May 4, 2023

Podcast - Critical Access to Care in Rural Communities

Hospitals at a Crossroads, a Counsel That Cares Podcast Mini-Series

This Counsel That Cares episode was previously recorded and released by Waller on February 12, 2023, and has been rebranded and relaunched now that Waller is a part of Holland & Knight. 

In our third episode of our "Hospitals at a Crossroads" mini-series, Holland & Knight healthcare attorney Jesse Neil is joined by special guests Martie Ross and David McMillan from PYA, a top 100 accounting firm and top 20 healthcare management consulting firm. Together, they discuss the rural healthcare sector as it relates to critical access to care and possible solutions to combat the issues facing small communities and their healthcare systems.

More Episodes in This Series

Part 1: Hospital Restructuring and Strategic Partnerships 

Part 2: Increasing Hospital Profitability Through Transformative Integrations

Part 3: Critical Access to Care in Rural Communities (You are currently viewing Part 3)

Part 4: Rising Chapter 11 Bankruptcies in Healthcare


Morgan Ribeiro: On today's episode, we are continuing our hospitals at a crossroad series. We're joined by Jesse Neil, a partner in the firm's Healthcare Regulatory Group, who leads our efforts in working with hospital clients who are navigating this challenging operating environment.

And our guests today are from PYA, a top 100 accounting firm, and a top 20 healthcare management consulting firm in the U.S. It's Martie Ross and David McMillan. Welcome to the show. I have asked you to join us for today's discussion given your firm's history and your personal experience representing hospitals in numerous states related to critical access and rural health initiatives.

Martie is the office managing principal for Kansas City and Director for the Firm's Center for Rural Health Advancement, and David serves as PYA's Chief Financial Officer and leads the firm's national consulting practice. So with that introduction, welcome to the show.

Martie Ross: Thanks, Morgan. It's a pleasure to be with you.

David McMillan: Likewise. Thank you.

Unique Struggles in The Rural Healthcare Sector

Morgan Ribeiro: Yeah, absolutely.

Martie, you are a trusted advisor to providers navigating the ever expanding maze of healthcare regulations, and you bring to your clients, who are primarily providers, a deep understanding of new payment and delivery systems and public payer initiatives. So, I want to learn more from you today about some of those initiatives and the creative solutions you are developing with your clients, alongside your clients.

But before we do that, I think it would be helpful for our listeners to get more of a macro level view of the rural healthcare landscape. I recently read that since 2011 there have been more hospital closures than hospital openings in the U.S., and about two thirds of hospital closures have been in rural areas where financial challenges pose significant risk to long-term operational liability.

There's a number of reasons that we can look at why this is happening. Decreasing patient populations, limited public financing support for low income populations are two possible causes for those closures that we hear about.

So can you speak more to just the overall challenges that are faced by rural hospitals or just rural providers in general?

Martie Ross: Morgan, it's pretty simple. It's low volumes against high fixed operating costs. There's only so much revenue coming in because you're only providing so many services. You don't have the funds to cover your operating expenses and anyone knows that formula doesn't last.

Now, in each community there are contributing factors that exacerbate that problem. If you have provider shortages, the health status of the population and the age of the population, the facility and the need to invest capital in the facility, the demands placed upon the organization, all of that is unique to each community. Meaning there is no silver bullet to what we refer to as the rural health crisis.

 Instead, there are challenges to these communities to do an information driven assessment of their position so they can identify what's contributing to their position and develop a plan that addresses that and that's really challenging for a number of these organizations because rural facilities are — we love to call them the Ginger Rogers of the healthcare system — they're doing the same exact thing but backwards and in heels. So you have one person that's wearing multiple operational hats and doesn't necessarily have the depth and breadth of experience to really wrestle with these challenging issues and identify creative solutions.

So, it's a number of contributing factors, but at the end of the day? Low volume, high cost, and we have to figure out the solution between the two.

Morgan Ribeiro: I imagine too, just being able to invest in doing an audit like that and to take the time to pause when many of these hospitals and these facilities are in crisis mode. So I think it's challenging to even take that step.

Martie Ross: Yeah. There was a program that state of Tennessee pursued right before the pandemic, 2018, 2019, where the legislature committed funds to support rural hospitals in doing what they referred to as "transformation plans." So they developed relationship with different consulting firms and experts, and brought those resources to the hospitals and an infrastructure for doing the type of review, right? What are the factors that need to be considered? What data needs to be a part of those types of analysis?

I'm suspecting as this crisis becomes more serious, especially in our new post pandemic world, that we'll see more of those types initiatives either by state governments, by foundations, by the business sector that's really concerned about maintaining these hospitals.

One of the greatest concerns for these rural hospitals, you lose your hospital, you lost the underpinning of your economy because you just can't attract new businesses. Because the first question when you're thinking of locating a business in a rural community is what's the stability of the healthcare system? What's the stability of the educational system? What's the faith community in that area? And the answer is, we just lost our hospital; that is certainly not the best lead when you're trying to focus on economic development.

