Despite significant challenges, rural healthcare leaders are embracing population health as their future—not because it offers economic salvation (it doesn't), but because it makes perfect sense for their mission: to provide care for the community.

This article first appeared in the October 2015 issue of HealthLeaders magazine.

Population health management is being pursued by many healthcare leaders, but it's a hard strategy to manage when the population is small and spread out. That's the difficulty facing rural healthcare providers, who have long dealt with an older and sicker demographic, difficulty in finding physicians, and economic constraints, and are now pushed to the brink by healthcare reform.

Yet many rural healthcare leaders are embracing population health as their future—not because it offers economic salvation (it doesn't), but because it makes perfect sense for their mission: to provide care for the community.

Population health—like everything else in healthcare—is resource-intensive. Many of the requisites for population health are more easily found in urban areas, where there is more of everything: more primary care physicians and subspecialists, more money to spend on very expensive healthcare information technology, and greater economies of scale for purchasing and leveraging with vendors and payers.

Of course, an essential component in population health is ready access to a population. As obvious as that sounds, in large swaths of the United States that's not such an easy proposition.

Still, leading healthcare providers in nonurban and rural areas say they can make population health work for the people they serve—and for their organizations—despite the obstacles. Among the approaches: cooperation rather than competition among equals, clinical integration that emphasizes providers' strengths rather than weaknesses, local engagement with a community rather than local ownership of all the components of care, and a focus on primary care rather than specialty care.

The challenges facing rural America
About 60 million people—one-fifth of the U.S. population—live in rural America, a designation that covers 95% of the nation's landmass. For the most part, U.S. Census data show that the 2,000 or so rural and nonurban hospitals that serve this population treat a patient base that is generally older, sicker, and less affluent than their urban counterparts.

Jane Bolin, BSN, JD, PhD, senior editor of Rural Healthy People 2020 and director of the Southwest Rural Health Research Center at Texas A&M University, says specific challenges facing rural and nonurban providers, such as diabetes or heart health, can vary from region to region. She views these regional challenges more as symptoms of a larger health crisis that all rural providers face: access to quality care.

Rural hospitals have much more difficulty recruiting and retaining providers than do urban hospitals. Wide stretches of rural America are bereft of healthcare services. A survey released in May by physician recruiters Merritt Hawkins, for example, found that 147 of Texas' 254 counties, serving a total population of 1.8 million, have no obstetrician; 158 counties, with a combined population of 1.9 million, have no general surgeon; and 35 counties have no physicians.

Added to that is the very nature of healthcare reform, which appears to be more advantageous in urban settings with larger populations that help to control risk, and easier access to providers and specialists. Simply put, rural providers often don't have the money or the personnel.

"If you're looking for a linkage that sees a patient through an acute event, or stops an acute event through chronic disease management and prevention of acute events, you'll need good pharmacy; good home healthcare providers; a chronic disease prevention program, which is largely outpatient-based; and all of the education that is needed," Bolin says. "For a rural hospital system to have all of those services is nearly impossible."

Rural and nonurban providers struggle to treat this patient population with dwindling Medicare reimbursements that they can do little to control. Since 2010, 55 rural hospitals have closed, and 283 more are on the brink of closure, according to a July statement from the National Rural Health Association.

Dire financial straits have prompted many rural and nonurban hospitals to surrender some of their cherished independence in exchange for affiliations that provide economies of scale and access to capital and services.

"They have to link up and collaborate with external organizations in the community to provide all of those services for referral purposes," Bolin says. "That is key to getting that enhanced Medicare reimbursement. Then you spread that reimbursement pot around to everyone who participates. That has been the challenge for a lot of rural providers. In an urban area you've got everybody within four or five blocks."

Well care for a sicker population
Scrolling through U.S. Census data on Appalachia presents a demographic of peaks and valleys. The mountainous region is among the nation's highest for rates of unemployment, poverty, disability, tobacco use, and chronic health issues such as diabetes. It ranks near the bottom for income, educational attainment, and percentage of people with health insurance.

That difficult socioeconomic terrain and the healthcare problems associated with poverty and inaccessibility of primary and chronic care were apparent to Tennessee's Kingsport-based Wellmont Health System and Johnson City–based Mountain States Health Alliance.

