Moving beyond its urban hospital network strategy, Columbia/HCA Healthcare Corp. is extending its hand to rural hospitals as well.
That hand manifested itself in a recent article in a periodical devoted to issues confronting rural hospitals, not for-profit hospital chains. That the article appeared at all signals a change in acquisition strategy for Columbia and a change of heart by some rural hospitals long wary of takeovers by for-profit chains.
The National Rural Health Association published a three-page "forum" by a Columbia executive heavily involved in developing rural hospital networks in Arkansas and Texas. The article appeared in the September/October issue of the NRHA's Rural Health FYI.
An NRHA spokesman called the Columbia piece "rare" for the group's publication, a semi-monthly journal.
Columbia isn't alone. Many investor-owned chains have rural hospitals in their sights, and they're gently reminding those hospitals of the uncertain times ahead and how they'd be better off as part of a larger system.
"Proposed cuts to Medicare and Medicaid would greatly affect rural communities because 60% to 70% of rural hospital revenues come from these federal health programs," wrote Allyn Harris, president of Columbia's Lone Star/Arkansas division. "Many rural hospitals provide a disproportionate share of Medicare and Medicaid services, but signals from Washington indicated that disproportionate-share payments may be ending," he said.
"The managed-care environment also puts extra pressures on rural physicians and hospitals because of the smaller volume of patients and the smaller resource base in these areas," Harris explained.
In the last year, several investor-owned companies have been formed, made public offerings or began developing subsidiaries to go after rural hospitals (July 1, p. 32).
Analysts say it's not surprising Columbia would seek to acquire smaller hospitals given the increased competition in urban markets.
"I think everybody's now chasing rurals to some extent," said Peter Costa, senior vice president of the Boston office of Chicago Corp., an investment banking firm. "Columbia acquired a substantial rural market after the Healthtrust (merger)."
Because there are about 2,400 rural hospitals located outside of metropolitan statistical areas, analysts say there's plenty of room for all for-profit chains to compete.
Harris was unavailable last week for an interview. But the article said Columbia is attempting to link its smaller hospitals with facilities in the company's larger markets.
"If they (rural hospitals) need medical services not available in the local community, they will have access to a tertiary Columbia facility nearby," he wrote.