How Small, Rural Hospitals Can Benefit from Revenue Cycle Management Consulting

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Nov 3, 2020

When some think of revenue cycle management, they think of larger healthcare organizations with complex needs. But healthcare organizations of any size can benefit from revenue cycle assessments.
Yes, smaller hospitals can benefit from revenue cycle assessments and healthcare consulting. In fact, these assessments could have a greater proportional impact on smaller, rural hospitals.
Rural hospitals need help. In 2016, 41% of rural hospitals in the United States operated with negative margins. As populations age, this problem is getting worse – not better.
Today, we’re highlighting some of the ways that small, rural hospitals can benefit from a revenue cycle assessment.

Understand the Unique Challenges Facing Smaller, Rural Hospitals

The first and most important step is to understand the unique challenges smaller hospitals face. Smaller, rural hospitals face challenges that don’t exist with larger hospitals in big cities:
• 20% of the US population lives in rural regions, yet only 10% of physicians practice in rural regions, leading to a consistent physician shortage of smaller, rural hospitals
• Nearly half of all rural hospitals in the United States operate with negative margins
• Rural hospitals deal with different, more challenging patient demographics than larger hospitals in metro areas; rural areas tend to have older populations and higher rates of unemployment, creating problems for smaller hospitals seeking to optimize revenue cycles
• Hospitals in rural areas deal with more challenging patients than hospitals in urban areas; there are more patients over 65, higher rates of childhood poverty and premature death, and increased childhood mortality rates, among many other issues
Smaller, rural hospitals cannot change these factors: they’re inescapable parts of rural life in many parts of the United States. Instead of complaining about these challenges, good rural hospitals have learned to surmount these challenges by optimizing revenue cycles.

Get Creative When Attracting Physicians

Smaller, rural hospitals may already be operating with negative margins, making it harder for them to attract physicians. Typically, organizations that struggle to attract physicians can increase pay or other benefits. With smaller, rural hospitals, that may not be an option.
Instead, organizations seek other solutions.
Many rural hospitals implement team-based care models that depend on advanced practice clinicians, for example.
One 2016 study by the American Academy of Physicians Assistants found hospitals that used a higher physician assistant-to-physician ratio, reduced care costs more than other teams in the same hospital using a traditional staffing model. These care teams had 3.5% lower costs, for example.
A separate study found that team-based care improved overall organization productivity. A recent MGMA survey, for example, found that implementing physician assistants into patient care led to a 34% boost in productivity compared to similar organizations.
While physicians may be the cornerstone of patient care, many rural hospitals are achieving success by switching to a team-based care model.

Get the Best ROI from Health IT Investments

Rural hospitals also face challenges on the IT side. While larger hospitals have the resources for full-featured IT departments, smaller hospitals do not. This can create technology headaches for patients and staff. It could impact patient data and organizational security.
2016 MGMA report found that a typical health IT implementation costs up to $32,500 per physician. That’s a 40% increase in costs over the last five years. That’s a challenging cost for rural hospitals to cover.
Some rural hospitals take a different approach, using paper-based systems even in 2020 and beyond. These clunky systems reduce productivity and reduce patient security, among countless other downsides.
Thanks to technology, there’s a viable alternative: cloud-based systems. Cloud-based health IT systems allow rural hospitals to access the power of a full IT department without hiring a full IT department. They can use cloud-based health IT systems to boost productivity and enhance patient care – all at a comparable cost to what their larger, more metropolitan competitors are paying.
A good healthcare consultant can analyze organizational needs, then recommend and implement the best health IT system.

Reduce Uncompensated Care

Rural areas tend to have higher poverty rates than suburban areas. They also tend to have more adults 65 and older. That means more Medicaid and Medicare claims for rural healthcare providers.
Uncompensated care continues to be an issue for rural healthcare providers. One study found that 6% of rural hospital budgets go towards uncompensated ‘charity’ care, while urban hospitals pay just 5.1% towards uncompensated care. It’s a disproportionate burden for rural hospitals to bear.
Patients are expected to cover the cost of care out of pocket. However, patients in rural areas tend to have higher rates of poverty and unemployment. Even when patients owe money to the healthcare provider, the provider may never get it. Hospitals may setup extended payment plans, only to leave themselves with bad debt.
Healthcare consultants can implement payment systems that enhance a patient’s likelihood to pay, making it easier for rural hospitals to capture lost revenue. Many rural hospitals have achieved success with value-based reimbursement, for example.

Other Revenue Cycle Management Tips for Rural Hospitals

Rural hospitals seeking to compete with larger competitors should implement the following strategies, according to the National Rural Health Resource Center:
• Expand primary care services and hours
• Build a larger primary care network by aligning primary care physicians with other providers, fostering relationships between departments and staff, and creating affiliations with neighboring healthcare organizations, among other partnership opportunities
• Boost market care quality and patient satisfaction scores to get a competitive edge
• Invest in facilities and health IT
• Maximize fee-for-service revenue by building on existing services and customer loyalty (like marketing services to local providers for referrals).

Final Word

Rural hospitals face many unique revenue cycle management challenges. Unfortunately, much of the revenue cycle optimization guidance published today is catered towards larger organizations – not smaller providers.
Fortunately, a health care consultant can help. A good healthcare consulting team can analyze an organization’s needs, then recommend actionable solutions.
Even small changes are magnified at rural hospitals. That means minor improvements can lead to proportionally significant results. Optimizing a single medical coding system can have noticeable impacts on the bottom line.
For all of these reasons and more, consider hiring a revenue cycle management consultant for your smaller, rural hospital. Contact HMI, LLC today to get started.


Articles authored by HMI Corporation