This year, the rival systems confirmed that Appalachia was not immune from the pressures to consolidate under healthcare reform when they announced plans to merge. The health systems expect the regulatory process to continue through the end of this year. The unified system will include 19 hospitals, more than 15,000 employees, and scores of outpatient facilities across the region.

Bart Hove, president and CEO of Wellmont, says the two systems have demonstrated success on their own "despite the difficult challenges we have being a low-reimbursement area and an area highly prone to health problems and demographic problems.

"All of those challenges really drove a lot of the thought process by coupling and partnering our resources together and avoiding the excessive cost implications of the local competitiveness to channel those resources back into trying to improve the health of our region," says Hove, who will be CEO of the as-yet-unnamed unified system. "We have a vision that utilizing extensively the community resources, working with our various community agencies, and working collectively amongst ourselves, we can more rapidly move from paying for volume to paying for value and really have a definitive impact on the health of the population of the region. That is the underlying principle for seeking to pursue this merger of equals."

In fiscal year 2013, Wellmont reported net patient service revenue of $754 million and net assets of $515 million, and MSHA reported net patient service revenue of $933 million and net assets of $448 million. The nonprofit health systems together provide access to care in 29 counties in the heart of Appalachia, where the mountains weave through Tennessee, Kentucky, Virginia, and North Carolina.

The shift toward population health, with its emphasis away from volume and toward outcomes, preventive care, and value-based reimbursements, was a big motivator for both health systems to pursue the merger, with its economies of scale and other efficiencies that come with the combination of two health systems. A big selling point was eliminating redundant services that are done to address competition.

"We've gone for 60 years with a healthcare system with payers saying, 'Do more, build more and we will pay you for it.' All of a sudden everybody is saying, 'We want you do to less,' " says Alan Levine, president and CEO of MSHA, who will serve as executive chairman and president of the new entity. "We've got to find a more rational way to take all of these resources we have invested and all this capital and capacity, and find a way to better deploy it."

With volumes and reimbursements shrinking, Levine says the health systems' ability to subsidize rural hospitals in their networks is jeopardized when the systems cannot shed redundant capacity and the costs associated with it.

"Collaborating more closely under a merged environment allows us, going forward, to be more rational in our decision-making so we are not creating redundant spending of capital and redundant costs and instead we can redeploy these assets," he says.

As elsewhere in rural America, the population served by the two health systems displays distressing health indicators, despite using hospital services at a high rate.

"We run about 124 admissions per 1,000 [population in the 29-county area]. The national average range is somewhere between 70 and 110," Levine says. "So we've got to find a way to bring down the unnecessary utilization that may exist. By doing that, it means you have all this fixed capacity in the region, and so by coming together, as opposed to being apart, it allows us to more rationally address the issue of all this capacity."

Reducing admissions requires an emphasis on wellness and prevention, and that requires access to primary care. The unified system will have a research and recruiting affiliation with the Quillen College of Medicine at East Tennessee State University in Johnson City, which has a national reputation for placing primary care physicians in underserved rural areas.

"Part of our strategy is to develop a 10-year plan related to the health of our community," Levine says. "ETSU, in partnership with us, is going to do a deep-dive public health needs assessment of the region, defined as southwest Virginia and northeast Tennessee."

There will also be a push for research grants from the National Institutes for Health and other funding sources.

"We think this investment in research not only will help drive the economic growth in the region," Levine says, "we also think it will help us solve some of these unique problems, where we have one of the highest rates of diabetes. Tennessee is the fourth highest in the nation in Type 2 diabetes, and our region is among the top five counties in the state. That is pretty compelling when you think about the need to understand data and how we target efforts."

If the plan works, the unified system will have one of the nation's most aggressive wellness programs.

"We are talking about creating a population health model that has not been done yet," Levine says. "When you talk to most systems about population health, they're talking about how to manage diabetes better. This is about going upstream and understanding what causes the rate of diabetes. Let's use the research data we get to address that. These are the things we don't get paid for. These are things we have to invest in. In order to invest in them, we have to generate the synergies between our two systems. It's all linked."

Maintaining independence amid integration
The phrase rural Nebraska borders on redundant.

