Community hospitals: New models for success

Last year I visited more than 80 community hospitals. Most are remote outposts of care, and often the last hope of medical aid for miles. I have logged thousands of miles shuttling between them and spoken with hundreds of staff. Across the board, every one of their leaders has made hard decisions in the past year — who to layoff to save money, how much to invest in new technology, and when to make the switch to value-based care.

The going has been tough. In recent years nearly 70 rural hospitals have closed, and hundreds more are at risk of shuttering for good or being acquired by larger health systems. Success looks very different than it did 50 years ago when the community hospital was the only option and patient loyalty was a given. Most are confronting shrinking, aging communities. Declining reimbursement payers, increasing patient responsibility for payments, high Medicaid populations, dwindling operating margins, and the inability to recruit and retain providers are further stressing the limited resources and resolve of these rural care outposts.

Considering 41 percent of critical access hospitals are hemorrhaging money , it's not a stretch to wonder if these hospitals can maintain their independence for much longer. Here are four strategies community hospitals can adopt to remain independent and thriving:

Specialize. Small hospitals don't have the financial and staffing capabilities to do everything. Given the opportunities in a particular geography, hospitals may have the opportunity to re-orient around the community's needs. For example, Aspen Valley Hospital in Colorado took its remote location near several ski resorts and turned it into a niche opportunity for orthopedic surgery. In order to capitalize on its proximity to a large number of people with ski injuries, Aspen Valley became one of the top orthopedic centers in the region. Rethink your hospital's service line mix to effectively serve patients and also compete with larger networks in the region. Become experts: figure out what the community needs most and build up those services.

Invest in Network-Enabled (Cloud-Based) EHR/Billing Solutions. It's clear that a lot of hospitals invested in EHRs they could barely afford to qualify for Meaningful Use funds. Years later, they are still paying for implementation costs and have failed to produce significant cost savings. To add insult to injury, the rules keep changing—MU, MSSP, bundled payments, APM, MIPS, and now MACRA. In order to compete, rural hospitals should follow the lead of those in other industries and embrace less costly cloud-based solutions that can properly capture charges, expedite billing, increase revenue through better performance insight, and most importantly, adapt with change. Expensive software licenses, high-priced servers and IT staff to maintain them are obsolete.

A cloud-based network provides benefits beyond your organization by connecting you with a network of other hospitals and medical groups. The most successful companies today are run on cloud networks that can automatically push updates when necessary, capture data from everyone on the network, learn from it, and surface analytics that track progress and success.

The ability to take data and make it work for them gives small hospitals the power of a larger organization. It puts them in a better position to negotiate favorable rates with payers, become the preferred provider for certain employers, and shop complex cases to larger health systems outside their area.

Make the Patient #1. The Achilles heel for most community hospitals is their image; many are perceived as backward, using archaic systems. Patients are increasingly bypassing their local hospital and traveling to larger cities where the care is perceived as higher quality.

No matter the size, hospitals must take their brand seriously and work to retain patient loyalty. Start with a targeted patient engagement strategy, which should include all the conveniences patients are familiar with in their everyday lives—for instance, a patient portal with the ability to receive test results, schedule appointments, communicate with providers and pay bills online. Portals are also excellent channels for patient outreach and chronic disease management. We recently did an on-site study of one hospital under 25 beds and found that last year it lost over $280,000 in revenue in Medicare annual wellness visits, colonoscopy and breast cancer screenings due to lack of care reminders.

Embrace Value-Based Care and New Payment Models. Protecting turf (i.e., covered lives) is a concern that keeps many a hospital CEO up at night. Value-based care can be a terrifying unknown that threatens the status quo. The government is encouraging well care rather than sick care, yet no one knows what this will look like in three years. For a critical access hospital the question is how to balance the benefits of joining an ACO or CCO with the loss of control that would come from being a small piece of a larger organization. It's a tricky situation—aligning your tiny organization to a larger one, which could conceivably buoy or sink overall reimbursement rates dependent on performance. For more on my thoughts on population health management and accountable care in the community setting, read Four steps to a winning accountable care strategy.

That said, community hospitals should take advantage of their smaller size and ability to quickly implement new workflows and processes—as opposed to their larger, less nimble counterparts—and embrace these new models and be ready and willing to pivot earlier rather than later. Nothing stays the same and though the reinvention of care delivery may be excruciatingly slow, it's coming. Best to be ahead of the pack when it does.

Ultimately, whatever strategy or combination thereof you choose, don't go at it alone. The best chance any rural, critical access, or small hospital has to thrive is to partner well —whether it's choosing the right tech vendor or joining with a like-minded physician group or health system in a risk-based venture.

Reed Liggin is vice-president of Hospital Sales and Solutions at athenahealth.

athenahealth is a leading provider of network-enabled services for electronic health records (EHR), revenue cycle management and medical billing, patient engagement, care coordination, and population health management, as well as Epocrates® and other point-of-care mobile apps.

[1] National Rural Health Association

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