Healthcare Business News
Husson Internal Medicine is in one of Medicare’s Pioneer ACOs and reported some savings.
Dr. Frank Bragg practices at Husson Internal Medicine, one of seven primary-care practices with Eastern Maine Medical Center. The hospital is in one of Medicare's Pioneer ACOs and reported some savings.

Shift to coordinated care

Qualifying for ACOs a tough challenge for rurals

By Beth Kutscher
Posted: October 19, 2013 - 12:01 am ET

The town of Paris, Tenn., population 10,166, boasts a 60-foot replica of the Eiffel Tower and draws visitors with events such as the “World's Biggest Fish Fry.”

It's also a community where 19% of the population lives below the poverty line and residents struggle with high rates of diabetes, chronic obstructive pulmonary disease and high cholesterol, plus low health literacy. With the closest major city, Nashville, and its major medical centers two hours away, the job of overseeing population health falls to 101-bed Henry County Medical Center, the only hospital in the county.

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“We're a very poor-health community,” says Thomas Gee, the hospital's administrator and CEO. “Just being in rural Tennessee, that puts us at ground zero. There's a lot of room for improvement.”

The quality-improvement agenda of the Patient Protection and Affordable Care Act is intended to help improve the health of communities like Henry County. While rural healthcare providers say they're doing their part to meet the “Triple Aim” of better care for individuals, better health for populations and reduced healthcare spending, they're facing a bumpy road in the shift from fee-for-service to value-based payment.

Lacking in electronic health records and data analytics expertise, many rural providers are not even being given the chance to participate in risk-based managed-care contracts and accountable care organizations, says Jennifer Lundblad, president and CEO of Stratis Health, a Bloomington, Minn.-based not-for-profit that focuses on healthcare quality and safety issues.

In addition, Medicare ACO programs require a minimum of 5,000 beneficiaries, which by itself could be a barrier in a small community. “They're not offered the opportunity to shift from volume to value,” Lundblad says.

But some rural hospitals that are part of larger health systems and have more financial resources than standalone facilities have launched accountable care initiatives. And for smaller independent hospitals, organizations such as the National Rural ACO are working to create a pooled ACO for rural Medicare beneficiaries across the country.

Henry County Medical Center participates in the 17-county Delta Rural Health Initiative, where it works on chronic-disease management and pharmacy assistance programs. It has clinics in the community and offers free cholesterol screenings and diabetes education programs.

It also is investing heavily in technology and is now at Stage 2 in meaningful use of EHRs. “All that stuff is really expensive to do,” Gee says. The hospital ended fiscal 2012 with $287,000 in net income on $71.7 million in revenue, according to a financial statement filed with the state.

Gee estimates that the medical center's efforts have saved patients more than $1 million in prescription costs. But whether there will be a financial return on investment for the hospital is still uncertain. “I'm seeing patients benefit, but I'm not seeing it translate to financial benefits for the institution,” Gee says. “It hasn't accrued to us—it's accrued to patients.”

Meeting the ACA's quality-improvement measures is proving hard for rural providers. The investments needed to meet the goals of care coordination and population health management are likely to shut out some providers from participating in new healthcare payment and delivery models such as ACOs. The two biggest cost barriers they cite are in adding personnel and health information technology.

Preventive care is at the center of keeping people healthy. But 77% of rural counties face a primary-care physician shortage, and 8% don't have a single primary-care provider, according to a 2009 policy brief from the federal Office of Rural Health Policy.

Then there are the infrastructure costs required to track and analyze patient data. While a third of rural hospitals have at least basic EHR capabilities, only 1% can meet a proxy for Stage 2 meaningful use, according to testimony in July by the American Hospital Association before the Senate Finance Committee. Nationwide, 44% of hospitals have at least a basic EHR system, and 5.1% can meet a proxy for Stage 2. For a hospital struggling to stay in the black, the costs of implementing an EHR system can be daunting.

In Georgia, a hospital financial survey from the state Department of Community Health found that 55% of rural hospitals lost money in 2011, compared with 38% of the state's hospitals overall. The difficult operating environment led two rural providers to close their doors this year—Stewart Webster Hospital, Richland, and Calhoun Memorial Hospital, Arlington.

