Reinventing Rural Health

Hospitals in rural areas face different challenges, and opportunities, than those in cities.

By Ian Morrison

America is a big country. Every summer vacation with my family, I drive exactly 1,000 miles each way from San Francisco to Northern Idaho; I don’t go through another city. If you take a 1,000-mile drive across Europe, you not only have crossed 10 countries, you are now in Asia.

So, as a geography major who has been to just about every state (and a majority of them in the last year alone), I understand that America is one big piece of real estate, and a lot of people, almost 20 percent, live in rural areas. But, even in states like Indiana, Nebraska, Kansas, Oklahoma or Texas, most people live within 90 miles of a pretty fancy hospital, and even more live within 20 miles of a Walmart (which, we are told, may well be a key health care provider in the future).

Critical Access

Part of the reason so many rural communities are relatively accessible to major hospitals is that we built the hospitals before we built the freeways.

However, according to Census classifications, a full 60 percent of rural residents live in rural areas that are adjacent to urban areas, while only 10 percent of rural residents (some 2 percent of the total population) live in remote areas with small populations.

Rural hospitals account for about a third of the nation’s hospitals but only about 12 percent of national hospital spending.

At the core of our national policy toward rural health is financial support for critical access hospitals (CAH). There are 1,327 CAHs across the country, and they must meet three core criteria (among many other complex regulatory provisions), according to the Department of Health and Human Services:

This latter distance provision was debated during super committee deliberations when proposals were floated to change the distance criteria, potentially reducing the number of CAHs. In a lot of states like Kansas, Indiana and Nebraska, that change would dramatically reduce the numbers of hospitals designated as critical access. When I spoke to hospital associations in those states in the last few months and asked whether a 20-mile change in the distance provisions would affect their designation, a significant minority of the audience raised their hands. (By the way, when I asked, “How many of you are within 25 miles of a Walmart?” almost everyone raised a hand.)

In addition, because of the previous provisions in some states that governors were able to designate critical access facilities using an “any necessary provider rule,” you ended up with CAHs that are quite close together. In counties in rural heartland states such as Iowa and Indiana (with not many mountains), you can find two, three or even four CAHS in the same relatively small county or within a stone’s throw of the county line.

The number of counties per 1,000 square miles and per 100,000 population also increases the number of CAHs that are geographically proximal, because so many hospitals built in the Hill-Burton era were county based. To give perspective on this phenomenon, take three large states with large populations and large land area: California, New York and Florida. California has 58 counties, New York has 57 counties while Florida has 67. Compare that with Texas (254), Georgia (159), Kentucky (120), Missouri (115), Kansas (105) and Illinois (102).

There are other relatively small population states such as Iowa, Indiana and Nebraska that have more than 90 counties each. I understand that these county lines were derived by natural boundaries based on how far you could ride a horse in a day in the 18th century. But they create a density of local government and health care infrastructure that varies enormously across the country, and it may be fuel for unneeded duplication of facilities and services.

But the really critical thing to understand about critical access hospitals is that they operate under a cost-based system of reimbursement. This seems to be a model that is inconsistent with the trends of the time. As Todd Linden, CEO of Grinnell Regional Medical Center in Iowa and a national thought leader in rural health care, told me in an interview: “Being a cost-based component of a health system that is moving overall to value-based reimbursement is going to be like trying to put a square peg in a round hole.” He’s concerned that CAHs might get left out of accountable health development plans or shared savings models because cost-based payment doesn’t necessarily lead to quality or efficiency.

Grinnell’s hospital is a tweener at around 50 beds, so it is too big to be a critical access hospital with cost-based reimbursement, but it has all the challenges of any rural health facility, such as heavy Medicare and Medicaid dependency.

Critical Community Resource

While many rural health facilities may be sustained economically by cost-based reimbursement, they are in turn a major economic engine, if not the economic engine of rural America. Hospitals are the largest employer (generally after local government) in most small towns. By the way, the same is true in very big cities, but at least in many large cities there are some other employers of scale. In smaller communities, hospitals may be the sole economic engine, and both a platform for and symbol of continued community cohesion. They are important not only for the health care services they deliver, but for maintaining the overall economic vitality and viability of the communities they serve.

