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Could Telehealth Give Struggling Rural Hospitals a Path to Stability?

A Navigant analysis finds that one-fifth of the nation's rural hospitals are struggling to stay open. Telehealth could give these hospitals an opportunity to redefine care and put them back on solid footing.

Source: ThinkStock

By Eric Wicklund

- New research shows that rural hospitals are struggling to stay afloat – and telehealth and telemedicine could throw them a much-needed lifeline.

An analysis of financial data by the Navigant Consulting firm finds that one of every five rural hospitals is at a high risk of closing unless its financial standing improves. And more than half of those hospitals, the firm says, are “considered essential to the health and economic well-being of their communities.”

The solution to those financial woes might just be connected health technologies that allow those hospitals to collaborate with other, larger health systems, reduce expenses and keep more billable services local.

“Partnerships between rural hospitals and regional tertiary and academic health systems need to be advanced in such areas as telehealth, back office functionality (revenue cycle, human capital, finance, EHR use), physician training, and clinical/service line optimization,” the analysis says. “Through these partnerships, rural hospitals can leverage the resources and capabilities of their better-funded, savvier peers.”

“Collaborating with academic and large health systems allows rural hospitals to leverage the resources of these better funded peers and develop a hub and spoke network of clinical care that augments rural services,” added Navigant Managing Director Daniel DeBehnke, MD, MBA, co-author of the study and a former academic health system CEO, in an accompanying press release.

Navigant’s study also references a long-standing bill aimed at amending Medicare guidelines to help rural acute-care hospitals improve their bottom line.

The REACH (Rural Emergency Acute Care Hospital) Act, last introduced in 2017 by Sens. Chuck Grassley (R-Iowa), Amy Klobuchar (D-Minn.) and Cory Gardner (R-Colo.), would create a new rural emergency hospital classification that would allow critical-access hospitals with 50 or fewer beds to convert to a rural emergency hospital that still offers emergency and observation services but doesn’t have to offer inpatient beds.

Such legislation, if passed, would also give these hospitals the leeway to launch mHealth and telehealth services – such as eConsults and access to specialist care like telemental health and telestroke - that improve those care pathways.

“Ensuring rural access demands that we embrace collaboration and technology,” Bruce Siegel MD, MPH, CEO of America’s Essential Hospitals, a Washington DC-based advocacy group, said in the Navigant press release. “Telehealth and partnerships between rural hospitals and tertiary centers will be key to ensuring the right care is delivered at the right time.”

According to the Navigant analysis, some 21 percent of the nation’s 2,000+ rural hospitals “are at high risk of closing based on their total operating margin, days cash on hand, and debt-to-capitalization ratio.” This equates to 430 hospitals across 43 states that employ 150,000 people.

In terms of community value (trauma status, service to vulnerable populations, geographic isolation, economic impact), meanwhile, the analysis found that 64 percent of the 277 hospitals considered essential to their community’s health and economic well-being are in trouble. In 31 states, it said, at least half of these financially distressed rural hospitals are considered essential.

These hospitals are struggling, the analysis points out, for three reasons:

  1. Rural communities tend to be very young or very old, with higher rates of uninsured, Medicare and Medicaid patients. This leads to more uncompensated or undercompensated care and reduces payer support.
  2. The shift to outpatient care (partly driven by improvements in mHealth and telehealth technology) has left these hospitals overstaffed and underused.
  3. Because of the first two reasons, these hospitals don’t have the financial standing to adopt new technologies or experiment with value-based care.

Potential bills like the REACH Act and recent moves by the Centers for Medicare and Medicaid Services (CMS) to expand reimbursement for mHealth and telehealth services would give these hospitals the opportunity to embrace new pathways of care.

“Our analysis shines a new light on a rural hospital crisis that must be addressed and could significantly worsen with any downturn in the economy,” co-author David Mosley, a managing director at Navigant, said in the press release. “Local, state, and federal politicians, as well as health system administrators, need to act.”


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