WILLCOX, Ariz.鈥� Ask Sam Lindsey about the importance of Northern Cochise Community Hospital and he鈥檒l give you a wry grin. You might as well be asking the 77-year-old city councilman to choose between playing pickup basketball鈥攁s he still does most Fridays鈥攁nd being planted six feet under the Arizona dust.
Lindsey believes he鈥檚 above ground, and still playing point guard down at the Mormon church, because of Northern Cochise. Last Christmas, he suffered a severe stroke in his home. He survived, he said, because his wife, Zenita, got him to the hospital within minutes. If it hadn鈥檛 been there, she would have had to drive him 85 miles to Tucson Medical Center.
There are approximately 2,300 rural hospitals in the U.S., most of them concentrated in the Midwest and the South. For a variety of reasons, many of them are struggling to survive. In the last five years, Congress has sharply reduced spending on Medicare, the federal health insurance program for the elderly, and the patients at rural hospitals tend to be older than those at urban or suburban ones. Rural hospitals in sparsely populated areas see fewer patients but still have to maintain emergency rooms and beds for acute care. They serve many people who are uninsured and can鈥檛 afford to pay for the services they receive.
Several months ago, Northern Cochise sought to strengthen its chances for survival by joining an alliance with Tucson Medical Center and three other rural hospitals in southwestern Arizona. Together, the Southern Arizona Hospital Alliance is negotiating better prices on supplies and services. And the Tucson hospital has promised to help its rural partners with medical training, information technology and doctor recruitment.
鈥淲e are committed to remaining autonomous for as long as we can,鈥� said Jared Wilhelm, director of community relations at Northern Cochise. 鈥淲e think this gives us the best leverage to do so.鈥�
Northern Cochise and the other rural hospitals in the alliance, which is similar to ones in Kansas, Mississippi, Washington state and Wisconsin, hope that by joining they will avoid the听of 56 rural hospitals that have closed since 2010. Another 283 rural hospitals are in danger of closing, according to the National Rural Health Association ().
Sam Lindsey shudders to think what a long drive to Tucson would have meant for him last Christmas.
鈥淚f I鈥檇 have had to go 85 miles,鈥� he said, 鈥淚 don鈥檛 think I鈥檇 be here today.鈥�
Multiple Advantages
The alliance offers the rural members multiple advantages. One of the most important is in purchasing. Their combined size will enable them to get discounts that are beyond them now. For example, instead of being a lone, 49-bed hospital with limited bargaining leverage, alliance member Mount Graham Regional Medical Center, in Safford, is suddenly part of a purchasing entity with more than 700 beds.
鈥淚f I鈥檓 just Mount Graham and I鈥檓 going to buy one MRI every seven years, the sales people will say, 鈥極h, that鈥檚 very nice,鈥� 鈥� said Keith Bryce, Mount Graham鈥檚 chief financial officer. 鈥淏ut as part of this alliance that they want to do regular business with, they are going to give us a much better price.鈥�
Bryce said that he expects the added purchasing power alone will save Mount Graham 鈥渋n the six figures鈥� every year.
Similarly, the hospitals expect the combined size of the alliance to result in lower costs for employee benefits, workers鈥� compensation and medical malpractice insurance.
The alliance also helps the rural hospitals recruit doctors and other medical providers, many of whom are reluctant to work, let alone live, in isolated areas. Rural hospitals rarely have the contacts and relationships that help urban hospitals find doctors. 鈥淲e鈥檝e been trying to recruit another primary care doctor to this community for the last year with no success,鈥� said Rich Polheber, CEO of Benson Hospital, another alliance member.
Tucson Medical Center has pledged to use its own recruiting muscle to help its rural partners find providers who are willing to live in rural areas, or at least regularly see patients there. As an incentive, Tucson will offer interested doctors help in managing the business aspects of their practices.
