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Rural hospitals: The beating heart of a local economy

Carolyn Bruce

Carolyn Bruce

Tim Wolters

Tim Wolters


A hospital is often the centerpiece of economic viability in rural America, providing jobs for a community’s residents and resources for its development. The positive impact of a thriving hospital starts at the heart of nearby towns and stretches across many miles, providing a vital boost to families and local businesses in the surrounding region. Nationwide, hospitals support more than 16 million total jobs, including 5.7 million direct jobs in health care and 10.3 million ripple-effect jobs, according to the American Hospital Association’s January 2017 report on the economic contributions of hospitals. The report estimates that every dollar spent by a hospital supports $2.30 of additional business activity. For rural communities, the link between hospitals and the local economy is even more pronounced, often due to the absence of other large employers. Tim Wolters, director of reimbursement at Citizens Memorial Hospital in Bolivar, Mo., understands the correlation between rural hospitals and their local economies very well. After starting in the industry working for a CPA firm out of college, he kept migrating back to hospitals — and rural hospitals in particular. Wolters has spent 26 years in public accounting working with rural hospitals. “Having a strong and vibrant health system is important for economic activity and growth, especially in small communities like ours,” he says.


Western Healthcare Alliance helps member hospitals work together to strengthen their regional message.

Carolyn Bruce, CEO of Western Healthcare Alliance in Grand Junction, Colo., works closely with rural hospitals striving to thrive in their communities while facing regulation and reimbursement challenges. Western Healthcare Alliance is a 28-member rural health care provider network with 10 prospective payment system hospitals, 11 critical access hospitals, and seven other health care and insurance providers. “We feel passionate about preserving the safety net that our rural hospitals provide in terms of both health and economic safety,” Bruce says.

Western Healthcare Alliance provides corporate support programs and services that aggregate the volume of independent provider members. By collaborating to combine their resources, the members develop, own, and operate programs and services typically unavailable to standalone facilities. In addition, Western Healthcare Alliance contracts to manage networks, like the 34-hospital California Critical Access Hospital Network, to bring Western Healthcare Alliance programs to other rural hospitals.

Nationwide, hospitals support more than 16 million total jobs, according to the American Hospital Association.

Fueling the economic engine

Local jobs are of paramount importance for the long-term health of any community. In a rural area, the hospital is typically the first, second, or third largest employer. “In addition to the obvious clinical and ancillary jobs, there are a host of supporting positions, building and construction, facility maintenance, and more. Those jobs are very important, and there’s an economic multiplier that expands the economy they live in,” Bruce says.

When there’s a thriving hospital system and healthy employment levels, the demand for schools, housing, transportation, and other services goes up. “If a company is looking where to expand, whether it’s a factory or distribution center, they look at the school system and health care system and want to have this available to attract and retain their employees,” Wolters says.

If people have to leave the community for health care, the local economy suffers. “Decreasing services or closing a hospital stunts the community’s economic growth,” Bruce says. “Companies are rarely attracted to relocate to a community with little or no health care. Existing businesses may be forced to close or move out of the community. The rest of the community — health-wise and economically — can enter a downward spiral of decline.”

Wolters agrees that closing hospitals can have a devastating effect on the community. “That’s why we need to protect hospitals — so we have the ability to sustain jobs and keep that care at a local level,” he adds.

Tackling workforce challenges

Although rural hospitals are often the biggest employers and contribute locally with much of their goods and services spending, they continue to struggle with recruitment and retention of professionals. “Rural has an incredible challenge in attracting and retaining high-quality staff of all types, from administration to physicians to nursing, leadership team, and more,” Bruce says.

When it comes to recruiting, Western Healthcare Alliance helps member hospitals work together to strengthen their regional message. “We encourage hospitals to form relationships with national experts for recruiting so they’re in a better position to collaborate to get the word out and attract new health care providers,” Bruce adds.

Partnering with the community

Citizens Memorial Hospital needed to find new ways to fill the nursing pipeline due to an aging workforce, and they came up with a strategy worth replicating. The hospital teamed up with Southwest Baptist University and Bolivar Technical College to expand programs and train more nurses. The hospital serves as a training site for students and provides financial resources for the program.

