Framing the issue:

Rural hospitals are well-positioned to succeed in a health care system that is built around collaboration.

Rural hospitals can play a critical role in managing population health.

Lack of capital and large patient populations have prevented rural providers from embracing the risks and rewards of value-based systems.

Rural hospitals are finding innovative ways to adapt to dramatic changes in the health care system.

They are forming ACOs, developing patient-centered medical homes and launching initiatives to improve the health of their communities.

When it comes to solving complex problems, sometimes the simplest approach can yield the most dramatic results. That’s what administrators at one hospital found when they looked for ways to help the most vulnerable patients in their community.

Like many larger, metropolitan hospitals, 99-bed Winona (Minn.) Health had a fair share of patients cycling in and out of the emergency department. But, hospital executives say, it also had an important advantage: a strong sense of community.

Located in a scenic Mississippi River town of 28,000 in the southeast corner of the Minnesota, the hospital has forged close relationships with the local senior center, the public health department and Winona State University, among others, to create a support network for chronically ill individuals. In 2012, Winona Health and Winona State University launched the Community Care Network, a program that trains student volunteers to be health coaches. The volunteers make weekly visits to patients in their homes, not to measure blood pressure or manage medications, but to provide what Robin Hoeg, R.N., says is just as important to a person’s health — emotional support. They listen to patients, offering company and comfort. They also take on basic tasks, like going to the grocery store or arranging transportation to appointments.

The idea is to make sure vulnerable people — like those with multiple chronic conditions, the elderly or frequent visitors to the ED — don’t get lost in the system. Hoeg, service line leader of inpatient services at Winona Health, and another nurse and a social worker support the coaches. “We wanted people who were trained in listening, in relationship building and goal-setting,” she says. “This is about empowering patients to take ownership of their illnesses.”

Shopping for groceries or listening to stories may not seem like a cutting-edge strategy, but the results are impressive. Within the first three months of the program, emergency department visits fell 91 percent and readmission rates declined by 94 percent. “It’s unbelievable,” Hoeg says. “We had hoped for 10 percent, and we thought that might be a stretch.”

One of the first patients accepted into the program — there are currently 42 participants — was a woman in her 60s who had a tracheostomy and was in the hospital with pneumonia one week out of every month, according to Paula Philipps, R.N. The coach discovered that the woman lived alone in an apartment with no heat and was on the verge of eviction. Eventually, the care team worked with the senior center and arranged for home-delivered meals, housekeeping services and a new place to live.

“She still has the same health problems, but she is a new woman,” says Philipps. “Since she joined the program in 2012, she’s had one, maybe two, hospitalizations.”

Big challenges, big thinking

The success of the program underscores the critical role rural hospitals can play not only in reducing costs and improving quality, but also in managing population health, says Rachelle Schultz, Winona Health chief executive officer. “We need to look at the social determinants of health and what our role is in impacting that,” she says. “I think we have a huge stake in making that happen as rural hospitals. We don’t get paid to do that, although we think Medicare and Medicaid should recognize those efforts. It’s just the right thing to do.”

It’s also something rural hospitals are in a good position to do, according to Jennifer Lundblad, president and CEO of Stratis Health, a nonprofit organization in Bloomington, Minn., that promotes innovation and collaboration among health care providers and communities. “A rural environment lends itself to population health and wellness,” she says. “Providers probably know the patient and their family, they may go to church with them, they see them at the grocery store. If rural communities can figure out how to harness those assets, they will be well-positioned for the future.”

As the health care system undergoes massive changes, from new payment and service delivery models to new policies and regulations under the Affordable Care Act, rural hospitals face a unique set of challenges. Many are the sole health care providers in their communities, as well as the largest employer, making them the lifeblood of small towns across the country. They struggle to attract and retain physicians and to serve patients who tend to be sicker, poorer and older than those in urban areas. Rural hospitals, with their limited resources, have been unable to fully embrace the risks and rewards of a system that links payments to the quality of the care they provide.

But many are finding new and innovative ways to survive. Rural hospitals are forming accountable care organizations, creating patient-centered medical homes and launching initiatives to improve the health of their communities. The key to the success of these efforts is collaboration, says Brock Slabach, senior vice president of member services for the National Rural Health Association. As those who live miles from their closest neighbor know, working together can mean survival, and few know it better than rural hospital CEOs. 

“There is a strong need for independence in rural communities, but there is also a strong sense of community and collaboration,” he says. “I would look at rural communities as laboratories where these experiments in health care delivery can be interesting. You can implement programs faster and get results quicker, reflecting the way change happens in these communities. A smaller boat can be turned around much more quickly.”

Surviving the post-reform world

That kind of agility has helped a group of critical access hospitals in Illinois to find a way to reap the benefits of Medicare’s pay-for-performance programs, something that most rural providers are unable to do alone.

Most rural hospitals have been shut out of Medicare’s Shared Savings Program due to a lack of capital, infrastructure and the patient populations required to participate. But last year, 21 hospitals in the Illinois Critical Access Hospital Network formed an ACO so they could participate in the program, which is designed to improve quality and lower costs for Medicare beneficiaries and the program itself. ACO hospitals and physicians coordinate services to deliver more efficient care and are allowed to share any savings that they generate.

“This really is a big step for our rural hospitals in Illinois,” says Pat Schou, executive director of ICAHN, which represents 53 small and rural hospitals in the state. “It’s the first step in learning to take on risk. It is very difficult to go from A to Z, as we have our health care system built on our current reimbursement system. I often heard the hospitals say that they wanted to be part of the solution and these efforts are well worth the additional resources and time to make it happen.”

