A Blueprint to Save Rural Hospitals

A troubling trend emerges as healthcare reimbursement shifts from volume-based to value-based systems: rural hospitals are increasingly at risk for closure. There are many factors contributing which make these closures more and more prevalent.

One principal reason is that more patients are shunted to urban hospitals as EMS transfer systems become more efficient, especially for heart attack and stroke care. For a modest fee of $50,000, one may take a 30-minute helicopter ride from his or her local community to the nearest regional hospital. Unfortunately, many of these transfers ultimately prove unnecessary and deprive local hospitals of admissions that could have been managed locally.

Second is the perception that more volume means better care. A plethora of published studies suggest that doing more CABGs, transplants, and so forth translates into lower complication rates. The press generated by such journal articles fuels an erroneous public perception that care at rural hospitals is inferior or simply “no good.”

Finally, value-based reimbursement now penalizes facilities for complications such as catheter-associated urinary tract infections or readmissions within 30 days of discharge for the same diagnosis. While large hospitals might be able to “take the hit,” rural hospitals with smaller margins are quite vulnerable to insolvency when reimbursement is reduced or denied for setbacks that are not necessarily the result of improper care.

So, what are rural hospitals to do to survive?

In my experience, the first priority is to staff rural hospitals with physicians who have a stake in the community, preferably qualified local physicians. In my little town, four of my partners and I take turns working at the hospital every five weeks. Since we assumed inpatient care responsibilities last spring, patient satisfaction surveys for our hospital have gone from abysmal during the tenure of out-of-town hospitalists to the highest in the Saint Thomas Hospital system at the end of April 2018 under us. I am of the opinion that when you have to see patients in the grocery store or at church, you try a little harder to deliver good care.

Second, having great case managers is a must. Close communication between case managers and physicians about length of stay and how to get someone to qualify for an admission who needs it remains a financial necessity for a rural hospital’s survival.

Third, cultivate a working relationship with a reputable tertiary care center. Even if your local hospital does not make a profit, if you are capturing business for a tertiary center by transferring patients who require a higher level of care than your facility offers, you might be able to subsidize your local hospital’s operations through a partnership.

Furthermore, develop a safety net between your hospital, nursing home, and home health providers to keep “frequent fliers” out of the emergency room. It is no secret that many patients come to the ER for problems that could have been managed with a phone call or an office visit but instead trigger a 30-day readmission. Having a committee of representatives from case management, nursing homes, and home health agencies who can devise strategies to care for noncritical patients at home pays dividends to all. Home health networks and nursing homes get to keep their patients, and hospitals do not get penalized for unnecessary hospitalizations.

Finally, be a champion for your facility. When you do something well, make sure it gets press in your local news media. Get happy patients to tell their stories. The positive feedback might make other patients think twice about seeking care at large hospitals fifty miles away instead of yours.

Having a local hospital is a boon for small towns. It can mean the difference between having a booming community or a declining population. Rural hospitals provide a means to care for patients locally without their families driving long distances to be with them for simple problems that do not necessarily require specialty care (illnesses such as pneumonia, CHF exacerbations, COPD flares to name a few). Sure, if I am having a heart attack, get me to a big urban hospital for a cath. If I am dehydrated from a virus, just give me a couple of liters of saline at my local hospital.

Sadly, if communities do not support their local hospitals, their facilities will certainly close. The negative ripple effects of such closures will be painful and likely irreversible. Therefore, if you do not have a plan to keep your small-town hospital open, then I suggest you get busy right away!


Factors causing rural hospitals to close:

  • Loss of volume to urban hospitals from improved EMS transport
  • The erroneous perception that bigger is always better
  • Reimbursement penalties for complications and 30-day readmissions

The simple blueprint to save rural hospitals:

  • Staff them with qualified local physicians when possible
  • Invest in excellent case managers
  • Cultivate a partnership with a larger tertiary-care hospital network
  • Develop a safety net between case managers, nursing homes, and home health to reduce unnecessary ER visits and admissions
  • Be a champion for your facility – word-of-mouth from satisfied customers is the best way to advertise your services