I'm based in Kansas and we've had a number of rural hospitals close and we've worked with those communities post-closure, and it's just an enormous obstacle, not having the hospital and figuring out how to deliver healthcare for your community, but then how you can work through that in part of an economic development strategy.

Morgan Ribeiro: Jesse, you have anything to add just in terms of challenges that you're seeing with the state of rural healthcare?

Jesse Neil: Sure.

 I agree completely with Martie's assessment, and I'll add that the low volume for rural hospitals relates to also the type of volume that they're getting.

The shift from inpatient to outpatient has a dramatic impact on the number of patients who ultimately receive care at home as opposed to traveling into some of the urban areas and also the reimbursement that's associated with it. The irony is that even some of the developments that people all think will improve the system, like the overall transition to outcome based reimbursement, the infrastructure associated with competing in that world is substantial for even capitalized strong market based hospital. For a standalone rural hospital to start competing and have the infrastructure to track and outreach and everything associated with it, and then win at that game for the limited reimbursement.

It's a big challenge, so low volume and harder dollars to come by.

Morgan Ribeiro: David, you have anything to add to that?

David McMillan: Everybody's made excellent points. I think I would just go back and offer this, Morgan, we speak the term rural as if that is a term that applies to everyone that is not urban, suburban, or academic. As if all rural providers sometimes are homogeneous and all of their challenges are exactly the same. In reality as we all know, and as the listeners know, there is a very wide dispersion of rural facilities with unique circumstances.

Now, a lot of those challenges are the same. And Martie alluded to that and Jesse was helping us put a finer point on that as it relates to not just the inpatient, but the outpatient challenges. But a rural community — in the rural communities across this country have very distinct characteristics to them at times that make their specific needs very different than, say, a rural community, even within close proximity to them.

So, these challenges that they face and the solutions that we're all going to ponder on here today, it's not a one size fits all when it comes to rural, just like it's not one size fits all when it comes to healthcare in general.

So, I just wanted to point out to those who might be listening saying, "Hey, wait a minute, that doesn't really represent me, but this represents me." We get it, but we'll do our best to call some of those out as we go.

Recruiting and Maintaining Physicians in Rural Communities

Morgan Ribeiro: I think that's an excellent point.

So, Martie, I want to go back to you. You mentioned, and David, you just were talking about this, it's each role market is facing unique or different challenges when it comes to particularly recruiting and retaining physicians. And so at the end of last year, I think Martie, you presented a webinar titled "Physician Compensation and the Three Rs of Rural Markets: Reality, Recruiting and Regulatory considerations." Can you tell us more about what you mean by each of those three Rs?

Martie Ross: The realities are just exactly what we're talking about, right?

The need for a physician presence in a community is so pronounced because it drives volume. If a community doesn't have primary care providers — furnishing core services ­ — there's no one to make the referrals into the hospitals. So it's such a critical piece in the equation, is to have adequate physician presence in your community for recruiting them. That's the reality.

The recruiting strategies are just different because you have to sell a different package. Rural hospitals, rural communities, really have to make their case very effectively to potential candidates.

First, it's identifying the right candidates, and obviously folks that grew up in rural communities are more likely to return to rural communities. So a lot of rural hospitals pursue a grow your own type program. So, whether it's initiatives in the local high school, encouraging kids to pursue a career in medicine, or it's sponsoring medical students or residencies. It's trying to get them as early as possible, getting them to do their residencies in rural communities that, again, research shows us you are far more likely to take a job in a rural community if you do residency in a rural community.

For example, again, here in Kansas the medical school opened a separate campus in a relatively small town, Salina, Kansas, and they have a small group of med students that are doing all their training in Salina, Kansas and that are doing all their residencies in small rural hospitals. And the idea being that's going to generate a new workforce.

But certainly in rural communities, it's so critical that they have that strong relationship with the local medical school so that the career people at the medical schools are aware of their needs, are able to communicate with those potential students.

The other part of it is the idea that the regulatory considerations, it's how do you think outside the box? Obviously, you've got to think about your compensation structure. There's sort of a presumption that you have to pay more for a rural provider, to get a physician to come into a rural community. How are you going to navigate that? Do you have the resources to navigate that? And what we're seeing is hospitals thinking really creatively about the packages they're offering.

We had a hospital out in southwest Kansas that developed a mission program so that they would recruit mission minded physicians. Say work in the community nine months out of the year, we'll support you in a mission three months out of the year. So you can go to a poor country and provide Doctors Without Borders types of services, and it's had an amazing response to it. They've been able to increase the size of their medical staff significantly. So that's part of it.

