• Rural hospitals face growing pressures on multiple fronts, including reimbursement changes tied to value-based payments and raising concerns about health care access in rural communities.
• These pressures are forcing greater demands on rural hospital trustees, who must make ever more complex decisions about service lines and whether to affiliate with larger health systems.
• Greater demands on rural hospital boards means that more than ever, rural hospitals need trustees who are knowledgeable about the latest hospital industry trends and challenges.
• No matter what the current knowledge level of rural hospital trustees, they must continually seek and utilize educational opportunities to increase their knowledge, in order to make the right decisions for their hospitals and their communities.
• When considering an affiliation with a larger health system, rural hospitals must place the health care needs of their local communities above all other considerations.
Rural hospitals, the primary providers of health care to some of America's most vulnerable communities, are striving to maintain their missions amid a dizzying array of complex challenges.
Those challenges include the move to value-based reimbursement; declining populations and hospital census; aging infrastructure; and difficulties in recruiting medical staff to serve in small towns. Fifty-seven rural hospitals have closed throughout the United States in the past five years, according to the North Carolina Rural Health Research Program.
"For rural hospitals, the biggest challenge to their continued viability is tightening reimbursement and their inability to necessarily bring down costs because of the services they have to maintain," says John R. Combes, M.D., chief medical officer and senior vice president of the American Hospital Association and president of the Center for Healthcare Governance, an AHA affiliate organization.
As a result, Combes says, "There is a concern about the continued access and availability of services to people in rural communities."
Todd Reding, board chair of Grinnell (Iowa) Regional Medical Center, says reimbursement issues are especially daunting to rural "tweener" hospitals — those that are too large to qualify for Critical Access Hospital status and too small to absorb the financial risk associated with prospective payment system programs. "We're a 'tweener' hospital, so our reimbursement from the federal government is significantly lower than [that of] our peers around the state," Reding says. "That makes our financial situation even more challenging."
These circumstances force rural hospitals to make difficult decisions about which services to maintain, which services to drop, and whether to affiliate with a larger health system.
Hospital executives make recommendations, but the final decisions on such questions fall to the boards of America's rural hospitals. With so many challenges to navigate and so much information to absorb, the responsibilities facing these trustees have ballooned in their level of complexity.
"I don't think there is a more difficult or challenging volunteer job right now than being on the board of a hospital," says Tom Bell, president and CEO of the Kansas Hospital Association.
The responsibilities weighing on rural trustees are magnified by the nature of the close-knit communities they live in, Bell says. "When you're the trustee of a small rural hospital, you are much more likely on a Saturday morning or in the evening at a football game to run into a constituent of the hospital, who may have some praise or some concern about something going on at the hospital."
Nevertheless, rural hospital trustees must be increasingly sophisticated in their understanding of the hospital's current and forecast financial and operating conditions, and which options are available to improve the hospital's probability of success, says John Leifer, a Kansas City, Mo.-based health care consultant and author. "Boards are often deferential to leadership," he says. "I don't believe boards can afford to be deferential to senior leadership. They need to be respectful, but they also need to be actively engaged and challenging the recommendations of executive leadership."
Trustees must be knowledgeable
Amid all the changes buffeting rural hospitals, experts say it is more important than ever for trustees to have a thorough understanding of their hospital, industry dynamics and policy issues. They must have a good handle on what the migration from a fee-for-service to pay-for-performance reimbursement model means. They must keep up on changes in technology and be fluent in issues like population health, the Medicaid situation in their states, the consolidation of the insurance industry and spiraling drug prices. And even if they themselves are not data experts, they must learn what financial and quality data their hospital needs to collect and how it can be used to improve performance in both patient care and the bottom line.
It starts with recruiting the right people to serve on the board, a process fraught with its own set of challenges.
Bell says the potential trustees available to rural hospitals may not have expertise in health care. "If you're looking at going on a hospital board, you don't need to know everything about hospital finances. But certainly it helps a little if you just understand some of the acronyms that are out there."
Todd Linden, president and CEO of Grinnell Regional Medical Center, says hospitals traditionally looked to community leaders to serve as trustees. "Often that includes lawyers or CEOs of companies or chief financial officers. Having business or legal backgrounds has been pretty typical of board members for many years."
But today, Linden adds, "you have to think more about whether there are folks with quality and process improvement and safety experience backgrounds. We're always thinking about clinical expertise, whether that's physicians or RNs. For example, we have a dean of a health sciences college on our board who happens to be a physician's assistant by training."
Tim Putnam, president and CEO of the Margaret Mary Health, a CAH in Batesville, Ind., says his hospital recently recruited a board member with expertise in Lean Six Sigma waste-cutting strategies. "She has been a great asset."
But rural hospitals also can find effective trustees among more traditional rural constituencies, Putnam says. "In small communities, farmers are great. Because one thing farmers know is how to adapt to odd government payment programs. I've learned a lot from farmers I've worked with on the board."
Putnam says Margaret Mary Health has bolstered the effectiveness of its trustees through a board governance committee. Committee members "are committed to making sure board of trustee members have what they need to do their job and do it well. What information do they need? What education?”