The Cornhusker State's land area of 76,824 square miles makes it the 15th largest state by area, but its population density is about 24 people per square mile, well below the national average of 87. To put that in perspective, New Jersey, a state about one-tenth the landmass of Nebraska, has 1,196 people per square mile. Obviously, these two states have different population health delivery challenges.

The relative isolation of Wheat Belt communities over the generations has fostered a fierce sense of independence and self-reliance, two traits that run crossways with healthcare reform's insistent nudges toward integration, collaboration, consolidation, and scale.

With that in mind, 66 healthcare organizations in western Iowa, northwestern Missouri, and Nebraska joined together in a strategic alliance called the Regional Provider Network, LLC. Formed in 2013, RPN relies on nine founding-member health systems across the region that provide hub-and-spoke specialty and tertiary care for the rest of the alliance, which includes smaller critical access and community hospitals.

"Our two main strategic goals are to guide clinical integration in each of our members and their surrounding regions, and also take advantage of our scale to help reduce some of our delivery costs," says RPN President and CEO Michael Hein, MD, an internist.

But the rationale for RPN is to maintain the independence of the members. "In our region, there is a strong sense of community, and of the local influence of these healthcare systems in their communities, and a sense for maintaining that independence," he says. "Autonomy and independence are among our founding principles."

RPN is "driven by the recognition that health and health outcomes are a local construct, that our health—as human beings—is determined by the communities where we live. And the people who are best positioned to create value for our patients—improve the quality of care and lower the cost—are those closest to those in the communities," Hein says. "It is anchored in this deep belief that, ultimately, healthcare is local, and an organization that is anchored on that principle should be able to create value in a superior way."

While some outlying critical access hospitals don't have to contend with many competitors, several of RPN's nine founding health systems remain competitive, Hein says, which adds a certain friction to the mix that is not necessarily a bad thing. Those members include Nebraska Medical Center and Nebraska Methodist Health System, both Omaha-based, and Bryan Health in Lincoln, Nebraska.

"An alliance of competitors is the gambit of the strategic alliance," Hein says. "At the core of their DNA is that inherent tension between what is in my self-interest as an organization versus what benefits the whole. What am I willing to relinquish to the whole for the greater good versus what my needs might be locally? That is an inherent tension to this type of organizational structure."

Even if the RPN members wanted a more formal top-down relationship involving consolidations and acquisitions, Hein says it wouldn't necessarily be an improvement.

"Our furthest east member to our furthest west member is about a 10- or 11-hour drive on the interstate at 75–80 mph," he says. "It is a large geography, and for many of these communities, the hospitals are the sole providers of inpatient services in their area.

"That geography creates these unique markets that are distinctly different from each other," Hein says. "A vertically integrated system across that tends to have a need to standardize across all members—across all processes and outcomes—and oftentimes that is a challenge when you have distinctly unique markets."

Robert L. Wergin, MD, is a member of the RPN and a sole practitioner at Memorial Health's Milford (Nebraska) Family Medical Center. He says that the network can improve care quality for patients, provide more leverage with payers and vendors for otherwise isolated providers, and also help with recruiting physicians, which has always been a challenge in rural America.

The key to success, he says, will be to demonstrate to independent providers the benefits of clinical integration. "As we move to value-based payment, data will be king," says Wergin, who is also board chair at the American Academy of Family Physicians. "Medicare by 2019 wants a value-based billing system, so you need to show that you're meeting certain standards. If you are in a onesie-twosie office, developing the resources or infrastructure is challenging. Collectively you might."

That reassurance and support that RPN could provide can give rural physicians a sense that they are not alone, and could also help recruiting efforts in Nebraska, Wergin says.

"We know workforce shortages are an issue in rural areas, and one of those barriers might be the sense of isolation," he says. "Networking and demonstrating that support to a new young provider who is tech savvy might be another way to get them to understand the rewards of practicing in a rural areas and being part of a community."

Hein says the first hurdle for RPN is clinical integration and addressing the "messenger model" physician hospital organization structure, which serves merely as a conduit for messaging payer contract terms and conditions to providers, who then decide if they will participate in that contract. The PHO does not negotiate terms on behalf of its members and does not serve as signatory for contracts on behalf of its members.

