By Wilson Weber, Executive VP and COO, CHC
Rural hospitals operate as a healthcare safety net for smaller
communities, where demographics tell the story about these community-based hospitals. Patients tend to be older than those at urban or suburban hospitals
, many patients are uninsured, and rural facilities have to maintain emergency rooms and beds for acute care even if they see fewer patients. In the last five years, Congress has sharply reduced spending on Medicare, and this decline in reimbursement rates has been particularly challenging for rural hospitals.
Along with the need for hospitals and healthcare services, our rural hospitals need more primary care physicians (PCPs) to care for patients. According to data from the Agency for Healthcare Research and Quality, there are 68 PCPs per 100,000 people in rural areas, compared with 84 per 100,000 in urban areas. Approximately 65 percent of primary care health professional shortage areas are in rural counties, according to Rural Healthy People 2020. This lopsided geographic distribution makes it doubly difficult for rural hospitals to maintain the health of their communities.
Like any business, a hospital’s financial well-being is tied to expenses and revenue. The tried-and-true formula is to increase revenue and reduce costs. That’s simple enough — yet bottom-line results for a rural hospital mean more than just the numbers. Employees, patients and the surrounding community depend on the hospital’s continued success.
In spite of the challenges, some community hospitals are seeing better financial performance. Let’s examine some actions they are taking to improve the bottom line.
- Identify areas needing improvement. Begin by looking at the basics. For example, Yoakum Community Hospital in Yoakum, Texas began working to qualify the payer status of patients prior to admission. Self-pay patients may qualify for Medicaid or another reimbursement source. This step alone can make a significant difference in increasing revenue.
- Strengthen physician relations. Great Plains Regional Medical Center includes physicians in leadership positions to enhance relationships between hospital executives and physicians. Currently physicians account for roughly one-third of the hospital's board, so they have a voice in the hospital’s strategic decisions. Hospital-physician collaboration can improve quality and cost efficiency. And because a significant part of the growth and success of a hospital is dependent upon the right mix of physicians and specialists, creating or revising your medical staff development plan should also be on your “to-do” list.
- Benchmark performance against similar hospitals. Compare clinical data. This is a great way to identify opportunities for improvement and potential cost saving, and facilitate movement toward value-based care.
- Think about partnerships. If internal improvements aren’t sufficient, community hospitals may want to consider forming relationships with other organizations. Analyze the advantages and disadvantages of a potential partnership. What is the community hospital expected to provide? What amount of control they will cede for the expected benefits of the partnership? Make sure cultures are aligned and define expectations at the start.
- Ensure board involvement. Your board can be your biggest advocate and ally. When board members are better educated about their responsibilities, including overseeing finances, clinical quality and strategy, their support and ideas can be invaluable.
Financial stability is the solution to beating the odds in rural healthcare. Find out more about how CHC is helping hospitals.