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Rural Health Information Hub

Apr 19, 2023

Better Together: Rural Hospital High-Value Networks

by Clint MacKinney, MD, MS; Nate White, JD; and Brett Norell, MHA, MPH

many hands joined together in the shape of a heartThe volume-to-value transition is underway in U.S. health care. Volume-based payment — fee-for-service and cost-based reimbursement, for example — is giving way to value-based payment such as shared savings and global budgets. Fundamentally, value-based care refers to the delivery of the Triple Aim of better care, improved health, and/or smarter spending. However, healthcare value is a nuanced concept and depends on perspective. Patients, clinicians, employers, and taxpayers may measure and weigh the importance of the three Triple Aim components differently. Despite the definitional imprecision of value-based care with accountability driven and incentivized by value-based payment, the Center for Medicare & Medicaid Innovation recently announced the federal government's goal that all Medicare fee-for-service beneficiaries and most Medicaid beneficiaries will be in a care relationship with accountability for quality and total cost of care by 2030. Commercial health insurers are following suit. Therefore, rural hospitals should prepare for a value-based care eventuality.

Rural hospitals have many strengths including a dedicated workforce, high patient satisfaction, and nimble organizational structures, as well as multiple non-inpatient service lines such as clinics, home health, and nursing homes. Rural hospitals serve as their community's anchor institution and offer a sense of safety and security to community members. But in a healthcare environment that increasingly rewards delivering the Triple Aim with value-based payment, rural healthcare organizations may face challenges on multiple fronts. Low patient and service volumes (diseconomies of scale), limited resource pools, underdeveloped process improvement capacities, and lack of value-based payment experience may impede successful rural hospital transitions from volume-based health care to value-based health care. It is value-based care that allows receipt of value-based payment.

Better Together: Rural Hospital Networks

Rural hospital networks are cooperative collaborations between multiple rural hospitals to provide services often unavailable to individual rural hospitals. Rural hospital network services may include shared services such as legal, insurance, accounting, compliance, and coding; peer-to-peer learning; clinical and non-clinical education; group purchasing; grant application assistance; and more. A rural hospital network provides interdependence that realizes the benefits of cooperative strength while honoring a rural community's desire for local decision-making. Furthermore, rural hospital networks help level the playing field by giving independent rural hospitals a single voice that facilitates conversations with commercial payers and urban health systems. Three well-established examples of rural hospital networks are the Rural Wisconsin Health Cooperative, the Illinois Critical Access Hospital Network, and the Texas Organization of Rural & Community Hospitals.

A rural hospital network provides interdependence that realizes the benefits of cooperative strength while honoring a rural community's desire for local decision-making.

In addition to the important opportunities that a rural hospital network offers an individual rural hospital, a rural hospital network may also develop the capability to operate as a high-value rural hospital network. A high-value rural hospital network can use its economies of scale and value-based care capacity to access value-based payment contracts; that is, payer contracts that pay for value-based care and do not pay exclusively fee-for-service. Development of a rural hospital high-value-network starts with a clinically integrated network (CIN).

Laying the Foundation: Clinically Integrated Networks

A clinically integrated network (CIN) is a group of like-minded healthcare organizations and clinicians who agree on a set of quality improvement (better care) and efficiency improvement (smarter spending) strategies and then hold themselves accountable for delivering those strategies. A CIN is a complex organization requiring multiple organizational components and involving multiple operational functions.

Clinically Integrated Networks
Organizational Components Operational Functions
  • Clinician leadership
  • Performance improvement
  • Information technology
  • Legal and contracting options
  • Membership criteria
  • Fund flows
  • Team-based care
  • Proactive care
  • Clinical guideline use
  • Clinical variation reduction
  • Quality improvement
  • Care coordination
  • Data sharing and analysis
  • Clinician accountability
  • Efficiency improvement
  • Legal protection

Establishing a high-functioning CIN requires a significant amount of time and work. But CIN opportunities are worth the effort! Most importantly, a rural CIN can improve the health and well-being of rural people and places. CINs support rural healthcare organizations too. As compensation for delivering value-based care, value-based payment offers new rural hospital revenue that supplements ever-dwindling fees-for-service. Importantly, under most anti-trust law constructs, an established CIN that demonstrates sufficient "clinical integration" may request (or design) value-based payment contract options and then serve as a single-signature contracting authority. Typically, demonstrating proper "clinical integration" involves CIN members sharing ongoing financial risk towards achieving varying aspects of the Triple Aim. Failure to meet this standard could violate anti-trust laws if the network were to attempt single-signature contracting with payers.