Rural Health Challenges

Rural health is tough to manage, from both a policy and practical point of view, for many reasons. UnitedHealth Group (in conjunction with new survey research from my colleagues at Harris Interactive) recently produced a fantastic fact-based review of rural health, which I urge you all to read as a deep dive into rural health. (See “Modernizing Rural Health Care” [Working Paper 6], published in July 2011 by the UnitedHealth Center for Health Reform & Modernization.) Drawing on that paper and other resources, such as the Institute of Medicine’s 2005 report on the issue and the ongoing great work of the Rural Policy Research Institute, the picture is pretty clear, and the challenges for rural health are great:

Dominated by public coverage. Rural health is more dependent on Medicare and Medicaid coverage and has lower levels of commercial insurance and a resultant higher level of uninsured.

Higher health needs. Rural populations tend to be older and in poorer health, with higher rates of obesity and poor health habits, such as smoking. In addition, they have a surprisingly high set of needs in terms of drug abuse, according to the United report. (This squares with my anecdotal evidence: I can’t tell you the number of relatively rural states I have visited that claim to be the crystal meth capital of America. I Googled this question and apparently there is no clear winner: It depends on which denominator you use. Suffice it to say that crystal meth is a big problem everywhere, including the rural heartland.)

Difficulty attracting providers, particularly specialists. A full 12 million Americans live in areas designated as primary care shortage areas (defined as having less than 33 primary care physicians per 100,000 population). Of that 12 million, 5 million are living in rural areas. (Presumably, the residual is found in underserved urban areas.)

It is difficult to recruit new physicians to rural areas. Most new doctors want to be close to big cities with Starbucks and symphonies. They want to eat tofu and drink soy macchiatos, not watch soy grow. Even premium pay for rural service won’t overcome the tendency of young physicians to pick urban areas and employed practice environments. The big question is who will replace the current generation of rural primary care physicians and good all-round generalists in the surgical and medical specialties. As Grinnell’s Todd Linden told me: “I am trying to hire a good generalist orthopedics specialist who can handle a wide variety of cases; they don’t exist anymore.”

Sub-optimal in scale, both clinically and financially. While cost-based reimbursement can cover a multitude of operational sins and inefficiencies, it is pretty clear that rural health violates the basic economic principles of economies of scale and scope. It also violates the well-established health services research linking volume to outcome.

Similarly, there are basic operations research principles that show that the smaller the institution, the lower the occupancy rate. (A CEO of a large Midwestern health system that I visited last week had just toured a critical access hospital in his system that had a census of zero all that week; now that’s low occupancy.) Conversely, cost-based reimbursement can lead to overbuilding and to small institutions acquiring technologies (such as robotic surgery equipment or advanced imaging) that are arguably too advanced for the setting.

Quality of care differentials. The UnitedHealth working paper using published scientific evidence, Harris Interactive surveys of doctors and patients, and claims data analysis paints an overall picture of health care quality (both perceived and measured) to be slightly lower in rural areas compared with urban areas overall.

For example, the analysis of quality performance for the 256 hospital referral regions (HRRs) for which there were sufficient data found that 75 percent of HRRs had rural quality lower than urban quality, 20 percent had the same quality, and only 5 percent of HRRs had rural quality that was higher than urban quality. This last group of relatively high-performing rural HRRs tends to be in regions where larger integrated systems of care have been developed, such as in the Upper Midwest.

Aging plant and equipment. Half of CAHs are more than 40 years old. The aging physical plant of these Hill-Burton institutions means that renovation, rebuilding or repurposing is high on the strategic agenda of hundreds, if not thousands, of facilities. (Hill-Burton was a 1946 act that provided funding and support for the upgrading of hospitals, particularly in rural areas.)

Measuring quality with small numbers. Quality measurement and reporting is challenging in rural health because of the small number problem, where it is difficult to have statistically reliable measures of performance because the number of events is low. This is a problem generally in health care as we drive to finer granularity of measurement to the individual provider level. The issue is even more challenging in the case of rural health because of low volumes and dispersed populations.

