Since 2005, 120 rural hospitals have closed, greatly reducing local access to care for 20% of the U.S. population. Fairfax Community Hospital is on the verge of becoming one of the latest critical access hospitals to shut down due to financial struggles. Once ranked by state health officials as a top rural health facility in Oklahoma, it’s emergency room and nursing staff had run out of basic supplies. Hospital employees hadn’t received paychecks for 11 weeks. As staff decreased, those remaining were working 150 hours over two weeks voluntarily. Rural Oklahoma was down to one doctor for every 1,700 people, compared with one for every 400 nationally.
Failing hospitals, like Fairfax, are impacting access to care for citizens in affected areas. 41% of rural hospitals are operating at a loss with 673 rural hospitals considered vulnerable for closure. As value-based metrics use increases alongside shifts in the financial market, government programs no longer provide rural hospitals the financial stability they once did. Rural hospitals are more likely to serve populations that rely on Medicare and Medicaid and are heavily dependent on these government programs that made up 56% of rural hospitals’ net revenue in 2017. If these rural hospitals close, an additional 11.7 million patient encounters would be affected and approximately $3.8 billion in revenue could be lost.
CMS (Centers for Medicare & Medicaid Services) is developing new models including an innovative, voluntary payment model known as Direct Contracting (DC). Where other fee-based payment models have been challenging for many rural providers, DC provides more choices for participants and flexibility to those encumbered by complicated EHR systems, rules, and requirements currently in place. DC stands to reduce program expenses and improve quality of care while protecting patient choice and access.
DC initiatives attract a broader variety of organizations, such as health plans, health care technology companies, and other entities interested in contracting with providers and suppliers to become DCEs (Direct Contracting Entities). This growth is not only important for providers, but also CMS as these measure lower costs, renew focus on quality, and engage DC participants.
As these programs are executed, DCEs are likely to need technical assistance implementing EHR systems and other system requirements. As the use of DCEs expands, it may be necessary to redefine geographic regions to include non-rural with rural areas to allow for more robust provider networks for DCEs unable to adequately address CMS’ access to care requirements. Rural providers need technical assistance to configure EHR systems to accept program requirements, rule waivers, and shared services to maximize rural provider participation in DCs. CMS will need to develop new relationship arrangements and flexible terms within provider agreements and contracts to allow for growth in care and access.
At Signature Performance, we have unique experience supporting rural providers on the front line of health care payment and delivery systems. Our observations can mold Direct Contracting in a way that increases provider participation by reducing burden and ensures patients receive adequate care closer to home. This can be done while improving quality and reducing expenses on behalf of CMS while together we represent the voice of the provider, big and small.
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Dawn Wierzbicki is the Senior Vice President of Partner Engagement at Signature Performance Inc., in Omaha NE. Signature Performance is an industry leader in reducing healthcare administration costs for private and public healthcare sectors. Our unmatched experience in serving both the payer and provider side of healthcare financial management allows us to implement innovative solutions for every administrative demand.