The ACO, dubbed the Illinois Rural Community Care Organization, conducted feasibility studies showing that it encompassed a minimum of 370,000 lives, including more than 80,000 Medicare beneficiaries. In July, it submitted its application to the Centers for Medicare & Medicaid Services, and it was approved in December.

The decision to join was an easy one for Greg Starnes, CEO of Fayette County Hospital & Long Term Care in Vandalia. “We’re not in a position individually to form our own ACO, because the requirements are a lot,” he says. “Many services we don’t even provide in our communities, so how do we go about surviving in this post-reform world?”

Fayette County is a 25-bed hospital located in a small farming community one-hour from St. Louis. “We’re the little engine that could,” Starnes says. “We recognize that it may work well and it may not, but gosh, if it can work then we want to be a part of it. There is great risk in doing nothing.”

Solving problems, but still worried

John Gardner, CEO of Yuma District Hospital, is not one to sit on the sidelines. So, when he realized that the 12-bed facility spent $1 million in one year to recruit locum tenens, or temporary physicians, he found a better way.

Finding doctors willing to live in Yuma, located in a remote corner of northeastern Colorado, was a challenge, so Gardner began offering physicians part-time, long-term employment. While it solved some problems, it created others, like bumpy transitions when doctors changed shifts, he says.

“We found physicians who were able to work three to four days a week so we’d have two part-timers on the front end of the week and two in back,” he says. “But there wasn’t a real good handoff of the patient. Even though we had electronic health records, communication was lacking.”

Gardner found another solution: In 2013, the hospital became a patient-centered medical home with help from the Commonwealth Fund and a group of Colorado safety net clinics. This enabled them to create care transition teams made up of physicians, nurses and patient navigators to guide patients through their care plans. Yuma’s PCMH is certified by the National Committee for Quality Assurance.

“If a physician goes on duty Wednesday and a different doctor comes in on Friday, you have a great number of people familiar with Mrs. Smith and her condition,” he says. “The potential for quality of care improvement was significant.”

Gardner says patient satisfaction is up and hospital admissions are down, but he worries about how Yuma will fare in the shift to value-based reimbursements and how long the hospital will be able to remain independent. “I don’t know how we fit into that picture. I get nervous about that piece. At some point, will we be part of a larger system?”

Is independence feasible?

That is a question that rural hospital CEOs everywhere are asking, according to Russ Johnson, senior vice president for network development at Centura Health, Colorado’s largest health care network with 15 hospitals and 10 independently run affiliate hospitals in Colorado and western Kansas. “My sense is that most small, rural hospitals have a feeling they will need to pick a partner eventually,” he says. “Rural communities in the West are fiercely independent. It’s how they define who they are. John has a good hospital and he’s an excellent administrator, so they don’t feel desperate. But it’s hard for rural hospitals to look ahead and think that they won’t have to have a partner.”

Mary Beth White-Jacobs, president and CEO of Black River Falls Hospital in Wisconsin, is optimistic about her organization’s ability to adapt to the changing health care system, but worries about what will happen if it’s forced to join a larger health system. “It’s much easier for a smaller organization to change processes and become leaner, but if payment systems force us to become part of a system to get paid, that’s a problem,” she says. “We are smack dab in the middle of three health care systems. If we become affiliated with one system, two-thirds of our patients won’t be able to get care at our hospital. There has to be a way for small, independent hospitals to show that they have high-quality, affordable care and to get reimbursed for what they do locally.”

Black River Falls is one of 39 hospitals that make up the Rural Wisconsin Health Cooperative, which provides its members assistance with EHRs, financial consulting, quality improvement, and an array of educational programs, among other services. White-Jacobs says that her colleagues in the co-op have the same concerns about the future.

Slabach is hopeful that rural hospitals can adapt to value-based payment systems, and even come out better for it, but the process likely will be painful. “Everyone is having trouble crossing the shaky bridge into value-based systems. If we do it correctly, rural health care will emerge stronger. I’m bullish on it in the long run. In the short-run? We will have a lot of trouble.” Rita Pyrillis is a freelance writer in Chicago. 

Executive Corner

How critical access hospitals can improve their communities’ health

1 | Understand and build the case for population health.

2 | Develop a marketing strategy to engage your community.

3 | Include the CFO, framing the conversation in terms of charity care, bad debt and community benefit.

4 | Dispel the notion that population health equals cash outlay. Population health strategies may take time, but do not necessarily involve writing a check.

5 | Include population health on the agendas for meetings across all levels of the organization (such as board, management, quality improvement, health information technology, business office, staff).

6 | Discuss how population health aligns with your strategic initiatives and health reform activities.

7 | Reach out to the community. Don’t wait to be asked; offer and engage in conversation with a wide variety of community partners and leaders.

8 | Think beyond traditional health care partners to identify opportunities for coordination and collaboration, like senior centers, schools, libraries, etc.

Source: National Rural Health Resource Center, 2014


More articles and videos on rural health issues can be found online at


VIDEO: Phil Kamp, CEO of Valence Health, discusses the options rural hospitals have when it comes to assuming more risk.

VIDEO: Marcum & Wallace Memorial Hospital, a critical access hospital in Kentucky, has embarked on an innovative path to improving community health and enhancing primary care.