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Success of Pennsylvania Rural Health Model

Rural hospitals provide essential health care services and are pillars of their communities, but many are struggling to stay open. Rural hospitals are facing challenges due to financial instability and a system that dis-incentivizes visionary transformation.

Rural hospitals are essential to their communities as…

  • Provision of vital services to local communities, enabling lower transport times to the ER and closer access to general healthcare needs for a population.
  • Personal and familiar to members of the community, including many pre-existing relationships between patients and healthcare providers.
  • Economic pillars of the community as a significant employer in most communities and an anchor for local goods and services

Rural hospitals are challenged for many reasons …

Patients tend to be older, sicker, and have more chronic diseases.

  • There are a larger number of uninsured patients.
  • Equipment is very expensive.
  • Specialists are difficult to recruit.
  • There are significant physician shortages.
  • Operating expenses continue to increase.
  • Patients may travel to urban areas for health care services.
  • There is a national trend of declining inpatient admissions.

The Pennsylvania Rural Health Model is an alternative payment model designed to address the financial challenges faced by rural hospitals by transitioning them from fee-for-service to global budget payments. This aligns incentives for providers to deliver value-based care and provides an opportunity for rural hospitals to transform the care they deliver to better meet community health needs. Pennsylvania is the first state in the country to design and implement a model such as this that is focused entirely on rural hospitals.

Pennsylvania’s response is focused on ensuring access to quality care and improving health outcomes in rural communities. Guiding principles in developing a response.

Utilize the latest promising practices in meeting rural health community needs

  • Engage communities, payers, providers, private sector, and national thought leaders to bring the best solution forward
  • Pursue models those are nationally scalable
  • Ensure stability for rural communities and care providers through a public-private partnership
  • Direct investments toward transformational solutions, including achieving a budget-neutral rural health care delivery system over time

The pillars of the PA Rural Health Model – the global budget and transformation support – address these core challenges

  • The global budget is fixed annually and paid out by the payers to hospitals monthly, providing a stable stream of revenue
  • The global budget is calculated based on historical net patient revenue data, adjusted for transformation-related annual service changes
  • Volume-independent, stable cash flow will allow investment in care quality and population health
  • Model incents provision of lowest-cost quality care, encouraging hospitals to focus on innovative population health strategies.
  • DOH will provide tailored, end-to-end assistance at no cost to enable hospitals to focus on a successful transformation
  • Support across all transformation phases: data collection, plan creation, implementation progress

The Model provides financial stability lacking under today’s system and incentives population health focused transformation. And each provider will define its own transformation plan, leveraging three key opportunities to succeed under the model

  • Reduce potentially avoidable utilization
  • Improve operational efficiency
  • Optimize service profile

Specific goals hospitals should pursue

  • Expand behavioral health and substance use disorder services
  • Offer certified community health worker education programs
  • Combine emergency medical services with neighboring areas to increase coverage when needs arise

The Pennsylvania Rural Health Model will open the door to new and innovative solutions for citizens who live in rural communities to have greater access to health care closer to home.

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