Rural hospitals form clinically integrated network in North Dakota

Nearly two dozen critical access hospitals in North Dakota have formed a clinically integrated network, bucking the historical trend of rural hospitals seeking acquisitions by larger health systems.

The alliance of 23 hospitals is designed to allow the facilities to reduce costs through group purchasing, aggregating shared services and collaborating to add specialty care, executives said. It could also improve negotiating leverage with commercial insurers and keep patients in their respective communities as the hospitals share clinicians.

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The network is dubbed the Rough Rider High-Value Network after North Dakota's nickname, the Roughrider State. It will focus on primary care, related care referrals and chronic care management, particularly as the individual hospitals look to participate more heavily in alternative payment models such as the Medicare Shared Savings Program and accountable care organizations, said Ben Bucher, the chair of the network’s board and CEO of Towner County Medical Center in Cando, North Dakota. 

“By becoming a clinically integrated network, we can assure we stay independent and stay open,” he said.

In addition to an executive team, the network’s board consists of seven leaders from some of the affiliated hospitals. It also has a clinical integration committee that includes one medical practitioner from each hospital to oversee clinical and quality initiatives across the network. 

Rural hospitals have had trouble maintaining services as Medicare reimbursement drops, 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.

Approximately 60% of rural hospitals are affiliated with larger health systems, according to research from consultancy the Chartis Center for Rural Health. Clinically integrated networks allow independent hospitals to experience some of the same benefits of those types of affiliations, said Michael Topchik, national leader for the center.

“Rural hospitals can’t operate any longer in the absence of deep partnerships, including and most importantly clinical partnerships,” he said.

A clinically integrated network can provide a legitimate alternative to mergers and acquisitions, said Nathan White, CEO of Rough Rider High-Value Network and president of the advisory firm Newpoint Healthcare Advisors.

“We’re investing in telehealth, quality improvement, credentialing and IT, which are all considerable investments, especially for rural facilities,” he said. “But when you divide that investment across 23 members, it becomes more affordable.”

While the discussion to create the Rough Rider network has been ongoing for years, the hospitals were incentivized to form the alliance when state officials selected Blue Cross Blue Shield North Dakota in January 2022 to become the managed care organization for the state's Medicaid expansion beneficiaries, White said. The insurance company transitioned toward value-based payment models for the Medicaid expansion program, a formidable ask for the individual hospitals given the necessary resource investment, he said.

“The transition to value is a daunting task and scale matters,” said Alfred Sams, president of the Rough Rider network. “As we looked at the 23 hospitals, we saw we could achieve economies of scale and make the move to value meaningful and effective.”

In addition, the Rough Rider network received $3.5 million of state funding to help the hospitals move to value-based care, according to a news release.

The Rough Rider network was modeled after the Illinois Critical Access Hospital Network, a 57-hospital partnership formed in 2003. Other examples include the Rural Collaborative in Wisconsin and the Texas Organization of Rural and Community Hospitals.

Rural hospitals in other states are considering forming similar organizations, said White.

“We are currently working with three other states that are looking to partner and develop similar models,” he said.

John Henderson, CEO of the Texas Organization for Rural and Community Hospitals, applauded the Rough Rider network's formation.

“Contracting efficiency is part of the story, but we believe the more significant achievement through collaboration will be a reimagining of rural care and improved quality as they chart a path to a value-based world,” he said.