The Rural Hospital Advantage

Compared with urban hospitals, a new report finds that rural hospitals fare quite nicely. In fact, this report finds that "rural hospitals have achieved a noteworthy level of comparative performance...."

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The National Rural Health Association released a report that compares the effectiveness of rural and urban hospitals. On most measures, rural hospitals compare quite favorably with their urban counterparts.

In fact, the study finds that, when matched against urban hospitals,  “rural hospitals have achieved a noteworthy level of comparative performance…” Rural health care is not more expensive than care in urban areas, and rural care is equal to, if not better, than care given in urban hospitals.

The comparison was done by iVantage Health Analytics, a private health care research company. Below are excerpts from the report. The company collected data on Medicare costs and health outcomes for doctors and hospitals for a 12 month period and then divided the results into rural and urban groups based on zip code. (The company used the same metro and nonmetro designations we commonly employ at the Daily Yonder.)

If you’d like the full copy, click here.  Here is a summary of the company’s report:

Rural hospitals have an opportunity to play an important and unique role in the implementation of the new health care reform law, the Patient Protection and Affordable Care Act (PPACA) because they have demonstrated cost effectiveness, high quality care and equivalent patient experience.  

In addition to these positive performance traits, rural hospitals have the potential to augment regional integrated delivery systems to ensure rural residents receive the right care in the right place at the right price.  

At this critical, post-­healthcare reform implementation stage, it is essential to understand how rural hospitals perform against their urban counterparts on industry standards of measurement, and how payments to rural residents compare to payments made to urban residents if they are to play a meaningful role.    

Rural residents tend to receive routine inpatient, outpatient and physician care at a local rural facility while seeking care for more complex treatments at urban facilities.  

Urban residents rarely out-migrate to rural settings for either routine or advanced treatments or care, yet many rural patients are referred to or voluntarily travel to urban providers based on the myth of better care.  

Perhaps more important, research demonstrates that rural residents have less access to primary care and fare worse than their urban counterparts on health status measures.  The combination of less availability of preventative/routine care and the existence of higher morbidity and pathology in rural areas presents a policy challenge that is borne out in this study.   

The tectonic shift triggered by the PPACA will have major rural implications.  

To prepare for increased provider-to-provider integration and coordination based on quality and cost, rural hospitals need to be able to demonstrate value. 

At the same time, larger urban hospitals and health systems that embark on development should use the planning phase to better understand and leverage the proven performance of rural hospitals as a means of ensuring optimal delivery model design, implementation and execution.

Summary of Medicare Beneficiary Payment Findings

• Approximately $7.2 billion in annual savings to Medicare alone if the average cost per urban beneficiary were equal to the average cost per rural beneficiary,

• Approximately $2.2 billion in annual cost differential (savings) occurred in 2010 because the average cost per rural beneficiary was 3.7% lower than the average cost per urban beneficiary,

• Approximately $9.4 billion per year is the existing and potential differential between Medicare beneficiary payments for rural vs. urban including the opportunity for savings if all urban populations could be treated at the rural equivalent,

• Per-capita Inpatient Hospital Service payments for rural beneficiaries are 2% less costly than payments for urban beneficiaries,

iVangage
Medicare spending per beneficiary is slightly lower in rural areas than in metro areas nationally. Here is iVantage’s breakdown of spending per beneficiary in each state, rural and urban.
• Per-capita Physician Service payments for rural beneficiaries are 18% less costly than payments for urban beneficiaries, and

• Per-capita Outpatient Service payments for rural beneficiaries are 14% more costly than payments for urban beneficiaries.

Summary of Hospital Performance Findings

• Neither the rural nor urban cohort dominates performance across topic areas…,

• There is no significant performance variation on 30-day readmission rates at the benchmark levels for the two hospital study groups.  There is nominal performance variation on 30-day all-cause mortality rates,

• Rural hospital performance on HCAHPS patient experience survey measures is better than urban hospitals, and,

• For three of the four price and cost efficiency measures based on Medicare Cost Reports, rural hospital performance is better than urban hospitals.

Summary of Emergency Department Performance Findings

• The mean Total Wait Time in a rural Emergency Department is approximately half as long as the wait in an urban Emergency Department (98 vs. 247 minutes),

• The mean Wait Time to see a Physician in a rural Emergency Department is nearly half as long as the wait in an urban Emergency Department (29 vs. 56 minutes), and

• More than 50% of all Emergency Department visits to Critical Access Hospitals were categorized as low acuity cases.

Based upon this timely analysis of the most current public and proprietary data, rural hospitals have achieved a noteworthy level of comparative performance including, demonstrating quality, patient satisfaction and operational efficiency for the type of care most relevant to rural communities. 

While not all care is equal, and it is indefensible that much complex care is appropriately referred to tertiary care centers, the findings suggest and the new law demands that Accountable Care Organizations (ACOs) must manage populations in a variety of settings. 

Value in healthcare is created by doing a few things well and not by trying to do everything. The rural findings may just suggest that by natural selection, rural has figured out what it does well and has optimized those services for the patient’s benefit. 

The misunderstanding that rural hospitals are more costly, inefficient and have lower quality and satisfaction is empirically challenged. More importantly as providers and developers seek to address the new healthcare using innovative delivery models, the rural setting must be better understood and included in any strategy for patient-centered care.

 

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