The other piece of this we can't ignore — the other reality, I guess —  is this isn't all going to be solved by physicians. We're going to have to take a good hard look at our scope of practice laws.

I keep giving you Kansas examples, but it's what's most immediate in my mind. We just redid our advanced practice registered nurse scope of practice laws in Kansas to allow greater independent practice, not under the supervision of a physician. We're requiring a different level of supervision, but really just allowing it to establish a complete primary care practice. Now it's going to be a challenge in its implementation. We're seeing that. You can write words that describe scope of practice, and then there's the reality of scope of practice.

That's going to be a challenge, but we're certainly going to have to use non-physician practitioners more aggressively to manage larger patient panels to help address part of the shortage issue.

Morgan Ribeiro: Jesse, any thoughts on that? As a lawyer on the line here, I'm curious to notice in terms of the scope of service and what you're hearing in that regard.

Jesse Neil: I couldn't agree more. What I often see is boards of medicine and physicians not being eager to see their traditional universe of treatment that they had exclusive domain over. But also, I don't know any policy makers that think that we can bend the cost curve or address some of the cost issues that we've got without getting the right patient at the right place at the right time, and to me that means a couple different things.

One, where are you and who's seeing you? And there's just a lot more flexibility around non-physician providers and being able to meet the patient. And I think that's just a natural place for us to find some efficiencies and some access, particularly in rural areas, where you might go to a more tertiary center for a significant event, but for day-to-day maintenance or even moderate issues that need to be maintained, a nurse practitioner who's in the community should be a great option for a lot of places.

Morgan Ribeiro: I think that's a good segue to my next question, which is how do we get more creative solutions around this?

Do you think role providers can fix that recruitment conundrum or do we need to look at more creative solutions like telehealth, which of course we saw really ramp up over COVID certainly increased the ability for those in rural areas to have access to providers through telehealth or having access to mental health services. I really think that it opened our eyes to that.

Although I'm curious, there's been some news, obviously, out with the pandemic as officially over with the federal announcement. So I'm just curious what those creative solutions, like telehealth or other tech enabled services, how that may end up helping rural providers and how much that's really included in these strategies as they sit down and look about what are our challenges and then what are the solutions, how much those options are available to them, and how helpful those are.


Martie Ross: Telehealth can play a critical role as part of a continuum of care, and I think this is also one of the lessons of the pandemic. You look at the utilization trends, the telehealth during the pandemic, they were lower in rural areas than urban areas. So the percentage of the population who received services via telehealth during the pandemic, even at the height of the pandemic and the first part of 2020, utilization rates were lower in rural areas.

And part of that is the challenge of technology. It's the last mile of broadband issue that we just don't have, especially to go to patients' homes. We don't have the necessary level of broadband connectivity. And then there are also just the technology challenges with old people, which is I get older and older, I appreciate so much more.

By way of example, we were working with a clinically integrated network on a health resources and services administration or HRSA grant to deploy remote patient monitoring in rural communities. And we thought this would be easy, right? You just nailed the device delivery by FedEx. There's instructions on how to set up the device and put the app on your phone and yeah, it just crashed.

To think that was going to be something the patient would be able to engage in directly, there's got to be a whole set of services and supports around that if we want telehealth to work. So telehealth sounds like a great solution. It is part of the solution, and you just have to grapple with the practical side, the technology side, but there's also the personnel side to this.

You're not increasing the number of providers. You're simply taking a provider that's sitting in an urban chair and targeting them in front of a computer to speak to someone that's in a rural location. Again, it expanded the number of providers. What typically happens in a practice that does telehealth, it's the newbies that do telehealth to fill their schedule. And then, as they develop their local practice, there's less and less time to do that telehealth. And so, the sustainability of that program is really challenged.

So yeah, telehealth's going to be part of our solution, particularly in the specialists being able to bring specialty services into rural communities, but it can't be seen as a solution in and of itself.

David McMillan: And to that point, if I might, Morgan, telehealth is not only an access point expander, but it's often viewed as a lower cost approach. And in reality, what Martie is defining is that individualized telehealth requires pretty substantial investment. Now, that may be more of a one-time investment. It may be an investment as equipment ages, but it requires investment.

And so that's why access points that are non-traditional are gaining popularity. That's why we see the CVSs, the Walgreens, the Dollar Generals coming into and filling the space of providing access points to care for rural residents. Because let's face it, the bricks and mortar associated with building a Dollar General are less costly than the bricks and mortar associated with building a dedicated healthcare access point.

And so whatever we can do within that lower cost access point, but it's still an access point that people are familiar with. It's an access point that they go to regularly. That can be a part of a solution to a problem along a continuum. but even within that access point, it requires an investment. Not just the investment in technology, but the investment and all the things that come along with technology. Maintenance and all of the tickets that come through when things aren't working and so on and so forth. And it's all dependent, as Martie mentioned earlier, on a telecommunications network that is reliable, which from an infrastructure standpoint, we all know is still lacking in many rural communities.