The Helping Hand of Health Reform

The Patient Protection and Affordable Care Act provides assistance to rural health care in a number of ways, including coverage expansion through exchanges to an estimated 5 million additional rural residents, expansion of Medicaid, increases in rural health funding for rural health clinics, support for telehealth and meaningful use of electronic health records, training grants for rural providers, and differential payments for primary care.

Rural health policy experts seem to advocate a mini version of national health care delivery reform (with the addition of telehealth initiatives). This version would encourage a team-based primary care focus through patient-centered medical homes. (To an outsider such as me, however, it seems like that is what country doctors have been doing for the last 100 years.

Reinvention Options

As we redesign the overall health care delivery system from volume to value, we raise the question of what happens to rural health care. While the challenges described here are real, in my travels I detect a growing openness to reinvention of rural health among community leaders and hospital CEOs across the country.

Here are some examples of promising approaches:

Regional integrated systems. Large urban-based health systems in primarily rural states are building significant scale by bringing regional facilities into systems of care through outright ownership of facilities, or through formal and informal regional networks of affiliation. Examples include Avera Health, a network of hospitals, family care practices and specialty clinics located in South Dakota, Minnesota, Iowa and Nebraska that have created sophisticated e-health links to their more remote partners.

Similarly, while Mayo Clinic is a global brand, less well known is the Mayo Clinic Health System, which describes itself as “a family of clinics, hospitals and health care facilities serving 70 communities in Minnesota, Iowa and Wisconsin.” “Mayo Clinic Health System,” it maintains, “links the expertise of Mayo Clinic with health care providers (including 17 owned hospitals) in local communities to offer patients a full spectrum of health care options. Patients receive quality health care at their local clinic or hospital, and, when needed, can receive highly specialized care at Mayo Clinic.” More and more such regional systems like these will emerge, but not all through direct ownership and acquisition.

High-tech rural ambulatory centers. Many of these new regional systems will repurpose individual facilities into regionalized hub-and-spoke sub-networks (analogous to the transformation in the airline business). Many rural hospitals may have a better long-term future for the institution and the community as a high-tech ambulatory care hub with limited short-stay capacity and a heli-pad on the roof or across the street.

Rural community-based continuum of care centers for the chronically ill. To a larger extent, the longstanding, valid and important role that rural hospitals have played is as a center for managing the aging rural population with chronic illness. In many rural communities, aging parents remain down on the farm while their children Skype them from L.A. or New York. Preserving the local capacity to have older patients “age in place” with the appropriate level of support for their chronic care needs seems an incredibly valuable asset, nationally and locally.

On a trip to Ireland last year, I was deeply struck by the potential for aging in place as an economic base for rural communities. We drove through fishing villages that clearly have not many farmers or fishermen left, but have seemingly thriving long-term care and assisted living facilities that, as far as I could determine, were the sole economic base for miles around.

Referral platforms. Many urban-based hospitals, faced with tightening appropriateness of care standards and a tough economy for elective procedures, are looking to expand their regional referral footprint. I joked with a large Midwestern system recently that, if you added all the growth aspirations of every adjacent regional hospital system in the Midwest, you would have to bring in the entire population of China for them all to come true. (It’s a wee bit of an exaggeration but directionally correct.) The result will be that, if rural facilities try to remain independent, they may have their economic base eroded by expanding urban-based regional systems that seek to maintain the economic viability of their own high-tech core operations.

A High-Tech Approach to Rural Health Care

Rural communities have as much right to high quality health care as the rest of us. But the answer can’t simply be providing sufficient cost-based reimbursement to keep all systems doing what they are doing, especially if they are under-scale for true quality care. In my view, the solutions will come through a reinvention of rural health care delivery, including:

I am confident that regional health system leaders and their rural partners will figure all this out. While the politics of reinvention are extremely difficult, both nationally and locally, rural health leaders (board members, rural hospital CEOs and the community at large) are passionate and committed to doing whatever it takes to serve their rural communities.

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN Daily and a member of Speakers Express.