"In contrast," Hein says, "we are building clinically integrated networks with PHOs as the nidus for that work [clinical integration]. With those PHOs as the 'engine' for creating clinical integration at a community and micro-region, we envision being able to negotiate value-based contracts with payers region by region as they mature. Eventually, RPN in its entirety will be clinically integrated and able to negotiate terms and serve as a single signatory for regional and statewide contracts.

"For us, that is taking those nine founding members—each of them having a physician hospital organization that either is being created or has been a messenger model—that we're positioning so it can be a clinically integrated network in those communities. There is a forum we created that allows those providers to interact around community-based metrics where they demonstrate opportunities on cost and quality," Hein says.

"Ultimately, as we're moving those nine founding members' PHOs forward, we can see that our physician network would become a super-PHO and be able to negotiate contracts with payers for the entire provider network that those PHOs represent. We really see those PHOs as the foundation anchor for our RPN."

Critical access hospitals in the network that lie within the footprint of RPN's larger hospitals would join the PHOs.

"We create this hub-and-spoke footprint across our geography that is anchored around the hospitals of those nine founding members," Hein says. "We are in the process of standing those up and firming up participation agreements between the PHOs and RPN, as well as the providers that participate in those PHOs and how they would be defined as part of the RPN provider network."

On the population health front, Hein says RPN will start with the combined approximately 37,500 employees and dependents covered by the health plans of the nine founding members.

"We have secured the data capabilities to understand utilization and cost and quality patterns of those employees," Hein says. "The RPN clinical leaders are identifying opportunities within our population and working directly with their local PHOs to target the interventions that will move the ball on our employee health plan."

Ultimately, RPN wants to expand population health initiatives to private employers in the region by 2017 "if we can demonstrate to employers and payers that we are able to effectively manage a population of patients," Hein says.

Establishing the PHOs, defining the provider network, and other heavy lifting for the RPN should be completed this fall, while the health plan initiatives for employees has already begun. Despite the challenges of geography, Hein says RPN "can position itself to be successful in value-based care."

"That is our intention and our goal," he says. "The pace of how that occurs somewhat depends upon the external environment and our competitors in the marketplace, but also the federal framework and the pace of policy change. The whole healthcare system is moving in that direction, obviously, and moving a lot faster than people perhaps thought would happen a few years ago. RPN will position our member organizations to participate in that."

Finding advantages in being small
While the trend in healthcare is toward consolidation and scale, some providers see advantages in staying small and local.

"In some respects we have advantages because of our relationships with the community, and our size has an impact in terms of its ability to relate to the patient experience," says Todd C. Linden, president and CEO of Grinnell (Iowa) Regional Medical Center.

"Those can be advantages in a small environment. Obviously, there are disadvantages with the skill sets necessary to do value-based payments and the scale required if you are going to get closer to the premium dollar and to be part of population health," Linden says.

GRMC is a private nonprofit 49-staffed-bed hospital located 54 miles east of Des Moines. In 2013, the organization reported net patient service revenue of $40.5 million and net assets of about $21.7 million.

The move toward population health at GRMC predates value-based care by more than a decade and was influenced, Linden says, in part by the facility's status falling between critical access and specialty care.

"We started about 15 years ago recognizing that as a 'tweener' rural Prospective Payment System hospital given some of the worst Medicare/Medicaid payments in the country—well below 75% of the cost in terms of reimbursement—the only way for us to be relevant to our community is to look at ways we can improve the health, even though we are not incentivized to do that," Linden says. "We opened our first community fitness center 17 years ago and partnered with the county health department, which is part of our organization today."

The process that led to developing a population health strategy also exposed potential problems.

"When we recognized many years ago that payment would begin to shift to population health, we believed it was important to begin to build skill sets that were not traditionally in the acute care hospital setting," says Linden. "These include programs like specific public health services, wellness initiatives, stress reduction, and integrative medicine services like massage therapy and acupuncture. These programs all put the focus on keeping the population healthy and will serve us as the flip from fee-for-service to value continues to evolve."

GRMC's independence is important, Linden says, but not to the point where it hinders the mission. Compromises have been made. For the past six years, GRMC has been affiliated with Mercy Health Network of Iowa and collaborates with Mercy Medical Center-Des Moines, which provides an array of support services for GRMC. In exchange for an annual fee to Mercy, which Linden declines to disclose, GRMC remains independent but consults with Mercy and its affiliated hospitals on quality, best practices, access to specialists, population health management, and HIT.