As Martie mentioned, the idea is fantastic. It's one we all rally around. The reality of executing that idea is we still have a few hurdles and we have yet to demonstrate. We have to make the investment necessary to make some of those aspirations a reality.

Morgan Ribeiro: I was talking to a CEO of a healthcare company the other day. He has started a behavioral healthcare company that's focused on rural providers, and they actually utilize a room within the hospital where then a patient can talk to a psychologist or a psychiatrist through telehealth within the hospital. And I think that's an interesting model where it's not just thinking of telehealth like I'm sitting at home on my phone, but there are some unique models that are out there that are expanding services, which I think is certainly a great thing, but it's definitely not perfect.

I think telehealth just got so much attention around the pandemic and there's spikes, like you said, Martie. I think there's some stats out there that actually show us it was not across the board that everyone just started using telehealth and there's a lot of reasons why.

David, I want to continue with you.

So you, for three decades or so, have led engagements that include strategic planning exercises, merger and acquisition projects, visibility studies, physician hospital alignment projects, compensation design, fair market value services, or valuation services. And you helped launch PYA's Center for Rural Health Advancement. Can you tell us more about that and the services that are provided to rural providers through the center?

David McMillan: You bet. Thanks for the question. But as the old adage goes, those services that we provide to rural providers and those services that we provide to other providers are exactly the same, but they're different. Because the circumstances and the needs are different. But just to underline that a little bit more, Martie mentioned earlier as we think about rural administrators, healthcare professionals, providers, they're superheroes. They really are, and we ought to recognize them as such because every day they don't do one thing. They do 20 things. And those 20 things may be 20 very different things for which there are 20 distinct people in a more well-resourced operation to get done, but yet there's one person to get that done in their environment and that's what it requires.

And they wear all these hats every day. But that might prevent a rural provider or a rural administrator as compared to their urban or suburban counterparts that might prevent them from getting as deep into an area of expertise, but generally speaking, their expertise is very broad. They know a lot about a lot of things. They might not know everything about something, but they know a lot about a lot of things.

So oftentimes as you go back to those services that we provide, that's where we could be of help. They may need some depth in that area because they just don't have those resources internally. Not to mention the fact they probably just need some bandwidth because again, they're the proverbial person spinning the plates at the circus. They're running from plate to plate before it falls off and it breaks just to ensure they're getting things done.

We can come in with suites of services, whether it's a specific service or whether it's an ongoing augmentation of services or needs that they have, and provide it to them hopefully in a more economic way.

Now, let me just say this though, and we talked about this earlier, oftentimes when we come to the table to help our rural clients, it's the crisis du jour. It's what's the crisis of today that we've got to get solved in order to still be here and operating tomorrow, a week from now, a month from now, and doing what we've got do to make sure this community has access to care. How do we get this solved?

And everyone knows that kind of trauma on a day-to-day basis has an impact that shapes how you work. It shapes how you live. And they don't often get the benefit to just unplug and think longer term. What does this mean? What are some solutions that we can think about longer term?

If you think about how we set the center up in terms of what we're trying to do to meet the needs of these people, we bookended it, right? And it's this one suite of services that we call immediate operational opportunities or improvement. When you got to get it done. The crisis is here and we've got to overcome, need something on the, provides a little breathing room to move on.

But when we have that moment, whether it's on the back end of the immediate opportunities or whether it's comes in a rare break where we don't have a crisis going on, we offer a suite of services on the other side that we're calling long-term sustainability. And that's a lot of, quite frankly, what we've talked about here today. We've been talking about the longer term sustainability. A lot of the folks listening to this may say, it's all well and good, I got to get through payroll next time, before I can start thinking about long-term sustainability, and that's real.

All of us have served, for example, rural hospitals, and we know that one of the things that rural hospitals often dread is vacation season. Why? Because that physician that takes vacation for that one week or that two weeks, that's going to impact our month in a very negative way financially. And can we overcome that? That's the degree of latitude or difference between passing and failing sometimes, is when did the vacation hit relative to these other factors?

And so for those listeners to your program who have never really experienced a rural environment, they can't imagine that for those that live in the rural environment, they're all nodding their heads and Oh yeah, I get that. That's just a part of how we live.

But you know what happens is when these really resourceful people don't have the opportunity to look at some of these long term sustainable solutions, it's really a shame because these are creative problem solvers who know what it means to get in and roll your sleeves up and get something don't. They're gold mines for these creative solutions. They're used to doing more with less. So, the solution doesn't have to be perfect for a lot of the folks that operate in these rural environments, it just has to be adequate and keep the patients safe.

So at the end of the day, yeah, we provide all of these services to our rural clients just like we do all the clients that don't find themselves in a rural circumstance, but how it gets provided can often be very different. And I think the one thing that a rural provider recognizes and appreciates is someone who comes to the table that understands their unique needs. And it's more than just understanding, it's the empathy. It's, Hey, we've lived through this with others. We understand what you're going through.

