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Q&A: Inside the Pennsylvania Rural Health Model

By Topic: Financial Management


Prior to joining the Pennsylvania Rural Health Model, Endless Mountains Health System, a 25-bed critical access hospital in Montrose, located some 40 miles north of Scranton, had seen year-over-year declines in revenues. “We were seeing a declining population in our rural service area and declines in reimbursement,” says CEO Loren Stone, FACHE. “We were looking for a way to stabilize our operating and financial environment.” 

Launched in 2018, with 2018 being a pre-implementation year, the Pennsylvania Rural Health Model is a seven-year demonstration project aimed at helping rural hospitals improve their financial footing while reducing avoidable hospital expenditures and improving access to high-quality care. The state of Pennsylvania’s Department of Health jointly administers the program with the Centers for Medicare & Medicaid Services. 

“We are the first voluntary program specific to rural that is testing a global budget coupled with transformation planning,” says Janice Walters, COO at the Rural Health Redesign Center, which oversees the model for Pennsylvania. “Early evidence is showing that, across all of our quality and population health metrics, the vast majority of our participants are performing well, even through COVID-19.”

Eighteen participating rural hospitals receive fixed global payments on a prospective, consistent basis from Medicare in place of retrospective fee-for-service payments. Six private insurers are also participating in the model. 

“It’s really been a game changer,” Stone says. “We now have cash flow stability. We would not have been able to survive the pandemic without that cash flow given the significant volume declines we saw.” 

In the following Q&A, Walters and Stone provide more details about the model. 

How are you measuring performance in this model? 

Walters: We are leveraging common value-based metrics to monitor our program such as those used by CMS. We recognize that our rural hospitals are already strapped for resources, and we didn’t want to put additional administrative burden on them by asking them to report on new metrics. 

All of our hospitals, for the most part, are posting favorable results with regard to quality of care. Financially, our hospitals were thankful for the predictable global payments during the pandemic when their utilization was basically turned off. It certainly helped them weather the storm. 

How did EMHS determine what to focus on in its transformation plan? 

Stone: Participants in the model received data analytics support from consultants that worked with the state. From this, we learned that COPD and respiratory-related illnesses accounted for 28% of our admissions. That information was critical to us in being able to move forward. Like many other rural providers, if we had to do that type of analysis on our own, we wouldn’t have been able to do it. 

Our transformation plan focuses on reducing avoidable utilization from respiratory illnesses. We started to put in place numerous wraparound services for our COPD patients, such making sure they have the ability to consult with a pharmacist about medications. We are also planning to start up a pulmonary rehab program. Many of our initial plans have been delayed because of COVID, but we are getting back on track. 

What do you think has been critical to the successful rollout of the Pennsylvania Rural Health model? 

Stone: We all have a shared goal: cost reductions and avoidable utilization reduction. The payers don’t want to pay for inappropriate utilization. But now the hospitals, because they’re being paid under global budget, have seen a decline in inappropriate utilization. So, there's an aligned goal there, an opportunity for a win-win on both sides. 

Walters: A couple of things have allowed us to be successful. One has been an emphasis on relationship building and communication. In the early years, before COVID, we brought the stakeholders to the table. We had a lot of in-person meetings with both hospitals and insurers, as we were putting pen to paper to write the global budget methodology and to support transformation planning efforts. 

This high-touch approach helped us build trust. 

Any other advice you’d offer rural health leaders? 

Walters: We struggled in Pennsylvania because we don't have robust health information exchange or all-claims database; we’ve essentially had to build that from the ground up. I would advise working through data exchange issues as part of early conversations. 

Stone: To other rural hospitals, I’d recommend transforming within your capabilities. Several of the year-one participants in the model had maybe 10 or 12 transformation goals. 

We’re small organizations, and we don't have a lot of management and operations staff. To do a heavy lift on 10 or 12 transformation items is challenging. I’d recommend picking two or three goals. Then if you can get all those done in a year, that’s a really big success. We all want to try and save the world, but start with the things you can do. Then, I think, success builds on itself.

Walters: I’d also like to re-emphasize that relationships are the secret sauce. If you can get the communication happening, everyone will start pulling in the same direction. Everything else, like data exchange and sharing of resources, will be a natural byproduct. 

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