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Critical Times for Small and Rural Hospitals

Philip Betbeze, for HealthLeaders Media, July 8, 2014

He's staked the organization on one thing that might seem counterintuitive: growth. Critical access hospitals, by definition, only receive their designation, and the concurrent bump in Medicare reimbursement rates, by maintaining no more than 25 inpatient beds, among other conditions.

Luckily, growth can be measured in many more meaningful ways than bed count.

"We wanted to increase our commercial payers as much as possible," Simonin says.

Now, because of the number of specialists it employs and its successful strategy to become a destination campus for both obstetric and orthopedic specialties and, soon, bariatric specialty, "we're at a higher level of commercial payers than we were in the past," he says. "We find that if people have a choice, they want to go to a place with the highest quality and patient satisfaction, and they don't care how big it is."

Gross revenues for the two hospitals combined were $20 million at the time of the merger. They're around $100 million now, and the hospitals boast 40 clinical providers now as opposed to the six they once had.

"Our communities have lost population but yet we're still growing," says Simonin.

In a bid for future growth, Iowa Specialty just brought in a full-time ear, nose, and throat physician as well as a bariatric surgery specialist.

"A lot of these people are coming from the bigger systems," Simonin says. "They don't want to be on call; they don't want fear of what the ACA's going to bring. A hospital's administration can't make money for the hospital; we're just agents for the providers."

Affiliation?

In Grinnell, Iowa, Todd Linden, president and CEO of Grinnell Regional Medical Center, offers another option: affiliation. Grinnell Regional is part of the Mercy Health Network, a large joint operating agreement in Iowa between Catholic Health Initiatives and CHE Trinity Health. But alone among the nine organizations that make it up, Grinnell is not owned by either health system—it pays an annual fee to be part of the network, which Linden says offers Grinnell opportunities it would not have on its own to participate in value-based purchasing with both government and commercial payers.

Grinnell has its own integrated physician network of which about half are its employees.

"Iowa is turning into a two-system state," says Linden, the other system being UnityPoint Health, the former Iowa Health System.

"Our alliance is bringing us the skill and scale to do risk-based contracting without being on the same balance sheet so we can contract with Iowa Medicaid, for example, and Wellmark Blue Cross," he says.

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