So what we wanted for those clients to understand, and those that are facing this, is here's a place you can come where people understand what you're going through. And the thought of it at one time, like the song to the old sitcom Cheers, sometimes you just want to go where everybody knows your name. And it's the proverbial place where these folks can go. We may not know your name, but we recognize your story the minute you start telling it because we've all lived it.

The Four Foundations of Long-Term Sustainability

Morgan Ribeiro: Yeah, well, and you mentioned the long-term sustainability, taking the time and having the ability to just press pause and we're going to help you look into the future a little bit. And I know you all have talked about the four foundations of longer term sustainability for rural providers: community engagement, clinical excellence, financial stability, regulatory compliance. Talk a little bit more about what you mean by each of those.

David McMillan: Sure. And invite Jesse and Martie to jump in as well.

Let me just say, those are the things we've highlighted. They're imperative to long term sustainability. You've got to be planning around these four areas.

That's not an exhaustive list. So, everybody that's listening, don't discount everything we're going to say from this point on because you say, "oh, that's not the answer." No, it's an answer, and it's really a grouping of thoughts. But I don't think anyone would argue with the idea that we need to know what our community needs and then we have to know where are the boundaries of what we provide versus what we can't provide. This is true of any provider, but boy, is it true of rural.

When we try to be all things to all people, that's a guaranteed recipe for failure. So what can we be? What can we provide? And then where do we have to find the outlet and the partnership to provide those services elsewhere?

So when we get into sort of the community engagement, there are foundational things we have to have. Everybody has to have access to affordable primary care, number one. We have to. That's an imperative. So, we start there. That's the true north on our compass. And then we start looking around us and say, okay, then what is what?

But one of the things that we're very committed to, as Martie mentioned earlier, is that we know that when rural patients have the opportunity to stay in their community for care, as long as that quality and standard of care is what it should be, just like any other patient that has the opportunity to stay in their community, there are better outcomes.

We've had the opportunity to study longitudinally, and when I say longitudinally, it's a multiyear study of patients in one state. And what we were able to find was when those patients go from an acute care setting in a rural environment, and let's say they discharge, for example, to a post-acute care setting that's not near them in an urban environment.

While that SNF bed might be less expensive within the episode of care itself than perhaps a swing bed in a rural facility, when we just look at the absolute reimbursement from a cost standpoint, what we were able to find, when you track those patients' dollars over a number of years, their total cost of care is actually less when they're able to stay in their community for that continuum care.

But there's not a lot of currency for cost of care equations that go over multiple years right now. Everybody wants to know, what have you done for me lately? What are you going to do for me today?

So what we look for from a community engagement standpoint is, can you stay here for the things that we can do well, but let's don't waste time and energy and capital going after the things we can't do well. Let's create partnerships where when you have to leave for care, there's a way for you to come back and recover in this community if that's possible. And we know that works better. So that's how we think about community engagement long term.

Before I go on, I'm looking at my colleague Martie here and wanted to see if wanted to weigh in on that.

Martie Ross: The metric we have found very useful in measuring community engagement, identifying opportunities for rural hospitals is out migration analysis using primarily Medicare claims data because that's the most complete set of data available to us.

If you look at core services that you would anticipate that can be delivered locally and are being delivered locally, what percentage of that population is remaining local? What percentage are leaving the community? And you'll see significant variation across the state for rural facilities. Some have been very successful in stemming out migration and really keeping care local. Others are really challenged. They're losing a lot of inpatient admissions to the tertiary center 50 miles away.

And so, presenting that data to administrators, to physicians, starts the conversation about why is this happening? Why are they leaving? Is it a matter of, oh, they were actually visiting their kids and so when they got sick, they went to the local hospital? Or is it an insurance issue? But let's drill down. Where are people actually voting with their feet? And if that's happening, what are the causes of starting to peel that back?

That has both immediate operational impact on the facility because it's lost revenue, but then it's also, as you start finding those answers, you are addressing the long-term sustainability of the organization. So that is, I think, a key measure of community engagement. How and are you serving the community and understanding that data? And that it's really very rewarding to work with providers that haven't had access to that kind of data. They kind of have a feel for how things are. They get some data from the hospital association, but when we can really pin it down and say, here's what's happening, in this community, and here's what's happened over the years. You know? You hide from that. You have to find answers to that.

David McMillan: Yeah, so true Martie. When we think about clinical excellence and financial stability, we really do believe they go hand in hand.

Cause the things that we do with excellence likely are things that we've identified that we can do. They're things that we're resourced to do. We have access to capital or if we have collaborative relationships to do well and as a result people pursue them. And generally speaking, those are things we can actually do profitably, or at least in an economically tenable way going forward.