"I don't know that the notion of a local ownership is as important as local engagement, but we did find a middle ground and it's been extremely beneficial," Linden says. "Our partnership with Mercy offers a system of care, services, and support where GRMC is able to build the strongest local care delivery model while having access to national, statewide, regional, and local services and expertise."

In other words, GRMC enjoys most of the benefits of other hospitals in the Mercy network while remaining independent.

"The big difference would be if we were completely acquired or merged with the Mercy Health Network, there would probably be opportunities to participate in capital funding," Linden says. "The reasons we might consider a closer relationship would be likely two things: One is access to capital in the future because of our size and our financial position. If we are not able to enter into the capital market and have access to resources for major kinds of renovations or projects, that might be one reason to consider a closer relationship.

"The other is going to be what happens with the various networks for patients and employers if a tighter relationship is required to literally be part of a clinical network or some sort of insurance offering," he says. "That is likely another reason why one would consider having a tighter relationship. For now, we do enjoy most of the benefits of affiliation. It's proven very valuable for us for the past six years and is why we are continuously evaluating a closer relationship."

For example, GRMC has partnered with Mercy to retain legal services in a group purchase. "In addition, we are part of a Health Care Innovations Award from [the Centers for] Medicare & Medicaid Services with the Mercy Accountable Care Organization/Mercy Health Network," Linden says. "As a participation site for the Mercy ACO, GRMC will receive funding as it transitions to value-based care and helps create delivery models for the future of healthcare."

The affiliation with Mercy and HealthPartners, a nonprofit HMO and third-party administrator based in Minneapolis, has helped GRMC create a clinically integrated network for the combined 900 employees and dependents covered by the hospital's self-insured plan.

"About half of our medical staff have a direct employment or partnered relationship. The other half are in private practice. Having a clinically integrated network was vital to us to ensure that our clinicians have access to the information and data that would have been difficult under previous antitrust rules," Linden says.

"HealthPartners allows us to have access to information that we have never had: full access to claims data, full access to their care management and other kinds of services, deployed differently than the typical insurance company relationship where they tend to be miserly with that information," Linden says.

"Our clinicians are in a much stronger position to look at a population like our self-funded plan—our employees, their spouses and dependents—and use the biometric data that we collect through our wellness plan, use the claims data, [and] use their algorithms to help us not only identify the folks who are at most risk and who are consuming most of the resources now, but more importantly [to find] that group who, without some behavior modification or lifestyle changes, are going to be in that chronic disease state where they are going to have health and disability issues and also consume more resources in the future."

The results so far have been notable.

"GRMC has flattened our cost curve for health insurance costs, in essence spending the same amount per participant per year in 2014 as in 2008, which is unheard of today where most businesses are seeing annual increases of about 6% to 7% from 2008 to 2014," Linden says.

Using GRMC's self-funded plan as a petri dish, Linden says the hospital can leverage that experience to entice "other large self-funded plans in our community that will see the things we are able to do with our clinically integrated network and with the third-party administrator that we have teamed up with."

"We have invested in a health coach who we fund but works for HealthPartners, our third-party administrator, who can dedicate her focus to help our most at-risk members," Linden says. "Right now the person in this role is working closely on a regular basis with a number of employees who have chronic diseases like diabetes and hypertension, helping them with strategies to reduce their risks for complications and further illness."

Physicians who join the CIN must agree to best practices and other standards and protocols, as determined by a medical advisory board made up of other physicians.

"They agree to share data and participate in the kinds of things that make sure we can standardize the care and that people aren't falling through the cracks," Linden says. "Otherwise, I'd be forced to think about if I should create a narrow network for my own employees and dependents and spouses with just the physicians and advanced practice providers who are employed by us. With the CIN, I can keep it more pluralistic by allowing people to join the CIN, have access to providing services to my employees, giving employees full choice, but at the ame time creating a structure so we are standardizing the care and services that are offered."

While creating the CIN is a slog, measuring whether it's working is comparatively easy.

"We've proven we can control costs with our own health plan. The other metrics are going to be pretty straightforward things such as lost days and the numbers of employees who have chronic diseases," he says.

