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Critical Times for Small and Rural Hospitals

Philip Betbeze, for HealthLeaders Media, July 8, 2014

"It's obvious that there will be significant changes, so from about three years ago, what we've tried to do is find ways for the individual hospitals to bring an additional service or something that's unique to our system," Hart says.

For instance, he says, many of them have a nursing home or assisted living facility, so they're trying to build bridges for patients who are transitioning from the ventilator unit or the critical care unit.

"They have to differentiate themselves," he says.

Specialty no longer a dirty word

Differentiation is the bedrock upon which Iowa Specialty Hospital is built—at least for the past several years since a 2007 merger brought together two hospitals in Clarion and Belmond, Iowa. Steve Simonin, its president and CEO, says the emphasis on differentiation is necessary because rural and critical access hospitals have to find a way to compete with and win against bigger, deeper-pocketed systems. Rural and critical access hospitals, especially, can't be all things to all people as hospitals have traditionally tried to be. Therefore, they have to develop areas of expertise and "specialize" in areas that offer high return on investment potential.

Simonin brings up the hit film The Matrix, in which humans were deceived through computer-generated mass virtual reality into believing their lives are much like we believe our lives are today, when in reality, their bodies were hooked up to machines and left in coma state between life and death as technology run amok used them, essentially, as human batteries.

"That's where most critical access hospitals are now," says Simonin. "When you're hooked up with a big system, they're sucking you dry for referrals. We woke up when we started acting on our own and thinking and acting as a business rather than as the ugly stepchild."

Iowa Specialty went to a fully employed physician model, which Simonin says is an oasis for providers who want nothing to do with working for a big health system.

"We're Keanu Reeves. We escaped from the Matrix," says Simonin.

Not that Iowa Specialty doesn't take advantage of its two campuses' critical access status while it still benefits them.

"We're utilizing our critical access status individually, but we're essentially staffed as one hospital with two campuses," he says.

But Simonin, like others, has little faith that the cost-based critical access hospital reimbursement program will endure, and even if it does, it won't be enough to survive without innovation and differentiation.

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