What often happens, and I'm sure Jesse has experienced this, is there's this. Fierce independence sometimes among rural hospitals or rural providers. And when you drill down into that, what's really at the heart of it is a fierce desire to maintain some governance autonomy, because what we try to emphasize to our rural clients and really all clients in healthcare today is there's really no such thing as absolute independence anymore. Everyone has partnerships in clinical areas or whatever it happens to be.

This is particularly important for our rural providers, this clinical excellence and idea of financial stability. We call it independence through interdependence. Okay? You want that government autonomy. You want the ability to have more of a say of what happens in your community from a healthcare perspective. That's fine, but the way you're going to be able to accomplish that is through interdependence, through relationships that you have with others that preserves that.

So understanding some of those fundamentals are really important to long-term sustainability as well as clinical and financial stability. A regulatory compliance program that works. Setting up and maintaining that program is far less costly than dealing with the outcomes of a failure in a program.

It's not just the cost of a potential investigation or whatever it happens to be, it's the energy. Like we said, the bench isn't as deep. So all these critical thinkers that we need day-to-day, their energy and their attention is diverted to something that maybe could have been avoided. Understanding and putting regulatory structure in place is generally far less costly than dealing with the flip side of it.

And I'll throw that one to Jesse for him to weigh in on.

Jesse Neil: I couldn't agree more.

I'll add to that, why are patients perhaps leaving a community? Why has trust been diminished in a community? Why are they driving past it to go to the hospital a hundred miles away? If you have compliance issues — which by the way, you cannot separate compliance from clinical excellence either —

They are paid explicitly for those, and they're tied in and they're assessed and reviewed. And when you're looking at a compliance program, the clinical and the regulatory are intertwined, but it doesn't take more than one significant regulatory issue, particularly if there's a bad outcome with a patient or a group of patients. And if it's perceived that way in your community, you can lose that trust that you built over a generation in just a matter of weeks. And to build it back, it's a mountain to climb.

And in addition to that, there is a playbook generally for hospitals in terms of meeting the expectations, at least baseline the expectations of the government. They've got handbooks. They've got annual reports. And if you make it a piece of your culture — it's hard to find that — but if it's reduced to a checklist and it's reviewed monthly at the board meeting in terms of who went to training, that's not really going to do it, but if you do have the infrastructure in place, if you do have the policies and procedures — and the government always talks about it can't be static, it needs to be evolving. It doesn't have to be list of 50 things that changes every year.

You know, track the one or two or three things that you're committed to and that there's room for improvement. And having a basic plan and a time horizon to achieve it speaks volumes about the culture, speaks volumes about the risk that you mitigate, and the government — if there is an issue and you start engaging with them about a solution, those kind of facts matter.

We hired someone to confirm for this type of clinical setting, what were the regulatory risks from the government's perspective? What are some processes in place that address them? What did we find when we tracked them? That's really a big piece of what people don't realize is tracking compliance and then remediation.

Tracking compliance doesn't necessarily help your cause. If you don't remediate it, you just got a list of problems when they come visit. And so having the mechanism in place to have actionable intelligence and implement it, you don't have to about thousand. That's nowhere near the expectation of the government. But if you have a small dedicated team that tracks and updates periodically, it helps the issues you're focused on and it mitigates the risk for others as they're found and it has the spillover effect, I think, of enhancing the trust in the community. You can't hurt quality. You get paid for that too, and that's a part of compliance as well.

Independence Through Interdependence

Morgan Ribeiro: Thank you, Jesse, for jumping in on that topic.

I want to switch back to you, Martie. You've mentioned you're in Kansas and PYA has been recognized for its work with the University of Kansas Hospital. In 2014 the hospital was awarded a grant through the Center for Medicare and Medicaid Innovation, CMMI, to develop a new healthcare delivery and payment model in the Rural Clinically Integrated Network in rural Kansas.

So, CMMI considered more than 500 applicants and they awarded 39 grants. And the one for University of Kansas Hospital was the seventh largest. So, the Rural Clinically Integrated Network is a collaborative organization of independent providers committed to delivering quality care for targeted rural populations.

Can you tell us more about that? What was PYA'S role? Grant dollars have come forth, right? What role do you all play in that?

Martie Ross: It's kind of crazy. At PYA, we value relationships, and our relationship with the University Kansas Health System is longstanding. And we actually to them and said, "There's this grant program, we've got an idea. We know you're interested outreach, and you've been looking for a structure to support outreach. Now what if we applied for a grant to build a rural clinically integrated network?"

I guess we caught them on a good day because they said yes, and they were very active participants in helping convene a group, at that time, of 13 communities, we refer to them as the original 13 colonies, but 13 communities that were willing to step up and go through this process.

And at the health system's insistence, the focus was on clinical quality improvement, specifically around heart attack and stroke, and the ability of these small communities to address time critical diagnoses, and we were successful in securing the grant.