“The partnership has been successful in helping us build our nursing and clinical staff. Plus, it’s great to see local residents going through these training programs and choosing to stay and have a good career here in town,” Wolters says. Partnerships with local universities or technical schools can help hospitals train and recruit quality staff, as well as strengthen community ties and fuel the economy.

Beyond education and training for health care workers, there are more ways health systems can partner with the community to attract people and keep the economy strong. It starts with keeping people invested in rural areas so they have more reasons to stay.

Volunteer programs provide an opportunity to build momentum and positive energy, and they can also inspire youth to get started on a career path in health care. “At Citizens Memorial Hospital, we have about 300 volunteers active now,” Wolters says. “We also offer a summer program for youth ages 15 and older, where they can shadow employees to see if a health care career may be right for them.”

Rural health policy

Health policy needs to be responsive to the challenges of providing health care in rural areas. “Rural hospitals face the same regulations and requirements as our urban counterparts but lack the volume to be cost effective — or break even — on the critical services they provide,” Bruce says.

The low population density in rural areas often results in decreased patient volumes and diseconomies of scale, fixed overhead expenses, high percentages of subsidized and uninsured patients, disproportionately elderly populations, physician shortages, and decreased access for low-income patients.

“It’s important that our legislators understand rural and why it’s different from urban health care and what makes us unique. As rural hospitals, we take all of the patients who come, but we have more patients coming through our doors with Medicare, Medicaid, and uninsured,” Wolters says.

Bruce believes health policy should promote and assist rural independent networks. For example, HHS offers network development grants, which are just the tip of the iceberg in terms of what rural will need in the future.

“We’re in favor of rural health policy that promotes collaboration and sharing resources among independent rural hospital networks. We spend a lot of our time and financial human resources in our organization to help our independent hospitals learn about value-based reimbursement models. They need to aggregate their volume, and to do that, you have to network. Hospitals need to network now and gain experience with value-based models,” Bruce says.

“We’re pleased with the recently passed [federal budget] omnibus [appropriations] bill because it contained items favorable to rural, but it’s important to keep up the education and pressure. It is our belief that the omnibus bill, combined with the recent tax bill, will increase the federal deficit and potentially lead to increased pressure to decrease Medicare and Medicaid spending. If so, there may be renewed conversation about Medicaid block grants or other global payment options,” Bruce says.

Rural hospitals stand to benefit if they come together to learn about Medicare ACOs, data analytics, partnering and sharing infrastructure. “However, if they are not given the tools and the ability to network and aggregate models, a global payment model could be devastating to rural hospitals,” Bruce warns.

“The bottom line is that emerging health policy should include financial, human, and technical resources to rural facilities, enabling them to partner and collaborate and form rural health networks to share in the cost and education to successfully address future changes in reimbursement,” Bruce says.

Independence through interdependence

Bruce believes that collaboration is essential for rural hospitals that want to survive and thrive. “A majority of our members are independent, nonprofit hospitals, and they are amazingly collaborative. We like to refer to our network’s model as ‘independence through interdependence,’” Bruce says.

“In our experience, it is not necessary for a rural, community hospital to be acquired by an urban health care system. Rural communities can encourage collaboration with neighboring health care communities to network, share best practices and personnel where appropriate, and increase their aggregated volume. They should continue to invest in their hospital’s and physicians’ education so that they can quickly respond to the changing reimbursement landscape,” Bruce adds.

Look beyond your organization

Wolters’ advice for rural health care leaders is simple: Look for opportunities. “Find out who you can partner with at the local level. If you’re fortunate enough to have a technical school in the area, find ways to build those relationships and introduce students to opportunities in health care,” he says.

Bruce encourages others to look outside the walls of their own hospital. “In our 30-year experience as a rural health network, we would recommend that hospitals form partnerships (formal or informal) to build infrastructure together,” she says.

Working together, rural hospitals have more power to troubleshoot unique challenges, preserve independence, participate successfully in value-based reimbursement models, and be part of a thriving local economy.

Image © iStock.com/Mshake

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