COVID-19 has exposed the cracks in the foundation of America’s rural community health system. These cracks include increased risk of facility closures, loss of services, low investment in public health, maldistribution of health professionals, and payment policies ill-suited to low-volume rural providers.
As a result, short-term relief to stabilize rural health systems and long-term strategies to rebuild their foundations are necessary. In this post, we propose four policy cornerstones on which to rebuild the rural health system. They include new financing and delivery models, community engagement, local health planning, and regionalization of delivery systems.
The Cracked Foundation
The cracks in the rural health system’s foundation impair system performance on many levels. Rural hospitals, clinics, and emergency medical services (EMS) report reduced revenues and utilization; shortages of personal protective equipment, testing supplies, and ventilators; and limited COVID-19 surge capacity. The chronic underfunding of rural public health has also dismantled emergency response capacity. Finally, enhanced payment policies have slowed, but not prevented, rural hospital closures.
While these cracks are not new, COVID-19 has revealed how deep they are. For example, 172 rural hospitals have closed since 2005. Due to chronic underfunding, rural public health departments employ staff with narrower skill sets and fewer epidemiologists than their urban peers. Low patient utilization and revenues have severely reduced the crisis response capacity of rural health systems. Rural communities have fewer health resources to respond to COVID-19.
Despite concerns about hospital closures, a large percentage of rural residents bypass their local health systems. These bypass patterns reveal tension between the desire to retain local services and the will to sustain these services through utilization and financial support.
Weaknesses of Volume-Based Payment Policies
Fee-for-service payment policies fail to address rural providers’ high fixed costs, inadequate cash reserves, and high reliance on non-emergent care revenues. They also discourage delivery of high-value, low-margin services such as primary care, chronic care, and prevention.
To sustain low-volume rural providers, Medicare provides enhanced reimbursement to critical access, sole community, and Medicare-dependent hospitals and Rural Health Clinics. Still, these designation programs rely on fee-for-service payment methods insufficient for rural providers. They fail to mitigate the impact of Medicare sequestration and bad debt cuts, low Medicaid and commercial reimbursement, low dependence on inpatient care, and declining rural populations.
At the same time, volume-based payment policies in our market-based health system favor the location of services in larger communities and encourage providers to compete for business. This reality does not serve rural areas well, particularly small and isolated areas. A competitive market approach, in the absence of formal health planning, inhibits coordination, promotes wasteful competition, distributes services inefficiently, and shifts planning from local to corporate levels.
Patching the Foundation: Short-Term Solutions
COVID-19 has widened the cracks in our rural health foundation. Short-term responses have included financial support as well as regulatory relief to expand telehealth use and increase hospital bed availability. These interventions seek to stabilize rural providers and their ability to respond to community needs. COVID-19’s impact has also renewed interest in the Rural Hospital Closure Relief Act of 2019 [PDF] (H.R. 5481/S. 3103). The Act would allow additional struggling rural hospitals to become Critical Access Hospitals by restoring state authority to designate necessary providers.
After COVID-19, we will face difficult decisions. Some rural providers may close, while many others will be weakened. State and local governments may face growing service demands with fewer resources to meet those demands.
Rebuilding the Foundation: Long Term Solutions
While helpful, traditional rural support policies have not fully repaired the foundation of rural community health. Thus, long-term strategies to rebuild, rather than patch, the rural health foundation are needed. In response, we propose the following four policy cornerstones to anchor this approach.
Cornerstone 1: New financing and delivery system models
New rural financing and delivery system models are needed to:
- Respond to individual community requirements;
- Rightsize services;
- Reduce reliance on utilization and patient volume;
- Cover the costs of care, including fixed costs;
- Sustain crisis response capacity;
- Support public and population health, team-based care, telehealth, and transportation; and
- Ensure access to inpatient, outpatient, specialty, and primary care services.
Demonstrations in Maryland, Pennsylvania, and Vermont are testing payment and delivery system models that may inform future rural health system development. Revisiting lessons learned from past state and federal demonstrations can provide additional information to supplement the results of these demonstrations.
Cornerstone 2: Community engagement
Implementation of rural delivery system models will be less effective unless communities engage in selecting models that meets their needs. Effective community engagement includes cross-sector representation, participation of vulnerable populations, and education on the economics of local health care services. Community members must understand that health systems are not “public utilities” but resources requiring local utilization and financial support. Effective community engagement seeks to identify and reflect local concerns, values, and priorities. It should also explore why residents bypass local services to seek care outside of the community. Communities will need tools, technical assistance, and resources to support their community engagement processes.
Cornerstone 3: Local health planning
Community engagement and local health planning are closely aligned. Local health planning processes are not the large-scale programs created under the National Health Planning and Resource Development Act of 1974. Rather, they are local efforts that can leverage the community health needs assessments (CHNAs) required of tax-exempt hospitals or the Mobilizing for Action through Planning and Partnerships (MAPP) process, used by public health agencies for voluntary accreditation. These processes offer a framework to conduct community health planning and engagement focused on health rather than health services.
Collaboration between hospitals and local health departments (LDHs) would result in more comprehensive community health assessments. Maryland, New York, North Carolina, and Ohio encourage collaboration between hospitals and LHDs and/or the alignment of their assessment cycles. New York requires hospitals and LHDs to collaborate on CHNAs, prioritize community issues, and jointly implement initiatives to address health priorities. To maximize their effectiveness, these assessments and planning processes should reflect the health system and health improvement needs of the community.
Cornerstone 4: Regionalization of delivery systems
Regionalization of high-cost services complements effective local health planning. Rural health systems often compete in “medical arms races” for specialty and diagnostic services, resulting in duplication and inefficient resource use. In contrast, regionalization involves “rightsizing” health systems by organizing delivery of essential services locally and high-cost services regionally. The loss of rural obstetrical services is an opportunity to regionalize care by providing pre/postnatal services locally, performing deliveries at designated regional hospitals, and offering transportation to ensure access to regional services.
Effective planning and regionalization require local and state-level input on the distribution of rural populations, needs, and services. States can play an important role in encouraging regional health planning. Texas, for example, funded Regional Health Partnerships (RHPs) under a Medicaid 1115 waiver. RHPs, which include hospitals and LHDs. RHPs must create plans to improve regional access, quality, cost-effectiveness and collaboration. Florida, as another example, established local health councils which are non-profit agencies that conduct regional health planning and implementation activities.
Regional health planning can also support coordinated preparedness and response to local and global events. Minnesota, for example, established eight Health Care Coalitions that collaborate inter-regionally for planning and response purposes. State Offices of Rural Health and other stakeholders can facilitate regional planning by convening health care, public health, and social service partners.
With Crisis Comes Opportunity
Rural America has an exceptional history of resilience, innovation, and collaboration. Recovery from COVID-19 requires new strategies to rebuild the crumbling rural health foundation. The four cornerstones – payment and delivery system reform, community engagement, local health planning, and regionalization – can provide the base for strong and vibrant health systems serving rural America.
Tools and resources are needed to support rural communities in taking responsibility for their health systems. Government and philanthropic organizations can be an important source of funding for development of these resources. We further recommend that states explore opportunities to create regional planning systems to improve the delivery of essential and specialty services in rural areas. While COVID-19 has weakened rural health systems, it also provides an opportunity to pursue a new approach to engage rural communities in planning for and developing sustainable systems of care.