For the first couple of months PYA served as the management team for that grant, and then they were very lucky in identifying two qualified individuals who then managed what became the Kansas Heart and Stroke Collaborative, and built a program for training and evaluation and data collection and performance improvement initiatives all around evidence-based practice for heart and stroke care. They also developed a centralized care management team that served a broader number of rural communities. So, they built the infrastructure to deliver chronic care management services in partnership with rural health clinics.

Fast forward a few years, the entity is now the Kansas Clinical Improvement Collaborative. We've gone from 13 communities to 82. We have, I think last count they dropped a bill for their 120,000 chronic care management visits serving well over eight thousand rural Kansans with chronic care management services. They've expanded to more much broader clinical conditions, sepsis, heart failure, trauma, the like, and doing very localized, what we call boot camps to bring the nursing staff, physicians, administrative team, all together to support that evidence-based protocol.

In 2018, about half of the communities participating in the collaborative decided they go off the deep end and jump into value-based care. So, they formed a Medicare savings program, ACO. They've maintained their participation. They've actually earned shared savings half the years they've been in participation. They've always saved money, but actually enough to earn shared savings as part of that.

And it really has become a wraparound of services. It's the poster boy for independence through interdependence because these are all community-based hospitals. They're not parts of systems and they really highly value this clinical connection with University of Kansas Health System. The benefit to the health system, of course, is it has a statewide mandate to serve all of Kansas. So that certainly helps with their statewide mandate, but also they can point to increases in their case index because they've developed relationships with these rural hospitals and the trust relationship that this is where patients go and they need the higher level of care. And if you're an academic medical center, it isn't any head in any bed. It's the right head in the right bed.

And so they are seeing these tertiary, quaternary level patients coming their way because they're doing a good job helping these rural hospitals with the patients in their communities, the ones they can care for. It really, I think, has been an example of when you partner together, you can gain so much more in the rural space.

Morgan Ribeiro: This is an interesting segue because I think oftentimes, David, you were talking about this earlier, there's this fierce independence of rural providers and thinking like the only option is to sell, basically. I think there are just so many creative solutions out there and examples of creative solutions now, and through talking to advisors like yourselves that say, Hey, there's this grant out there, or there are other ways to do this beyond just, okay, put a for sale sign in front of your hospital.

David McMillan: Yeah, and I kind of go back to the community engagement of what's necessary primary care? Access to primary care is always necessary. So, if you start planning again around that true north, and you say, "Okay, what can we do? What can't we do? What makes sense for us to do? What makes sense for us to do with someone else?"

And all of a sudden, to Jesse's point about compliance, nobody has to bat 1.000. You don't have to be good at everything. You have to be good at the things you can be good at. And what that does, to another point Jesse made earlier about why do people drive away and leave if they can get it here, is when you do things well, you build trust. And when you start to build trust, the brand associated with that rural provider, with that rural access point elevates in the mind of that community and then you might be willing to trust them with the next thing or the next thing that happens because there is demonstrated focus.

And so again, start with that idea that we've got to provide access with primary care. Then all these solutions like what University Kansas Health System and others that participated in those innovation grants have been able to do. You can prioritize where you want to focus your time based upon that very objective clinical evaluation.

Considerations for the Future and Other Creative Solutions

Morgan Ribeiro: Absolutely.

So, Jesse, you've touched on this a lot, but there's a lot of coverage out there about the challenges, and it just feels like over the end of last year and even into this year, there's just been, it seems like a lot of headlines around doom and gloom for hospitals in general, but in particular number of closures or hospitals at risk of closure.

We've got some really smart people here on the line. We've talked about a number of solutions. I know you've also been working with a number of hospitals and regularly talking to folks out in the industry. What should leaders be thinking about given the demographics, the federal payments, and those other contributing factors? And I don't think we're just going to click our heels and things are going to miraculously improve by some sort of federal payment reform.

I think there's just so much at play here. Beyond that, so what can rural hospitals and other providers be thinking about over the next few years? And maybe there's some examples of other solutions that you've seen at play?

Jesse Neil: Sure.  

If I had to list out a few things I'd start with, for the vast majority of rural hospitals, the biggest risk to their enterprise is the status quo.

So first, knowing that you need to be evaluating yourself in the market and coming up with solutions and making decisions about priorities. Maybe that sounds simple, maybe it doesn't, but that is the first step in really maintaining your viability over even the medium term, certainly the long term.

Two, I would say along the themes that we've talking about, maintaining credibility in the community.

A CEO of a hospital, board of a hospital, those are, in my mind, practically public posts. You're a steward of a public asset from the perspective of the community. And so if your credibility, if you can demonstrate that you've got the right priorities,  you share with them, you bring news that isn't always good and you bring it to their attention and you talk about it and get their feedback on it, then you move on the next issue.

