More rural hospitals are joining clinically integrated networks to improve their standing with commercial insurers, maintain services, boost care quality and reduce costs.
The Rough Rider High-Value Network, a clinically integrated network of 23 North Dakota rural hospitals, represents the latest of these alliances. Others include the Illinois Critical Access Hospital Network, the Rural Collaborative in Washington state and the Texas Organization of Rural and Community Hospitals.
“We’re at a crossroads, where rural hospitals are looking at other ways to expand their network,” said Pat Schou, executive director of the Illinois network.
Here’s what to know about clinically integrated networks involving rural hospitals and physician groups.
What’s a clinically integrated network?
Sometimes referred to as CINs, clinically integrated networks facilitate collaboration among otherwise independent healthcare providers to coordinate and deliver patient care, often using uniform quality standards and treatment protocols. Federal regulators generally allow that type of collaboration if the network meets certain requirements, such as investing in tools and infrastructure that monitor and control healthcare utilization.
Typically, it is a separate legal entity that has a standalone leadership team comprised of the executives that manage the affiliate hospitals and physician groups. A subset of affiliate provider organizations in a network usually participate in an accountable care organization, which form agreements with commercial insurers and government-sponsored payers linking reimbursement to care outcomes and efficiency targets.
The network can negotiate contracts with commercial insurers and supply chain vendors on behalf of the providers. Clinically integrated networks often provide the infrastructure for providers to grow alternative payment models, such as the Medicare Shared Savings Program.
Why would rural hospitals want to join a network?
Rural hospitals can maintain their independence and still gain the benefits of scale under the clinically integrated model, said Joe Lupica, chairman of the M&A advisory firm Newpoint Healthcare Advisors, who has helped set up networks.
“Clinically integrated networks help you sustain local care because you are still in charge,” he said. “You are collaborating but not colluding.”
Many rural hospitals have cut services such as maternity care as reimbursement rates drop, infrastructure ages, labor costs rise and the population declines in their communities. They often seek large health system partners to invest in their facilities and equipment, more efficiently manage administrative tasks and expand their recruitment and retention efforts.
Clinically integrated networks are an option that allows a hospital to maintain its independence. “Small, independent hospitals don’t have the size to spread risk or cost," Schou said.
Are clinically integrated networks growing?
The Texas Organization of Rural and Community Hospitals, an advocacy group, formed a clinically integrated network in 2022 with nine hospitals. It has grown to 27 hospitals, and is expected to expand to about 50 facilities by the end of 2024, said Paul Aslin, executive director of the TORCH network.
“Some of the interest is driven by the financial state of rural hospitals that are looking to increase revenue and demonstrate that they can provide high-quality care,” he said, adding that rural hospitals that join the network have immediate access to six value-based care arrangements. On their own, rural hospitals are often limited in the value-based care space by their relatively small patient population, Aslin said.
What quality improvements have rural networks produced?
At the Rural Collaborative in Washington, diabetes care management and rates of screening for depression, breast cancer and colorectal cancer have improved, said Elya Prystowski, executive director. Unnecessary hospital admissions and readmission rates have dropped, she said.
“I remember when risk was a four-letter word,” Prystowski said. “But taking on risk through our accountable care organization turned out to be a really positive experience for all those involved, as we’ve seen major increases in quality.”
What cost savings have the networks produced?
Clinically integrated networks often allow hospitals to reduce costs by aggregating shared services, such as recruitment and retention programs and information technology tools.
The 23 hospitals that make up the Rough Rider High-Value Network, for instance, are poised to benefit from centralized shared services such as an IT platform, data analytics software for population health initiatives, physician and nurse credentialing, recruitment programs, revenue cycle management and billing and group purchasing, executives said.
The Illinois Rural Community Care Organization, the accountable care organization formed in 2015 under the Illinois Critical Access Hospital Network, helped generate roughly $7 million in shared savings from 2019 through 2022 via the network’s shared savings payment model with Blue Cross and Blue Shield of Illinois, Schou said.
Can clinically integrated networks limit health system revenue?
If the networks are able to curb complex procedures by boosting preventative care and care coordination, they may be able to drive down hospital admissions, said Anna Basevich, senior vice president of enterprise partnerships and customer enablement at Arcadia, which has helped providers set up networks.
“If there is appropriate investment and [networks] do value-based care well, they can start to chip away from higher-margin services, which can be threatening to major health systems,” she said.