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Disruptors, Essential Services, and Reflections on a Career in Rural Health, with John Supplitt

Date: July 2, 2024
Duration: 33 minutes

John Supplitt. An interview with John Supplitt, Senior Director of Rural Health Services for the American Hospital Association. We discuss the importance of maintaining rural essential services, and Supplitt provides insights from his long career with the AHA.

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Organizations and resources mentioned in this episode:


Andrew Nelson: Welcome to Exploring Rural Health, a podcast from the Rural Health Information Hub. My name is Andrew Nelson. In this podcast, we'll be talking with a variety of experts about providing rural healthcare, problems they've encountered, and ways in which those problems can be solved.

Today I'm speaking to John Supplitt, Senior Director of Rural Health Services for the American Hospital Association. John has been in rural healthcare since the 1980s, working for the American Hospital Association to support, develop and expand rural hospitals and the care they provide. During this time, he's served as the AHA's liaison for rural health care policy and member services to the U.S. Department of Health and Human Services, the Federal Office of Rural Health Policy, the National Rural Health Association, and state hospital associations.

His expertise has been an invaluable resource for us here at RHIhub. He's about to retire, but he agreed to talk to us one more time. Thanks for joining us today, John.

John Supplitt: It's great to be here, Andrew.

Andrew Nelson: John, you're retiring next month after a long career working in issues related to rural hospitals at the American Hospital Association. Can you tell us a little bit about when and how you got started working in rural health?

John Supplitt: My career in rural health really dates back to 1981 when I was the swing bed project director. And at the time, swing beds were a public-private demonstration project between the Robert Wood Johnson Foundation and the Health Care Financing Administration, HCFA. And the effort was to identify areas of the country where we could introduce a form of skilled nursing as part of the inpatient capacity for existing rural hospitals. So basically blending post-acute care with acute care. And I was privileged to be the project director for that.

Andrew Nelson: What would you say are some of the major changes in rural health policy that have occurred during your career?

John Supplitt: Andrew, the major changes that have occurred in rural health policy during my career — or what I would really phrase as the biggest disruptors of healthcare delivery by hospitals to communities in my career — are few, but they're significant. I would hazard to say that the transition to Medicare Inpatient Prospective Payment back in 1982 is perhaps the biggest disruptor we've experienced in rural healthcare in the entirety of my career. So what it gets back to is new models of payment, and in this case derived from and driven by what was then HCFA, and what is now CMS [the Centers for Medicare and Medicaid Services]. And the intent of the Medicare Inpatient Prospective Payment System was to reduce the rate of increase in healthcare expenditures. And it marked a change in the incentive for providers who previously had to spend a dollar to get a dollar, so cost-based reimbursement, which did not benefit from the cost-effectiveness or savings that would be generated by the inpatient system, which is driven by diagnostic-related groups, which put low-volume hospitals at a disadvantage.

So, the Inpatient Prospective Payment System systematically put low-volume hospitals at a disadvantage. And of course, rural hospitals, being low-volume, felt the brunt of that. So, what makes this such a great disruption? It's evident in the data. We talk about rural hospital closures all the time now in current terms, but it's not the first time that we've experienced this kind of disruption. From 1980 to '88, there were 200 rural hospital closures, which was about half of the total community hospital closures in the U.S. Just between 1985 and '88, 140 rural hospitals closed.

And this was largely driven by Medicare's Inpatient Prospective Payment System, whereby predetermined rates were set for each Medicare hospital discharge. The intent was to control Medicare costs by giving hospitals financial incentives to deliver services more efficiently and reduce unnecessary use of inpatient services by paying a predetermined amount. Partially in response to the number of rural hospital closures then, we saw a number of programs that were introduced to try to support rural hospitals in other ways. And we can list those as Sole Community Hospitals, Medicare Dependent Hospitals, down the line through Critical Access, low-volume adjustment, now Rural Emergency Hospitals. But to your question, the point is, I think the single biggest change that I've seen in my career was this transition from cost-based reimbursement to Medicare Inpatient PPS, and then the policy changes that came subsequent to that are significant, but they were derived from this larger change in this new payment model back in 1983.

Andrew Nelson: We certainly know that collaboration is key in the rural health world. Can you talk about some effective collaborations you've seen over the years to help advance rural health?

John Supplitt: I think the experience for rural hospitals is evident in that no one can go it alone. There are many ways in which a hospital can collaborate or affiliate with another provider or providers, and it's important that each of those hospitals and the communities that they serve look at them, at the way that best suits their community. You can have affiliations, mergers, acquisitions, but there are joint ventures, there's networks — there's many ways in which rural hospitals can work together in order to advance their vision and mission. It doesn't necessitate an asset transfer. And that's what many boards will kind of reflexively think is that, “Well, if we're going to participate in some sort of collaboration with another organization, it means we're going to have to transfer assets.” And no, that's not the case. Large hospital systems also acknowledge it.

