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Sarah Cope

Account Development Manager, GHX
Wednesday, June 05, 2019

The Rural Hospital: A Life-Saving Episode

Rural hospitals are often the centers of their communities. In addition to caring for the residents, they are also typically one of the largest employers in the area. The presence of a hospital can be an incentive to bring in new business spurring job growth and providing an economic boost. The impact of losing a rural hospital to closure goes beyond access to medical care for the local residents but can impact the community in a far more significant way. Over the last nine years, we see the loss of rural hospitals in higher numbers for a multitude of reasons. Because of the far-reaching effects of these losses, efforts are being launched to reimagine and revitalize hospitals in rural areas to meet the needs of their local communities.

According to the American Hospital Association (AHA), rural hospitals are facing many challenges that are contributing to overwhelming financial burden and ultimately the closure of facilities.

  • Outdated regulatory requirements
  • Aging infrastructure
  • Care delivery shifts
  • Patient and payer mix

Over 45 percent of rural hospitals now operate at a loss, compared to 40 percent in 2017. This is clearly a large part of the reason why nearly 700 hospitals are at risk of closure today. Ninety-five rural hospitals have closed since 2010, and more than twice the number of hospitals closed between 2013 and 2017 than in the previous five-year period, indicating a worsening trend.

These hospitals are already operating with limited staff resources to the point where reducing headcount is not a viable option to improve the financial picture. Cutting some services is one alternative, but this leaves the local population without medical care for that service line. In addition, these already financially burdened hospitals are also minimally resourced from an IT perspective and there is often a backlog of projects. Initiatives may be continually postponed with resources spread thin, perpetuating the inability to focus on higher-value work. 

This can make investment in supply chain improvements seem like a daunting task, even entirely out of reach. However, these are the type of changes essential for long term progress and can even be critical to the ability to continue operating.

Technology investments will reduce manual work and free staff to attend to more value-added work. The data provided from automation can help pinpoint the root cause of problems, further reducing repetitive manual work. For example, correcting pricing issues at the contract level rather than resolving price discrepancies at the line-item level on invoices eliminates time-consuming rework.

Applying technology to automate and streamline processes is a proven approach to reduce costs, but beyond the financials, when real advancement is achieved, trust is built throughout the organization. This can lead to more cross-functional achievements, buy-in from other groups like clinicians and improve morale – all of which contribute to a more high-performing and viable organization.

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