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Changes in Rural Healthcare Delivery — Is Resistance Futile?

By , SVP Strategic Analysis May 9, 2023 Critical Access and Rural Hospitals

Change is too often regarded as something that is happening to hospitals, compelled by forces beyond their control. With more challenges on the horizon, the time has come for hospital leaders to think of change not as something that is happening to them but as something they need to make happen, following a focused assessment of finances, operations and community needs. 

Small Changes Sometimes Yield Significant Results

With roughly half of all U.S. rural hospitals operating in the red (Chartis), the need to reverse negative financial performance while maintaining quality patient care is a key driver of change. The first step is recognizing that problems exist and that external assistance may be needed to identify the root causes of those problems and what changes can be made to remedy them. A good way to gather information is an operational assessment — a thorough evaluation of operations, revenue cycle, expense management, clinical services, staffing, and business development and strategy. The process identifies areas that impact a hospital’s performance and finances and outlines a plan that puts the hospital squarely on the path to sustainability. Sometimes, fine-tuning is all it takes to get a hospital back on track. However, for hospitals in crisis, outside help with a customized turnaround plan can identify quick, corrective measures they can take to regain their footing and strategize for the future.

Hospital Transformation — Some Big Changes Are in Store

In its roundup of “The Top 5 Healthcare Trends in 2023,” Forbes featured remote healthcare and retail healthcare, as two developments poised to change traditional care delivery models and the role of rural hospitals. 

Although every organization’s outlook is different, for some hospitals, transformation is the only path forward — and the more proactive the process, the better the outcome. Hospitals can start by assessing whether their service lines are financially supportable and still aligned with community needs. Evaluating service lines can lead to some hard decisions — for example, whether to cut unprofitable services that the community desires or find some means of offsetting their costs as loss leaders. However, along with a market analysis, a service line evaluation can uncover new business opportunities, as well.

REH Conversion 

Since the start of the calendar year, eligible facilities have the option of converting to a Rural Emergency Hospital (REH), a new federal designation that comes with a monthly cash infusion and higher Medicare payments but requires hospitals to discontinue inpatient services and essentially function as an emergency department with supporting outpatient services. While conversion makes sense for some hospitals, some of the financial ramifications (including a different reimbursement mechanism and ineligibility for the 340B Drug Pricing Program) can harm rather than help certain hospitals in the long run. 

Whether a hospital requires fine-tuning or radical transformation, CHC helps leaders think less in terms of adapting to change and more in terms of orchestrating it. In today’s healthcare environment, change is more akin to stability than stasis. 

By , SVP Strategic Analysis May 9, 2023 Critical Access and Rural Hospitals
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