It's not necessary to do that. It can be done, if that's the wishes of the rural hospital in the community, but it's not necessarily the only course. And so as we see what's transpired over particularly the last 10 years, the development of networks of hospitals largely we're seeing many independent hospitals combine their resources to achieve economies of scale in purchasing quality improvement and patient safety and performance. Many administrative tasks and distance learning opportunities have been achieved through these networks, none of which require an asset transfer, but all of which could not have been done without the collective use of resources among multiple providers.

I think the reality of it with things going forward, particularly as we look at the change in technology, the ability to treat patients more in an outpatient setting, and the continued drive towards these changing practice patterns really is going to drive rural hospitals to consider even more strongly what it is that they can do best for the purposes of their community and what they need to do in collaboration with other providers, so that you're creating systems of care rather than trying to function as the provider of all essential services to the community.

Andrew Nelson: During your career, I'm sure that it's always been very important to be well-informed about health policy and rural issues. Are there any publications you'd recommend in particular that you use to remain up to date on current rural health issues?

John Supplitt: I think, Andrew, the thing that really drives my day is staying current with all the issues. As a subject matter expert, you're only as good as your level of expertise. And what that means is that I have to be aware of and in front of the issues before they largely get brought to the public. And so that's a continuous process of reading and analyzing what's coming forth from any of a number of sources. Given what the AHA primarily does is representation and advocacy, the biggest source of information for me is Politico, to make sure that I'm aware of what's breaking news in terms of rural healthcare and what's being considered both in terms of legislative advocacy and regulatory policy, and how that's going to impact the providers in rural communities. We have a tremendous team here at AHA that does the same thing, with whom I work. We have a dedicated lobbyist who's following these advocacy issues. We have a dedicated regulatory policy expert who is following the issues of enforcement at the agency level. And so collectively, given our attention to the issues of the day, we are able to keep pace with what's happening.

The Federal Office of Rural Health Policy has a weekly newsletter that's very helpful. It brings forth the regulatory issues with which HRSA [the Health Resources and Services Administration] is dealing and managing, which keeps us abreast of that. I think there's a number of good websites that are helpful. The RHIhub website is an extremely strong resource for me. The Technical Assistance Services Center in Duluth has great resources that I pull on a regular basis. And then there's a number of CMS-generated newsletters and briefs that come forward that I read and use to help me better understand what's coming out and how I can better inform my members of what the issues are that are going to be confronting them.

Andrew Nelson: Are there any policy wins that really kind of stick out in your mind that you've seen or that you're most proud of during your time with AHA?

John Supplitt: I think when you look at what the wins were for rural hospitals, it can't be just the ones that are specific to rural hospitals. The single biggest win that we've had on behalf of rural hospitals and all hospitals in general was the Affordable Care Act, moving from a system that made access and coverage extraordinarily challenging to one that has the health insurance exchanges and opened up an avenue towards coverage for more Americans. Really how not just the communities and the individuals that could now be covered under federal healthcare or health plans, but also the providers that were bringing that care, because now we could better plan our budgets and our strategies based upon a regular stream of revenue that could only have occurred if individuals were covered under the health insurance exchange. I think another major accomplishment of the AHA was the $200 billion in provider relief funds that we were able to lobby for and achieve in 2020 under the national Public Health Emergency.

There would've been hundreds of hospitals that would have closed if we didn't have the provider relief funds, if we didn't have the Paycheck [Protection] Program. And getting us through that period of three years, 2020, 2021, 2022, was huge in terms of the ability to treat the emergency that was confronting us at the time, but also to put us in a position to come out of the national Public Health Emergency in a manner that would allow us to continue our services to our communities. A lot of changes occurred also in the way in which care was being practiced and delivered post-COVID, again, with a heavier emphasis on outpatient and telehealth and telemedicine that we didn't see prior to COVID. So the national Public Health Emergency was tremendously disruptive, but it also generated tremendous innovation across the field, but particularly I think in rural communities too.

