HAWLEY, PA — Wayne Memorial Hospital is one of eight rural Pennsylvania hospitals currently considering whether to join a statewide initiative whose two-fold aim is to improve healthcare access to rural populations in the Commonwealth and help rural hospitals meet the challenges of today’s changing healthcare financing and delivery systems that have stressed rural hospitals and in some cases threatened their existence.

Across America, dozens of rural hospitals have closed in recent years, and one third of all rural hospitals nationwide—about 670—are deemed at risk, including 80% of PA’s rural hospitals that operate either in the red or on unsustainable margins.

On July 3 at Wayne Memorial’s annual State Health Improvement Plan (SHIP) breakfast, Pennsylvania Department of Health Deputy Secretary for Health Innovation Lauren Hughes, MD, outlined for hospital and community stakeholders the Commonwealth’s plan for preserving healthcare in rural communities.

“The Pennsylvania Rural Health Model [PRHM] offers a new vision of health care,” she explained. “Its two goals are to keep local communities healthy and to achieve financial stability for rural hospitals. The model, she said, would be based on “a new payment structure” designed in part to help hospitals control their expenditures.”

In our current healthcare system, a hospital’s greatest revenue source comes from providing sick care and filling hospital beds, but under this new care model, participating rural hospitals would be paid for keeping people well and out of the hospital. They would, as Hughes explained, transition from a fee-for-services reimbursement model to one in which they would receive a fixed, stable, steady stream of revenue.

Hughes said, “I like to think of this as something akin to the hospital receiving a ‘salary.’” Under the PRHM plan, a participating hospital would receive monthly payments of 1/12 of its annual operating budget. These funds would come from Medicare, Medicaid and commercial insurers like Blue Cross and Geisinger Health Plan.

PA’s Department of Health has already signed an agreement with the federal Center for Medicare and Medicaid Innovation to implement the PRHM model, and the six-year program is due to roll out in 2019 with a minimum of six rural hospitals in the first year, followed by two dozen more coming on board in the ensuing two years. Year four would be for assessment of progress and revisions, with renewal (or not) after six years.

Currently, WMH is working to finalize both its action plan and its proposed budget for implementing the new care model; these would then be submitted to the PA Department of Health for approval. Because this work is still ongoing, the hospital board has not yet made its final decision whether to join the initiative.

Legislation to address rural hospital crises

In June, in the PA House, Rep. Tina Pickett (D-110/Bradford, Sullivan, Susquehanna counties) introduced House Bill 2532 to establish the PA Rural Health Redesign Center Authority, because “Pennsylvania’s rural hospitals are in crisis. 30 rural hospitals are at risk of closure in Pennsylvania. This could result in thousands of lost jobs and a significant decrease in access to health care services in rural communities.”

The Authority would be a public-private partnership, working with rural hospitals and community partners to improve local health status, to provide financial and technical assistance, without seeking additional state funds or imposing additional regulations.

State Sen. Lisa Baker has indicated she will introduce a companion bill in the Senate.