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3 Big Rural, Community Healthcare Challenges

John Commins, for HealthLeaders Media, January 9, 2013

This greater demand to provide and manage care for the obese will come as healthcare reform turns towards reimbursement models that reward quality outcomes and prevention over fee for service. Rural healthcare providers must get on the front end of this epidemic and emphasize prevention. Unfortunately there doesn't seem to be much coordination for this in any broad fashion.

"They are coming from totally different angles. We have people with different world views," he says.

"The folks in cooperative extension are coming largely from the perspective of agriculture. They feel somewhat uncomfortable moving towards healthcare as part of their mission. The folks in hospitals and clinical care see cooperative extension as the folks who help farmers and run 4-H clubs. There hasn't been a concerted effort to bring the two groups together."

What's Driving the Community Hospital M&A Boom?
Clearly, PPACA is a major component of the drive toward hospital mergers and acquisitions. But this trend has been accelerating since before Barack Obama was elected president. Irvin Levin Associates tells us that there has been a steady increase in hospital M&As over the past decade, growing from 38 deals involving 56 hospitals in 2003, to 90 deals involving 156 hospitals in 2011.  

A report from the Healthcare Financial Management Association provides the three primary drivers behind the rising numbers of hospital M&A:

  1. Lower payment rates from all payers will invite consolidation as hospitals look to reduce costs and improve economies of scale and market leverage with payers and vendors.
  2. Physician-employees, technology, and regulatory compliance are driving up the cost of doing business.
  3. Accountable care organizations reward integrated healthcare delivery that improves quality at reduced cost.

In the face of these challenges, scores of otherwise stable and well-managed not-for-profit community hospitals and health systems have joined with larger health systems in any number of partnership models. The strategy for many of them is to negotiate now from a position of strength rather than waiting for market pressures to force a move.

The biggest knock on hospital M&As is the loss of local autonomy. Hospitals are often the biggest employers and economic engines in the regions they serve and a source of local pride. No matter what guarantees are put in place the boards at most acquired hospitals are usually reduced to advisory status and their control is greatly diminished.

Scores of other hospitals across the nation have seen which way the winds are blowing. Increasingly they are willing to forfeit a certain amount of autonomy in exchange for access to the capital and clinical and business expertise that will improve their position in a highly competitive market.


John Commins is a senior editor with HealthLeaders Media.

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