The rural health care enterprise: keeping up with the city slickers

Physician Executive, May, 1996 by Barry R. Silbaugh

Despite these fascinating and frustrating tensions among the players within the health care system, rural systems can work for everyone--the citizens, the physicians, the hospital, and the insurer. lt nmay not, however, be "integrated" according to conventional wisdom. What is needed to prepare rural health care systems for success in managed care?

1. There must be a onechanism to pro mote improved health within the community, and provision of health-care services within the community when it is sensible to do so. One striking difference between urban and rural communities is the sincere interest in improving the health of the community. Urban health care professionals and administrators usually give lip service to the concept, but are really more concerned about competition from the integrated health care system that is most responsible for eroding their organization's patient base or profit margins.

It is difficult to even define the "community" served by an urban health care system. Is it the neighborhoods surrounding the hospital, or is it the zip code locations of the system's covered lives? Competition between urban health care systems serves to fragment rather than consolidate the sense of community.

Rural communities are smaller, and often have only one hospital. Physicians and administrators know the citizens well, often discussing health care issues with them in the aisles of the Piggly Wiggly, or at the Little League field. There is a sense of pride in the comrrrunity, and hence a genuine desire to improve the health of their neighbors. Furthermore, the community physicians and administrators have a strong and accurate sense of what services are necessary to accomplish the goal of improved health.

The fragile ecology of rural communities is always profoundly affected if the local hospital is struggling to keep its doors open. Health care institutions and profes sior,als in underserved rural areas are a precious resource to the community for both personal and economic reasons. The local hospital is generally one of the three largest employers in any community. If the profits of the hospital suffer, it stresses the community's ability to attract health care professionals and provide employment opportunities for its citizens.

It is critical that patients be cared for locally when high-quality services are available. Furthermore, health care costs are generally lower in underserved rural areas. Though the difiNerence is becoming smaller, utilization is lower, probably due to patient behavior and physician practice patterns and supply.3

2. Physicians must seek expert management resources to run the business of their medical pr=actlce, and should begin to merge practices into an entity that can manage limited financial risk and negotiate more effectively. The market dynamics that areforcing downsizing, mergers, and acquisitions in highly price-sensitive markets around the country will force significant changes in the business of the rural physician, too. The management expertise of large insurers and health care systems overwhelms the traditional physician's expertise. In many rural communities, physicians practice in solo or small group settings. They hire employees with little advanced business or health management skills, and pay them as little as possible. The physician as healer is little interested in the increasingly complicated business side of running a medical practice, yet thinks of him/herself as influential in the business sector nf the community--which s/he most certainly is!