Senior Manager, Research and Grants
Time: 10 min
We used to pay to keep people in the hospital, now we pay to keep them out. These shifts towards more outpatient care and away from fee for service reimbursement present a struggle for rural health businesses. With limited access to investment capital, provider recruitment and retention problems, a declining and complex population to serve, and a reliance on income from federal programs, they don’t have the luxury of hedging their bets across the latest quality care innovations. So what’s a rural hospital leader to do?
A Bit of Context
With treatments that keep people out of the hospital, it should come as no surprise that the industry is shifting care to outpatient settings. 75% occupancy was the longstanding goal of hospitals, but a seven-year decline leaves us with a national average for occupancy rates in an urban hospital of 64% while rural hospitals average 43%. Certain states in the country experience an even great gap, largely due to declining and even more rural populations. For example, in Alabama, the urban occupancy is 65% while the rural occupancy is 35%.
This is a massive difference from urban hospitals, who only receive about half (49%) of their inpatient income from Medicare and Medicaid. It should come as no surprise that in 2015, rural hospitals had an average profit margin of 0.2%-0.4% compared to 4.4% for urban hospitals. Changes, programs, and policies of federal agencies will have a great impact on rural hospitals in part due to the heavy reliance on federal reimbursement.
Where Federal Readmissions Programs Come into Play
In efforts to improve quality and the patient experience while decreasing costs, Medicare has implemented programs that aim to reduce hospital readmissions. The Hospital Readmission Reduction Program (HRRP) began in 2012 and assesses penalties based on a hospital’s performance relative to similar facilities. The payment reduction is capped at 3% and are applied to all Medicare fee-for-service payments. Medicare uses excess readmissions ratios (ERR) to measure performance on the following areas:
Hospital readmission performance is essentially graded on a curve since the calculations for determining penalties are based on comparisons to the national average. About 80% of the 3,241 hospitals Medicare evaluated in 2018 will face penalties next year. These penalties will withhold $564 million in payments over the next year from facilities across the country. Rural hospitals also have higher rates of being penalized (77%) and higher average penalties (-0.64%). There are 69 hospitals in Alabama that will have their 2019 Medicare reimbursement impacted by the readmission penalty. Thanks to Congressional orders, this amount is set to be reduced – but the problems is unlikely to go away without major changes to the HRRP program.
What can be done?
With razor thin margins, empty facilities, and an immediate need to rethink their delivery process a rural hospital is stuck behind the eight ball. Since facilities are so reliant on federal reimbursement, any change that happens in policies has a ripple effect that strains rural communities. Faced with these changes, there is not much left to do but move forward and start tackling problems.
There are many practical approaches that spring to mind as solutions for improving readmission rates. Maybe facilities just need to coordinate care, have quick outpatient follow-up, or create a better discharge plan. That feels like a good place to start for improvement, but research has shown these strategies are not impactful. A recent meta-analysis of readmission interventions found that success is difficult as only 42% of the 66 programs analyzed demonstrated a reduction in readmission rates. Making improvements is hard but the analysis found a few key strategies to successful readmission program. Monitoring and managing symptoms after discharge showed the largest impact while patient education and community support show some evidence of improvement.
A well run and evidence-based health coaching program provides these elements and more. Beyond using evidence-based strategies, the best solution for a rural hospital must be economical and scalable. Health coaching is one example that provides outbound engagement with patients, monitors symptoms via patient-reported outcome surveys and personalized coaching, provides patient emotional and educational support, and provides personalized assistance and support. A randomized control study showed that coaching not only improved readmissions but the patient outcomes were seen even months after the intervention was concluded.
If health coaching aligns with the scientific evidence and has been shown to work in a randomized trial, why is it not broadly used?
It comes down to cost and availability, starting an in-house run and operated coaching program is an expensive proposition and one that may not show a solid return on investment. Finding a health coaching vendor that can offer remote, scalable, and economical interventions will be critical to solving the rural hospital readmission barrier.