The limits of rural healthcare organizations
Although population health management is appealing for rural healthcare leaders, some providers say that limitations have to be acknowledged in the shift toward value-based care.

Richard Polheber is CEO of Benson (Arizona) Hospital, which is located 48 miles southeast of Tucson. He says care models that put his 22-staffed-bed critical access hospital at risk in a population health care continuum aren't realistic because the hospital board and the community insist on remaining independent.

"The infrastructure isn't there. Benson is 5,000 people. Our hospital district is 12,500, and it grows a little when winter visitors come," Polheber says. "There is just not enough base to keep specialists busy for a full-time practice, so trying to get that all coordinated becomes very problematic."

In fiscal year 2013, the hospital, which relies on Medicare and Medicaid for 75% of its patient mix, reported net patient service revenue of $10.5 million and total net assets of $4.9 million. The governing board at Benson Hospital has stated unequivocally that it wants to remain independent, which limits the options for a small hospital in the middle of the desert.

"Our board has made a decision that we don't want to merge with anybody else," Polheber says. "We think healthcare has a local focus and we are going to work to provide preeminent and quality care and do so through various alliances."

To leverage resources while remaining independent, Benson Hospital and three other nonprofit rural hospitals in the region joined with Tucson Medical Center in June to create the Southern Arizona Hospital Alliance, a loose affiliation that is expected to improve the hospitals' leverage with vendors and bring more physicians to the desert. Tucson Medical Center's executive director for network development, Susan Willis, is president of SAHA.

Polheber, who serves as chairman of SAHA, says Benson Hospital can tap into its community relationships to establish less-formalized population health programs that promote "personal ownership" through physical activity and diet. He's working with Benson's business community to bring in a local YMCA.

"The YMCA is working on this whole agenda of wellness and well-being with a raft of programs. In Tucson they have 90 different programs," Polheber says. "This moves us where the hospital doesn't own the wellness agenda but the business leaders in working with the YMCA and the hospital and the school district can make a meaningful difference. It's about finding niches."

The hospital is also developing a diabetes education program and support group with the hope that greater compliance toward a healthier lifestyle "will begin to nip away a little bit on the need for having these specialists," Polheber says.

"The problem is that the coordination of care requires a lot of resources, and I don't have the dollars to apply to that," he says. "That, to me, is the biggest challenge. I would love to own a population and say, 'We are going to coordinate the resources and make this all happen,' but I don't havethe money."

Benson Hospital's service area has only five primary care physicians and no OB/GYN. Polheber says he hopes the affiliation with SAHA can help bring more doctors into the service area. He says a strong primary care presence in Benson and the ability to refer complex patients to Tucson Medical Center makes the most sense, given the resources at hand.

"That's not necessarily a bad thing," he says. "Quite frankly, if you have a meaningful primary care delivery system, it takes care of a lot of issues, particularly if you create something in the community where the primary care docs aren't onesies or twosies practicing by themselves. The hospital can bring them together to understand best practices and what is going on in the industry. That could be very beneficial."

Can it work in the country?
Will all the affiliations, clinical integration efforts, and local engagement be enough to preserve rural healthcare organizations? Will the population health efforts improve the health of rural America's population, and of the healthcare providers who serve them?

Linden and other rural healthcare leaders concede that they won't readily know whether what they're doing will actually work in the long-term.

"All of this work around population health is going to play out over a number of years," Linden says. "There is not an immediate savings simply through providers moving to the premium side of the equation. But the long-term implications are clear. I've been a hospital executive for 25 years, and for the first time in my career the financial incentives are lining up more directly with what our true mission is, which is improving the health of our community."

Hein says the only way to find out is to plunge ahead.

"Some of my friends asked why I wanted to take this job," he says. "The honest answer is that I really do believe that healthcare is local, that our solutions for delivering the very best care are determined by local leadership, local providers, and community members working together.

"It's a compelling gambit and I think it is a model worth pursuing, particularly for our geography and where we are in the U.S. and our culture in our region," he says. "This is a model that may be superior, so I just wanted to put my money where my mouth was and see if I could join this bunch of other really smart, good people to make it work. I find it a compelling opportunity."

And if it doesn't work?

"I haven't really contemplated 'What if it fails?' " he says. "I think it will be successful. We'll give it our best shot, and if it doesn't work we'll find another way."