACO is Cottage Hospital in Woodsville.

The effort will be Androscoggin Valley's first foray into risk-based reimbursement of any kind, says James Patry, the hospital's public relations and marketing director. "We're still very early on in the ACO process."

The leadership team and physicians at Androscoggin Valley are preparing to deliver care under an ACO model with two prime goals, he says: maintaining quality and embracing innovation.

"We're going to measure success in value-based care the same way we do in volume-based care: It's quality. If we continue to provide quality care, the rest will fall into place… A lot of it is Yankee ingenuity. We get people around the table, find out what we can do, then get busy doing it the best we can."

A little financial help from the feds doesn't hurt.

The Centers for Medicare & Medicaid Services recognizes that rural health systems, hospitals, and physician practices often lack the financial resources to retool their organizations for value-based care delivery with costly investments such as new electronic medical record systems, Barr says. "Nobody can afford to build an ACO. It takes $2 million to $2.5 million to build one."

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.


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