3 Big Rural, Community Healthcare Challenges

I spent a recent afternoon reviewing some of my columns from 2012.

Clearly the biggest issue facing all healthcare providers, both rural and urban, this year 2013 and into the next decade or longer is the implementation of the Patient Protection and Affordable Care Act.

There are still a lot of questions about the rollout, particularly as they relate to Medicare/Medicaid reimbursements and the development of state-and federally sponsored healthcare exchanges.

With that in mind, it's easy to forget that rural and community-based healthcare providers have other challenges that precede or are not directly tied to PPACA. That's what I'd like to look at today.

Rural Patient Migration
The story that I found most interesting in 2012 concerned patient migration from rural areas. As I noted in September, a study found that nearly half of Tennesseans living in rural areas who seek healthcare drive past the hospitals closest to their homes to look for care in more urban settings, even when their local hospitals offer the same services.

Unfortunately, the data used to compile the study doesn't say why rural patients travel farther from home to get their healthcare. Study author Steven L. Coulter, MD, president of the BlueCross BlueShield of Tennessee Health Institute says "that actually is the question of the hour."

"My speculation is that they perceive, whether true or not, that the services are better elsewhere. We really can't make a policy-level judgment based on the data we have found. All we can say is people are mobile and they are moving. What we can't say is whether that is a good thing or a bad thing, because we haven't looked at clinical outcomes or the economic impact on the communities that these small hospitals serve."

These findings suggest that profound changes are underway for rural hospitals, at least in Tennessee. Maybe it's time for rural hospitals to wave the white flag for elective procedures and instead focus on services that take advantage of their proximity to patients: Trauma and chronic care.  

The Affordable Care Act will place a renewed emphasis, and money, on chronic care treatment. Coulter believes that rural hospitals are a perfect source point. Instead of traveling longer distances for their more-frequent chronic care consultations, patients could drive to the hospital down the street.

The Obesity Battle in Rural America
Generally speaking, rural providers have to care for an older, sicker, less educated, less-affluent and more overweight population. That poses any number of challenges in this era when reimbursements shift away from fee-for-service and more toward outcomes.

In September, I wrote about a University of Florida study published in the Journal of Rural Health which found that 40% of rural residents are obese, compared with 33% of urban residents.

Earlier studies had already shown that overweight and obesity is a bigger problem in rural areas, but those studies put the difference in the 2% to 3% range. That estimate is now doubled. With about 60 million people live in rural America, and assuming that the UF findings are valid, 24 million rural residents are obese as measured by the Body Mass Index.

"The problem [is that] the earlier studies were based on surveys that asked people to self-report height and weight," UF study author Michael G. Perri told HealthLeaders Media. "The study we did was based on measured heights and weights. One thing we are well aware of is that people tend to underreport their weight and over report their height. Everybody is five to 10 pounds heavier than they report and an inch shorter than they claim."

Obesity is a preventable condition that is linked to any number of serious and expensive-to-treat chronic diseases and other medical conditions such as Type 2 diabetes, coronary heart disease, high-blood pressure, cancer, sleep apnea, osteoarthritis, liver and digestive tract complications, and even mental illness.

"We simply cannot ignore the link between obesity and poverty, and the disproportionate impact this is having on rural America," Alan Morgan, CEO of the National Rural Health Association, said on the advocacy group's Web site. "If we truly want to decrease healthcare costs and improve the nation's health status, we are going to have to start viewing obesity as a top-tier public health concern for rural Americans."

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.