Here’s a potentially disturbing statement: “Rural healthcare needs healthcare – not buildings.”
I’ve been watching rural hospitals closely as they cope with the changing healthcare landscape, and I’ve come to believe this statement is true. You might find it disturbing because of its implications – if rural hospitals don’t need buildings, what happens to their staffs, their service, their presence in the community and their stakeholders? And most of all, without a physical presence in a community, what happens to urgent care and its lifesaving role in rural areas?
In the face of such profound implications, rural hospital boards and administrators are often tempted take the easy way out and do nothing. If you are of that opinion, I urge you to reconsider because I believe that doing nothing will quickly lead to your hospital’s demise.
Here’s why – the old models for success no longer apply.
In the old business models, rural hospitals secured their reputation and their profitability by offering as many services as possible, and then building clinics and departments and wings to house equipment, staff members, treatment rooms and beds. Having a large physical presence was integral to their business plans. They often tried to be all things to all people. They advertised local treatment – even if treatment at a facility in a larger town was less expensive and had better outcomes. The model seemed to work because patients weren’t paying the freight directly, and the hospital was reimbursed for the number of procedures it provided.
When the hospital wasn’t reimbursed for services rendered and indigent care overwhelmed care for patients with insurance, it was possible for rural hospitals to operate at a loss year after year because volume-based reimbursement programs, dedicated donors, foundations and grants often helped them stay in business. Rural hospitals were often providing care to those in the underserved community and some were created as a result of federal funding to provide charity care.
Now, however, the pressures on rural hospitals are pushing them to the breaking point. Bundled payments, value-based outcomes and an emphasis on population health are replacing fee-for-service in the marketplace. To survive, rural hospitals must reposition their business models, but they can’t change blindly. They must weigh the impact of their decisions in the following areas:
Here are six recommendations to redesign an effective rural hospital. This is an effective structure for the project; I’ll leave the details to you.
I think it’s clear that rural communities need excellent healthcare, just like urban communities do. The model, however, that encourages extensive real-estate holdings and capital building projects is no longer useful. The new rural hospital won’t look much like its predecessor, but it can be even more effective with proper vision, precise investment and productive dialogue among the affected stakeholders.
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