Being transparent in that communication leadership — that to me is kind of a precept to coming up with a proper, formal strategy.

A lot of what I do is I'll be engaged by county commissioners or hospital board or CEO to help them walk through a fiduciary process, look at strengths, weaknesses, trends that the hospital is experiencing, then help develop a plan, whether it's a loose affiliation, a potential transaction, maybe make a go for it through joint venture strategy, focusing on some clinical service lines that you found the most success in.

Inherently, when you decide to take one step in a direction you're deciding not to go in another, and you'll have to explain that to the community. And if you don't already have the credibility to make the case on what you're doing and why, you could have the best plan and strategy — in fact, you often come up with the right strategy — you can't execute on it in part cause there isn't the engagement historically that has needed to be for the community to understand that the status quo really is a danger to our community asset. If they cherish it and they've got the right leader, then that's key.

We'll go through an evaluation process and some things as simple as, you know, keep the lines of communication open. Maybe there's a hospital system, five counties over or two counties over, and every once in a while when you go through, you have a chance to engage with their leader talk strategy, have opportunities to engage. You never know where that will lead. And so maintaining those engagements helps with your credibility, finds opportunities.

And then things as formal as looking at your structure. If you're a government hospital, and a lot of hospitals still are, considering whether a not-for-profit model might be something that could reduce some of the headwinds. Open up some opportunities. For the right community with the right assets and the right objectives, that has proven to be a successful strategy. So, that's just one example of things I've seen that have worked when you've got the right people meeting the right plan.

And we've had some wins at hospitals in Tennessee. Lincoln County, Tennessee public hospital that was able to affiliate with an out of state not-for-profit system helped ensure access, primary care and otherwise in that county for decades. That's a big win. And you had a strong leader, strong board, and you got across the finish line.

In east Tennessee, Erlanger Health, largest public hospitals in the country, is undergoing restructuring into private not-for-profit. That's a booming region, great infrastructure. They've got a lot of opportunities to grow, and they decided as a community that this isn't without risk, but the opportunities outweigh it.

We think we can do it, and they've decided they're moving forward there. That's another example of not just sitting on your heels and waiting for an additional supplemental payment. That's just not going to work. And so each solution's going to be different for different communities and different hospitals, but there are examples out there of those that are finding success, even now, and I think that's great to see.

Morgan Ribeiro: That example too, with Erlanger, it's just a matter of not only their tax status and how they work with the government and not being in the sunshine. I mean, there's just things that can make a real difference. And it's not a, "We're in dire straits and we need to sell our hospital again." It's just a matter of thinking about how to get creative and how you operate ultimately impacts the way that you're able to deliver services.

And I know there's hospitals in other areas. I think in West Tennessee there was a hospital that had actually closed, and now an investor has come in near the Ford plant.

Jesse Neil: That's right. We call it Super Site Tennessee, and it's a special economic development zone that's going to bring tens of thousands of jobs, hundreds of millions of dollars in investments. It's going to just change the entire feel of probably a four or five county area.

Not that long ago, hospitals were winding down or converting to clinics. Now there's going to be a big demand with probably some good payers and they're able because of some of the community leaders, they're finding ways to get it off the ground and expansion of access. And so it's still in its early stages, but things can change, and if all along you've been maintaining these relationships and keeping community engagement at a high level, maintaining credibility, you might get an unexpected opportunity.

Morgan Ribeiro: Some of it feels a little bit like luck, but I'd say that's a good situation there where industry is coming into town and really revitalizing that community there.

Jesse, I wanted to ask you just about other federal initiatives. I know we've talked a lot about getting creative, finding solutions, but it seems like there are a number of federal initiatives like the one that Martie spoke to us about in detail that really influenced collaboration, right? We're going to incentivize you to collaborate with other providers. Is there anything from a federal incentive standpoint, Jesse, that you would add to that?

Jesse Neil: I can say that, not to get too technical — but some of the fraud and abuse regulations, statutory and the regulations that have been adopted have been able to loosen some of the restrictions when certain thresholds — compliance guardrails are in place that allow exchanging of money and goods that you couldn't necessarily do before. And so I think there's a recognition one on the clinical perspective, and I'm not a physician, but from what I gather, collaboration in today's environment is the name of the game to get good clinical outcomes. And in order to collaborate, you have to be able to meet the compliance to me and they've set forth.

And so there is a recognition that more is needed there and they have, to their credit, taken some steps to update the regulations. But it's still, I would say, a work in progress. I wouldn't say it's solved an issue just yet, but a step in the right direction is a big thing in my mind for the federal government. 

Morgan Ribeiro: I appreciate everyone's time today.

This has a really awesome discussion. Have learned a lot, certainly, while catching up with Martie and David from PYA.

David McMillan: Thank you so much for having us. It's been a lot of fun.

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