Rural providers feel financially stable, with most planning to expand existing service lines to increase revenue, a new survey has found (PDF).
The survey was conducted by accounting firm Wipfli and reached 106 rural healthcare organizations across 26 states. Respondents included a mix of critical access hospitals, rural health clinics and others.
Overall, most respondents are cautiously or completely optimistic about their financial viability. About 40% said their financial stability is higher than it was a year ago, and the portion of those who think they are in a better place than they were five years ago also rose compared to 2023. Despite challenges like high inflation, dwindling COVID-19 relief funds and flat reimbursement rates, growing optimism suggests rural providers learned how to manage unpredictability during the pandemic, the report said.
“Being a rural hospital in terms of your financial situation is like learning to ski when you’re a child,” Wipfli’s healthcare leader Kelly Arduino told Fierce Healthcare. “When you’re not far from the ground, you don’t have far to fall, but you don’t have much to get up either.”
Entering 2024, rural healthcare leaders are most concerned about revenue capture, digital capabilities and people management.
Focus on what you can control: revenue
Rather than trying to control expenses, organizations are focused on revenues. Among the key strategies to increase revenues are assessing revenue cycle, expanding existing service lines and working on revenue-capture initiatives.
Nearly two-thirds of respondents are launching efforts to increase their market share locally, using claims data to inform strategic planning and resource allocation. About half said they plan to review and renegotiate their payer contracts or change up their payer mix.
“This is not new; it’s just this behavior for them is new,” Arduino said.
However, value-based care is far from the mind of rural providers, Arduino believes. Instead, they are focused on Medicare Advantage, which is growing in popularity among their patients but requires being vigilant about understanding the cost of care.
Most organizations (70%) plan to expand existing service lines to increase revenue. Many have already slashed obstetrics care, Arduino noted, or spun off their nursing home, and don’t offer a lot of specialty services. “Maybe for rural, there’s just nothing more to eliminate,” Arduino said.
Three-quarters of the surveyed organizations operate independently and plan to stay that way. Those that are in better positions to do so are providers in better-paying Medicaid states like Wisconsin or are based in the West where hospitals get local tax support, per Arduino.
Conversely, in the East Coast and the South, there has been lots of consolidation and, thus, not many rural hospitals left.
Digital benefits, drawbacks
Nearly 90% of respondents said digital tools have made a positive impact on their patients’ experience, though less than a fifth have fully embraced digital transformation across their organizations.
“They're starting to dip their toe into that area,” Arduino said. “Rural moves slow.”
AI was the most common investment area this year, with more than half saying they plan to purchase or expand their AI capabilities in the next 12 months. That’s from less than a third of organizations saying so last year.
While digital transformation has many benefits, the report noted, it is not without risk. Nearly a fifth of organizations reported an unauthorized attempt to access their networks or data in the past year. Hence, 70% increased their investment in cybersecurity technologies.
“Change happens fast,” the report concluded. “If organizations wait too long to pursue digital and people strategies, they risk losing stable ground. Rural healthcare organizations need to act on their optimism and ambitions today.”
Managing staffing challenges
In its inaugural report in 2023, Wipfli found 90% of respondents had experienced a worker shortage. This time, more than a third of respondents said their workforce situation improved.
About 40% said it’s the same, but now leaders have more tools to manage the shortage, per the Wipfli report. Organizations are reporting using culture and increased benefits to keep talent, with an emphasis on retention rather than recruitment, including reducing working outs and increasing paid education programs along with other perks.
More than half plan to reduce their reliance on temporary staff as a cost-saving measure, but they are open to outsourcing nonclinical functions like laundry, billing and food service.
Respondents are also looking for billing talent that’s willing to make tough decisions and do things differently. About half of rural healthcare administrators are new, in their roles for five or fewer years.
More than half of respondents said leadership training could help them address staffing issues. Leadership skill development was the second most pressing education need for organizations overall behind optimizing the revenue cycle.