With respect to how rural communities have responded to changes in policy, well, there's certainly the swing bed project or the swing bed program, which is enormous. I mean, every Critical Access Hospital, all 1,330, wherever we are right now, have swing beds. And they do that because of the policy that was implemented back in 1981, but also because it is a better way to deliver care locally. It is more cost-effective. It is patient-centered, and it has changed the way in which these rural hospitals can function by making them more efficient and more effective. I think the other major change that we saw was with the Balanced Budget Act of 1996, which established Critical Access Hospitals by moving towards an allowable cost-based reimbursed method of delivery. It allowed for hospitals to continue to have a medical presence where they may not otherwise have had that, in an environment with prospective payment and diagnostic-related groups. So that was a huge change. It was one very slow to begin, but 75% of all rural hospitals are Critical Access, and all of those have swing beds. I think when you look at the combination of the activities that have taken place as an umbrella for hospitals with respect to the Affordable Care Act, and the specifics for swing beds and Critical Access Hospitals, those are the responses to the major changes in policy that have occurred over the course of my career.

The more we focus on the patient, the more the patient is in the center of how we're designing policy, the better the outcomes for all involved. When we lose that focus and we make it reducing costs and improving efficiency and effectiveness, it often comes at the expense of the patient's experience. And when we see some of the decisions that have been made with respect to how we pay hospitals, well, if the patient is not at the center, then the patient is the one that loses.

Andrew Nelson: It's important not to lose sight of that. Can you talk a little bit about the concept of essential services for rural communities and how we should identify and address the need for those services at different levels, whether we're talking federal, state, or local?

John Supplitt: Andrew, that's a great question, and I'm glad you raised the notion of essential services, because again, that brings us back to the focus of the patient at the center of what we're doing. I think if policy were to look at essential services, and we did that through a couple of reports that we published in 2010, and then again in 2013, if we look at what services are essential to the community, that will help us decide how best to apply the resources locally and regionally. I love the example of maternal health services in this context because as we're seeing hospitals close obstetrical services, it has a reciprocal effect on women's services and then children's services and health services overall. And it really is sort of a barometer as to the direction in which care is going to be provided. Women's services is an essential health service. It's driven by primary care, but it does demand a certain level of specialty care that's essential, that is required in order to have positive outcomes. And when we see the number of services that are closing as a result of financial decisions, then we know that the patient no longer is at the center of those decisions.

Obstetrics is a very expensive service, and not every hospital can afford to provide that, but also, not every hospital has the volume necessary in order to meet the standards that will, that will produce the best outcomes. But what we can do then is look at that essential service and find ways to focus regional approaches to providing care that won't disadvantage the mother and the baby, to look at new technologies such as through telehealth and telemedicine and diagnostics that will enhance the ability to treat the patient locally and if necessary, stabilize and refer them if things become complicated. If we look at the social drivers of health — transportation, food security, housing — and we apply it to the circumstances of a mom and baby, we can begin to address the needs of the patient at a much more fundamental level before it becomes a delivery in an inpatient setting.

If we consider all these drivers of health, we are better focusing on the patient's need as an essential service and finding ways to meet that need, as opposed to looking at a way of reducing costs and increasing efficiencies with the hope that we're going to have better outcomes. So to summarize, yes, the discussion with respect to how we treat patients in our communities has to begin with the discussion of what's essential and to acknowledge our limitations as rural hospital providers, but at the same time, then look at the ways in which we can collaborate to develop regional systems of care that will make these essential services accessible to the patients that need them.

Andrew Nelson: Early on, we talked a little bit about existing disruptors in healthcare that have changed the ways services have been provided or we were doing business. What do you see as current or looming disruptors in the future perhaps, and what challenges and/or opportunities they might hold for rural hospitals and other providers?

John Supplitt: When we reflect on what the disruptors are, I'm going to limit it to two, and the first is models of payment. We have moved towards advanced alternative payment models such as ACOs [Accountable Care Organizations] and bundles of care, with the intent of generating savings, which can then be shared and then reinvested into the health system to advance outcomes and patient safety and quality, which is great in theory, but doesn't necessarily work in practice because it assumes an economy of scale that is much bigger than what many communities, particularly rural communities, can afford. And so as a result, those hospitals that have smaller scale that maybe have higher episodic costs are compromised by this drive towards advanced models of payment because it doesn't fit their economic business model. And consequently, we'll see services get dropped, we'll see hospitals close, because they aren't able to maintain their business, their viability in an environment of alternative payment models. So we have to find a way to have more flexible models of payments for those smaller low volume providers that will allow them to maintain a medical presence in their community.

A second major disruptor is technology, far and away. As we look at the timeline of technology moving from telehealth and telemedicine and paper to electronic medical records, and now as we're looking at the advances of AI, it is creating significant disruption in the way in which care is being provided. Because we're achieving more efficiencies through this technology, hospitals and providers have to adapt to this technology and what it means, which is again driving us towards more outpatient care and shorter stays.

