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Financial Survival Tips for Rural Providers

Analysis  |  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."

To help finance the formation of rural ACOs, NRACC is tapping funds through the CMS's Center for Medicare and Medicaid Innovation, which gave rural healthcare providers $46 million in 2015 through the ACO Investment Model program.

The feds provide the money upfront and the funding converts to grants if ACOs fail to earn shared savings payments. With the vast majority of rural providers operating on thin margins, the low-risk proposition to begin adopting value-based care models is enticing, she says. "They're not making big bets on new models of care."

 

Rural-Market Inherent Advantages for Value-Based Care
Although there are daunting financial challenges to adopting value-based care models in rural markets, there also are advantages to seize upon. The biggest built-in advantage is familiarity with patients.

"That is the key—that relationship. If people don't know you, they don't open up. And rural providers know you. They know how much you drink and how much you argue with your wife," Barr says.

The staff members at rural hospitals establish a level of familiarity that is hard to match in urban markets or at large medical centers, says Bruce King, president and CEO of 83-bed New London Hospital, which is also located in the New Hampshire North Country. "We're more nimble. Those patients who come to the emergency department, we get to know them," he says. "That's where I think scale works for us."

New London Hospital, which is affiliated with Lebanon, NH-based Dartmouth-Hitchcock, is using familiarity with patients to "reach out proactively" in ways that support core goals of population health, King says.

The hospital is planning to launch a mobile integrated health initiative that will capitalize on the ambulance crew's familiarity with members of the community. Hospital EMTs and paramedics will be helping to conduct follow-up visits with chronically ill patients. "It's a little like home healthcare," he says.  

Familiarity with patients fuels care coordination, which is one of the prime mechanisms of population health, Barr says. "The number one factor of care-coordination success is the relationship with the patient."

Healthcare is a "very personal" business in rural markets, and hospitals can play a pivotal role as catalysts for change in isolated areas of the country, she says. "They can really mobilize the community. They have social prestige and can focus on a particular campaign [such as smoking cessation]."

Rural Physician Practices Get on Value-Based Bandwagon
Even resource-starved physician practices in rural markets can make progress toward adopting value-based care models, Barr says.

Changing workflows at practices such as more intensive pre-visit screening and boosting preventive care are essential steps for introducing population health models of care at the physician-practice level, she says. "This is just redesigning what we do at the front desk… It doesn't take a lot of resources."

And improved workflows can pay huge dividends in patient satisfaction scores. "It is very impactful," Barr says.

All rural healthcare providers can capitalize on a market mindset that has a softer edge than urban markets, she says. "We don't compete against each other, so there's a lot of sharing of the best ideas."

Christopher Cheney is the CMO editor at HealthLeaders.


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