One predominantly rural system that is participating in ACOs is Maine's EMHS, which has seven hospitals, the largest of which is in Bangor, a city of 32,800 people. The hospital is participating in one of the Medicare Pioneer ACOs.

The biggest investment the group had to make was in analytic tools, says Dr. Iyad Sabbagh, medical director of population health management. “We're a health system, not an insurance company.”

Its ACO included 10,000 Medicare beneficiaries in its first year, and 14,500 participants are expected in year two. Although it's still early, Sabbagh says the ACO has seen savings of about 5% in the total costs of care for its assigned Medicare population and scored in the 90th percentile on many of the Medicare Pioneer program's quality metrics.

Although EMHS has a footprint in about two-thirds of the state, there are still challenges, such as physician recruitment. Most physicians train in urban environments and prefer the urban lifestyle and professional environment, Sabbagh says. Out-of-state doctors don't have ties to Maine, and it's a cold place in the winter and a buggy place in summer. That means the system has had to rely on mid-level practitioners such as nurse practitioners and physician assistants to fill in the gaps.

In Kingsport, Tenn., Wellmont Health System is participating in a Medicare Shared Savings ACO, with 10,000 assigned beneficiaries. It plans later to add its own employees to the ACO program. Denny DeNarvaez, the system's president and CEO, says the six-hospital system serves a community with high rates of smoking, diabetes and obesity. “We have a very challenged market.”

Some of its care-coordination efforts include a nurse call program, where patients connect with a “navigator” who directs them to the most appropriate care setting so they don't just show up in the emergency department. It also will follow up with a home visit, if that's what a patient needs.

“By far the most significant (investment) is the people piece,” DeNarvaez says. High rates of obesity, for instance, are linked to depression and a lack of knowledge about nutrition. “It is by nature something that is more social work, (and) care managers are hard to come by.”

Wellmont also has spent $100 million transitioning from McKesson Corp. to Epic Systems Corp. for its EHR system.

The system reported $22.3 million in income on revenue of $789.7 million in fiscal 2012, according to a financial report. While those numbers were an improvement over fiscal 2011, inpatient admissions fell 6.3%, while emergency department visits fell 1.9%.

In October, Wellmont suspended operation of Lee Regional Medical Center, a 58-bed facility in Pennington Gap, Va., citing the federal budget sequestration cuts, other Medicare reimbursement cuts under the ACA and Virginia's decision not to expand Medicaid eligibility under the healthcare reform law.

More than 60% of Wellmont's revenue comes from government payers—and the payment cuts are coming hand-in-hand with efforts to hold down utilization. “The payment mechanism is lagging behind,” DeNarvaez says. “Right now it's one foot on the boat, one foot on the dock.”

Smaller rural providers such as Wellmont and Henry County Medical Center say they are looking at partnerships with larger organizations to help them transition to a world of alternative payment and delivery systems.

Wellmont, for instance, partnered with wellness company Healthways in October 2012 to prepare its ACO application and coordinate care for the Medicare beneficiaries in the program.

Other rural providers have enough size to do it on their own. At Sanford Health, which has hospitals in North and South Dakota, Minnesota and Iowa, clinicians who practice at the system's urban locations can help fill gaps at rural facilities, including through telemedicine. “I think one of the benefits we have is we've got the scale to be able to meet those challenges,” says Ruth Krystopolski, executive vice president of development and research.

Sanford is participating in a number of care-coordination projects. It runs 180 patient-centered medical home practices and last year received a $12 million CMS grant to integrate primary and behavioral healthcare. It also identifies patients who would benefit from close interaction with a nurse health coach to increase treatment compliance.

Lundblad of Stratis Health says rural hospitals do not need to give up their independence to create a care-coordination network. Partnerships with public health agencies or social services such as Meals on Wheels can achieve some of the same results. “We would never tell a rural hospital that their only option is to be part of a larger health system,” she says.

Gee of Henry County Medical Center says the hospital sees a merger with a larger system as a last resort. Its financial performance has been “spotty” recently, but in the past 22 years it has lost money only twice.

“We've been able to build a strong balance sheet and that's what's getting us through, but that's not going to last,” he says. “We're very concerned about what the future holds for us.”

Follow Beth Kutscher on Twitter: @MHbkutscher

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