But there are scale issues there as well. Larger health systems and larger hospitals can adapt to these technologies faster than what you would see in a small, rural, independent, Critical Access Hospital. By that itself, it forces hospitals to reconsider what it is that they can provide as they assess the essential services for their community. And it does drive these hospitals to look to ways to collaborate with others, which is realistic. You cannot go it alone, but it is tremendously disruptive. And when we look at our rural providers, of course, their innovation, their resourcefulness continues to find ways to work within these, these under these new technologies. But it's tremendously stressful and forces a lot of hard decisions with respect to the services that they provide.

Andrew Nelson: We've been talking about the changes in funding that rural healthcare providers have to change and adapt to. Are there any other noteworthy trends in rural healthcare you've seen over your career that you want to talk about?

John Supplitt: It would be remiss not to reference workforce and the challenges and stresses that have come forth with respect to the ability to recruit and retain a strong workforce, and just limiting it to the clinical discussion, physicians, nurses, advanced practice clinicians, what is essential and foundational to this discussion is primary care and the ability for rural Americans to access primary care in a convenient and reasonable fashion. And that's becoming increasingly more difficult as the pool of available clinicians really becomes thinner and thinner, the more remote we become, the less able we are to be able to produce sufficient numbers of clinical practitioners, physicians, nurses, and advanced practice practitioners.

What that does suggest, though, is that we look towards other ways of providing that care, and telemedicine and telehealth do provide us with some options and possibilities there, which, if supported through funding and payment, would really make a number of primary care services more accessible to those that are living in rural communities. Again, I use the example of obstetric services and women's health services and perinatal care. The ability to provide prenatal and postnatal care through telehealth will go a long way towards addressing the needs of those patients and providing better outcomes as a result. So workforce certainly is a challenge that has been and will continue to be one for rural providers, but there are ways in which we can look towards telehealth and technology to help us better meet the needs of those that live in rural communities, particularly in the case of primary care.

Andrew Nelson: Looking forward, what do you think are some of the exciting trends or possibilities for the future of rural health, as rural providers have to continue to kind of adapt in order to continue to serve their communities?

John Supplitt: Rural hospitals will continue to distinguish themselves as they have for the 37 years of my career as being the most resourceful, most innovative, providers of care out there. There is no provider that's closer to the patient than a rural hospital. And for that reason, the concept of patient-centered care is practiced as part of their vision and mission on a regular basis, and it makes the outcomes that much better as a result. So as we're going forward, I know that rural hospitals will adapt to and respond to the changes that they confront as healthcare is disrupted by technology, new models of payment, any advances that we might see in terms of diagnostics or pharmaceuticals, they will continue to be there front and center to be able to adapt and accommodate those changes as well as meet the needs to of their patients. But I think when we look to the future, we know that there's going to be continued movement away from inpatient care towards outpatient care, and we are going to have to be able to adapt to those changes through redesigning our own approach and models of delivery with an emphasis on the technology that will make care accessible and with an emphasis on a workforce that is more flexible and that can integrate various levels of care and coordinate care across different specialties and primary care.

That sounds simple, but it's really challenging. It's what rural hospitals have been doing through the entirety of my career, and it has been disruptive in that respect, and it will continue to be disruptive. But I know that our leaders in these rural hospitals are up to that challenge, and if they collaborate and share their resources among themselves and others, they will find that they will be successful in the new world of healthcare delivery, whatever that may be.

It's been a true privilege, just to be able to work side by side with the people who are in the field, bringing care to their friends and neighbors and family on a daily basis. I sit sort of on the periphery of that, and I see my role as making the landscape easier for them so that they can do the important work of caring for those that are sick and vulnerable and meeting their needs and making them whole. And if I have made their lives a little easier, then I consider that a success. And when we look at swing beds and Critical Access Hospitals and Rural Emergency Hospitals and others, payment models that may have given them more resources so that they can better achieve their visions and missions as rural hospitals, then we've been successful. The reality of it is that this is a highly political industry in which we work, and you cannot function as a caregiver without some sort of representation and advocacy at both the state, local, and federal level. And we'll be here to continue to provide that advocacy and represent the unique needs of our rural providers, but we recognize that the folks that are really making the differences are the folks that are in the field caring for the patients and those that are vulnerable 24/7/365, and anything we can do to make that load a little lighter. That's what we're glad to do. And it's been a privilege to do that.

Andrew Nelson: You've been listening to Exploring Rural Health, a podcast from RHIhub. In this episode, we spoke with John Supplitt, Senior Director of Rural Health Services for the American Hospital Association. Look in our show notes for more information about his work and visit for all things pertaining to rural health.