The rural alliance members also want Tucson鈥檚 help with medical training and IT. Some have dipped into telemedicine, which is particularly valuable for rural hospitals underserved by specialists, and are looking to expand those efforts. Copper Queen Community Hospital, in Bisbee, the fourth rural member of the alliance and probably the rural hospital in the best financial shape, is the most advanced user of telemedicine. Its networks in cardiology, neurology, pulmonology and radiology can connect doctors and their patients to specialists at major institutions such as the Mayo Clinic and St. Luke鈥檚 Medical Center, in Phoenix.
The alliance also will make it easier for patients who have surgery in Tucson to be transferred back to their home hospitals for recovery and rehabilitation, saving them and their families from traveling long distances.
A Defensive Strategy听
Despite the numerous advantages for the rural partners, the idea for the alliance began with the Tucson hospital, which approached the others with the proposal last spring. At the outset, some of the rural hospitals were skeptical.
鈥淎t first, we were like, 鈥極K, so why are they doing this? What鈥檚 in it for them? Do they want to absorb us?鈥� 鈥� said Bryce, the Mount Graham CFO.
But after a series of meetings, the suspicions disappeared and the rural hospitals eagerly signed on.
The Tucson hospital was frank about its motivation: to remain independent in an industry moving toward consolidation. As a result of acquisitions in the last few years, it is the last locally owned, independent hospital in Tucson.
鈥淎ll of a sudden, we were in a situation where [Tucson Medical Center] found itself isolated and facing its own competitive market pressures because the environment had so dramatically changed,鈥� said Susan Willis, executive director of market development at the hospital and president of the new alliance.
Nearly a quarter of Tucson鈥檚 patients come from outside the city, many from the areas served by the rural hospitals in the new alliance. Cementing the relationship with those hospitals, Willis said, will help Tucson maintain a flow of patients who need medical services that are beyond the capabilities of the rural hospitals. The rural members have laboratories, diagnostic equipment and therapeutic services, but some have little or no surgical or obstetrical services. Not one is equipped to perform complicated surgeries.
鈥淐ertainly you could describe it as a defensive strategy,鈥� Willis said.
Decades of Pressure
Many of the听problems plaguing rural hospitals date to 1983, when Medicare began paying hospitals a set fee for medical services and procedures rather than reimbursing them for the actual costs of providing that care. From 1983 to 1998, 440 rural hospitals closed in the U.S., according to the NRHA. That prompted Medicare to begin reimbursing certain rural hospitals for their actual costs, which helped stabilize them.
But the recession hit rural hospitals especially hard, as did 2011 budget cuts that reduced Medicare payments by 2 percent. Because the rural population tends to be older, rural hospitals rely heavily on Medicare payments. The pressure increased in 2012, when the federal government reduced by 30 to 35 percent its reimbursements to hospitals for Medicare patients who don鈥檛 cover their share of the bill.
鈥淭hat鈥檚 an example of how a little policy change that seems insignificant in Washington can have profound effects in the rural areas,鈥� said Brock Slabach, NHRA鈥檚 senior vice president for member services.
Finally, more insurance plans are increasing copayments and other out-of-pocket costs. Many of the patients at rural hospitals have low incomes. And when they can鈥檛 cover their costs, the hospitals have to pick up the tab. 鈥淲e don鈥檛 have cash reserves,鈥� said Polheber, the Benson Hospital CEO. 鈥淲e live on the edge, day to day, week to week. [The alliance] seemed like the best way to keep us going.鈥�
Given the threats to the nation鈥檚 rural hospitals, many are eager to learn from any models that work, which is why the Arizona alliance has attracted notice.
Slabach, for one, calls it a promising model, although one that may not be replicable everywhere. 鈥淵ou have to have willing partners willing to collaborate and provide assistance to each other,鈥� he said. 鈥淵ou need partners that share a cultural fit with you.鈥�
The rural members of the alliance are major employers in their communities and assets in attracting other employers and residents, including the snowbirds, who flock to the area every winter. But hospital leaders, workers and patients say saving lives is the main reason the hospitals must remain open.
鈥淚n medicine, distance lessens the chances of survival,鈥� said Pam Noland, director of nursing at Northern Cochise. 鈥淓ven if a patient has to be transferred to [Tucson Medical Center] or somewhere else, stabilizing them here is the difference between life and death.鈥