Establishing a high-functioning CIN requires a significant amount of time and work. But CIN opportunities are worth the effort!

A CIN adds an additional bonus that delivers on the Quadruple Aim that includes improving the clinician experience — professional motivation. Healthcare professionals seek meaning from their profession, mastery of their profession, and membership in their profession. Meaning refers to a passion for greater professional purpose; mastery refers to deep professional skill and accomplishment; and membership refers to a sense of belonging with compatible professionals (better together). Meaning is often innate to the individual professional. However, CINs can be the vehicle to develop professional mastery and membership. Cooperative education, experience, improvement, and collegiality can all blossom in a CIN. These CIN benefits are not limited to clinical professionals. All members of the healthcare workforce including administrators, plant managers, housekeepers, and business office staff can find vocational growth in a CIN and a high-value network.

Despite the comprehensive nature of a rural hospital high-value network, external partners are still needed to provide the continuum of care. Community-based-organization collaborations become even more important when developing value-based care capacity. For example, community-based organizations are essential to address health-related social needs. Since many rural hospitals do not provide tertiary (let alone quaternary) care, referral relationships with larger healthcare organizations that prioritize quality and efficiency are necessary. CINs should also work with insurers to implement health insurance contracts that reward both high-quality care and lower spending — a win-win for both rural healthcare organizations and insurers.

Building a New High-Value Rural Hospital Network

The authors of this article are helping establish the Rough Rider High Value Network (RRHVN) — a network of 23 independent rural hospitals in North Dakota with a service area of nearly 250,000 people. The RRHVN mission is to "create and advance the RRHVN — a sustainable network of rural North Dakota Critical Access Hospitals and clinics that increases clinical quality, pools member resources, manages financial risk, and improves community health." The RRHVN has established 10 guiding principles.

  1. Prioritize clinical quality and community health.
  2. Work with respect, honesty, and integrity.
  3. Collaborate for wiser decision-making.
  4. Develop partnerships to improve health and reduce disparities.
  5. Pool resources and aggregate lives.
  6. Reduce clinical variation.
  7. Increase healthcare efficiency.
  8. Care for the rural healthcare workforce.
  9. Find opportunity in value-based payment.
  10. Adapt to an ever-changing healthcare environment.

The RRHVN members are enthusiastic about their collaborative opportunities and in a few short months have already provided start-up funding to incorporate the RRHVN. The members have hired an interim staff, elected a governing board, and established the Clinical Integration and Business Integration Committees. The RRHVN staff is holding ongoing discussions with payers and tertiary care healthcare organizations.

The national advance to value-based care and the potential of rural-hospital interdependence make high-value rural hospital networks an important strategy to serve rural people, communities, and local healthcare systems into the future. We are better together.

Lead author A. Clinton (Clint) MacKinney, MD, MS has worked in health care for nearly 40 years — including as a rural family physician practicing the full scope of family medicine. Dr. MacKinney completed his clinical career as an emergency department physician in rural Minnesota. Dr. MacKinney also has worked as a national rural healthcare consultant providing services to approximately 75 rural hospitals and communities. Dr. MacKinney currently is a Clinical Associate Professor at the University of Iowa College of Public Health with professional interests in value-based care, rural hospital payment, and physician/administration relationships.

Nate White, JD, and Brett Norell, MHA, MPH are with Newpoint Healthcare Advisors.

Opinions expressed in this column are those of the authors and do not necessarily reflect the views of the Rural Health Information Hub.