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CloudView blog

Ideas and insights to help health care providers stay informed and profitable in today's challenging health care environment.

At Hospitals, the Question Is: Collaboration or Consolidation?

by Caroline Smart, CloudView Editor

Welcome back to Population Health(ier), a recurring series featuring athenahealth and The Atlantic's best storytelling on America’s population health revolution. To catch up on our series, you can find last week’s story here. Today, we explore how community-based and patient-centered medical homes can help to strengthen the communities they serve.

Earlier this year, the Health Resources and Services Administration awarded more than $800,000 in federal grant money to connect 10 Maine hospitals in five counties in a health collaborative aimed at improving rural health services. The money has been set aside to support the development of an organization called the Rural Health Innovation Network, which has been collaborating formally and informally since the 1990s. Its aim is to expand healthcare access for rural residents, improve the quality of health services, and strengthen population health in some of the most underserved and impoverished counties in Maine.

Much of the work of this burgeoning rural network in Maine will be focused on integrating care for chronically ill populations through the coordination of services among the ten participating hospitals. Of the five counties served by the collaborative effort, four have the highest rates in the state of hospitalizations due to congestive heart failures, as well as the highest percentage of adults with diabetes.

The collaborative effort will focus on preventive care, with hospitals hoping to learn from each other in monthly meetings about programs that have been proven to help, and then to replicate them across other counties. As part of the collaboration, the initiative has earmarked $100,000 to fund a pilot project that will use remote patient monitoring and virtual office visits to connect patients with healthcare workers from the participating hospitals through real-time video technology.

The collaboration could not have come at a more pressing time.

Nationwide, 58 rural hospitals have closed in the last five years, according to the health services research program at the University of North Carolina at Chapel Hill. Two hundred and eighty other rural hospitals are languishing, according to the National Rural Health Association—about 10 percent of all the rural hospitals in the U.S.

According to a recent report by the American Hospital Association, nearly one in four Americans lives in a rural area and depends on the hospital serving the community as a vital—and at times the only—source of care. Across the nation, rural hospitals have been grappling with some of the most pronounced challenges facing population health management: an aging workforce, higher rates of chronic illness, higher rates of poverty, and an over-dependence on government programs such as Medicare and Medicaid. Community hospitals have been hit particularly hard.

Federally certified Critical Access Hospitals (CAHs) are a staple of rural communities. They are small, with no more than 25 inpatient beds, highly transitory, with a stay of no more than 96 hours, and located in places that are at least 35 miles away from any other hospital.

They are also an endangered species. Twenty CAHs that opened in 2012 have already filed for bankruptcy. Some health professionals are sorry to see them go, while others point to studies that show they provide a lower quality of care than other hospitals.  For midsize community hospitals, the rate of closings has been even higher because they are reimbursed less by Medicare than CAHs.

As a result, the pressure on hospitals to consolidate is now more intense than ever. Since the passage of the ACA, hospitals have been seeking ways to increase share in their markets in order to reduce costs and gain more leverage with insurers. The number of mergers has more than doubled in recent years, from 50 hospital mergers in 2009 to 105 in 2012, according to the healthcare research firm Irving Levin Associates.

But is consolidation really the best thing for the community?

Some hospitals, at least, have experienced the advantages of partnerships and closer alignment.

Chilton Medical Center, once an independent hospital in Pompton Plains, New Jersey, is now part of the Atlantic Health System, where it benefits from advanced medical information and communications technology and a patient portal. Both organizations had previously collaborated in the fields of obstetrics and cardiology, but with this merger, which was completed in early 2014, the Atlantic Health system added the 260-bed hospital to its list of affiliated sites. There have been no staff reductions in clinical or patient-care areas as a result of the merger, according to Atlantic Health, and Chilton expects to reduce cost by two to three percent over the next few years.

Critics, however, are concerned that consolidation is likely to increase costs rather than reduce them. Whether through consolidation, formal mergers, or more collegial collaboration like the Rural Health Innovation Network, there is no question that rural health care providers have to collaborate to survive.

Because rural hospitals often represent a small town’s largest employer, their success or failure can directly affect the viability of their communities. As a recent New York Times investigation noted, “those towns that have been able to attract hospitals and other healthcare facilities have emerged as oases of economic stability across the nation’s heartland.”

The situation in rural Maine is a case in point. Northern Maine Medical Center is the largest employer in Fort Kent, Maine. The community hospital recently teamed up with four other Maine hospitals to form the Maine Rural Health Collaborative, an initiative similar in spirit to the Rural Health Innovation Network. The jobs created at the hospital have multiplied jobs in the community, underscoring the need—in Maine, and across the country—for rural hospitals to work together to remain strong.

Caroline Smart is a Senior PR Associate and CloudView Editor.

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