The One Choice We Don't Have Is Not Choosing

 
In 1991 the National Governor's Association stated in A Healthy America: The Challenge for States: "In essence, there are two polar positions regarding health care resource allocation - a market-oriented approach or a public allocation approach." Whether we personally agree or not, most private and public purchasers are moving to further restrict resources allocated to health care and are increasingly promoting market-oriented methods to that end. We face a complex array of options regarding how we and our communities will adapt to this era of market driven reform. The one choice we don't have is not choosing how to adapt.
 
The future well-being of our communities requires rural health leaders to be bold but not reckless, to be deliberate but not stampeded and above all to be value driven, not solely opportunistic. The challenge for NRHA nationally and for each of us at home, is to determine how we may most effectively engage unprecedented systemic change.
 
 
The purpose of this "President's Message" is to stimulate your feedback to me, other members of the Board and staff about how NRHA can best support rural adaptation to market reforms. This obviously can't be NRHA's only agenda but I am personally convinced that it requires greater emphasis. I apologize in advance for using some examples from my "day job" with the Rural Wisconsin Health Cooperative (RWHC). I do respect the incredible variation in situations faced by the NRHA membership and the need for multiple approaches. But as a "practitioner" relating to my own experience is for me the best way to express a series of challenges that I believe are increasingly faced by rural communities.
 
 
Medicare Managed Care: Nightmare or Opportunity?
 
A prime example of the expansion of market oriented methods is the clear movement of both Medicaid and Medicare to encourage the greater use of competitive models such as HMOs and medical savings accounts. In the face of this reality, NRHA has for some time expanded its fight for Medicare payment equity to Medicare managed care plans. Through the efforts of NRHA and other advocates within and outside of Congress, the recently passed Balanced Budget Act of 1997 substantially reduces the variation in payment rates to HMOs for Medicare beneficiaries.
 
While this remarkable policy victory has the potential to allow for more equitable reimbursement to rural providers, it does not guarantee it. Like the introduction of WalMart throughout rural Wisconsin, it will be seen very differently by different people--by some a benefit, by others a threat. As noted by the Rural Policy Research Institute in a report to Congress on May 29th, the effect on rural providers of higher payment rates are dependent upon:
To the extent that changes in capitation payments result in Medicare beneficiaries enrolling in managed care plans, there are significant implications for rural providers and communities. Instead of receiving payment determined by HCFA regulations, health care providers would instead be paid based on their contracts with managed care plans. Since most rural providers receive a significant proportion of their revenue for serving Medicare beneficiaries, they are likely to experience a substantial increase in the amount of revenue controlled by HMOs with a corresponding decline in the amount controlled by the federal government.
 
 
Competing With Outmigration
 
The loss of patients and dollars due to residents choosing not to use care locally available (or that could be developed locally) is a particular threat to maintaining or building a viable rural health system. In urban and suburban markets, competition tends to be among providers located within the same area so movement from one HMO to another doesn't as easily threaten the aggregate of care locally available. (Inner city neighborhoods face an outmigration situation in many ways similar to that of rural communities.)
 
While traveling an hour or more for care at a regional center is the right of any individual, not all residents have the means or health to do so, not all conditions allow that much time and weather is not always cooperative. Underserved populations are particularly at risk as local care becomes less available.
 
Add to this the very real link between rural health and rural community development and the issue of working to retain and enhance local access to health care is a high priority for most communities. "Health care spending represents about 14 percent of this nations economic activity. A disproportionately large share of this activity is concentrated in urban areas. Health insurance premiums and tax dollars destined to become Medicare and Medicaid payments flow out of rural communities. The return flow of these dollars is diminished for three interrelated reasons: (1) health services and resources are concentrated in urban areas, (2) reimbursement rates are higher for urban providers and (3) rural residents travel to urban area to seek care." (Health Care: A Growth Industry for Rural America, a paper prepared by Sam Cordes and Wayne Meyers for the July, 1997 Capital area Rural Health Roundtable.)
 
[RWHC's analysis of it's member hospital discharge data clearly showed that Cooperative hospitals compete not with each other but with outmigration. Each member hospital has a clearly defined market with minimal overlap with its immediate neighbors. If people do not choose to receive care locally, they go into a regional center, not another RWHC rural hospital. Antitrust principles do not prohibit the collaboration of providers from separate markets as long as there is a demonstrated opportunity for consumers "to flee" the market and as long as the collaboration does not require exclusivity. Consequently, RWHC has begun to negotiate and administer HMO and other payer contracts on behalf of its members.]
 
 
A Rural Model Of Competition Interfacing With Cooperation
 
While some areas of rural America will probably remain apart from managed care and networking, I believe that many areas (perhaps the majority?) will evolve along the lines of multiple and competing regional insurers and systems working with a cooperating rural provider base. This contrasts significantly with non-overlapping vertically integrated competing systems or "natural rural monopolies" most frequently referenced in the literature. These alternative models can most easily be visualized as noted on the attached schematic. The implication for rural networking with competitive markets is that attention must be given to both rural-rural collaboration as well as multiple rural-urban linkages.
 
 
Identifying the "V-shaped model" of competition in rural markets led to rural providers in south-central Wisconsin initiating the Rural Zones of Collaboration Task Force with seven HMOs and insurers, an employer health care purchasing cooperative, two state public health representatives and the state hospital association. The Zones Task Force identified issues specific to promoting collaboration within a rural network of providers as well as integrating that work with multiple competing HMOs/insurers. Several strategic directions were identified; below is the set that specifically addresses issues of multiple HMOs working with a single provider:
 
Goal 1 - Increase the effectiveness and utilization of RWHC's regional credentialing service for multiple practitioners, hospitals, health plans and direct purchasers and more effectively coordinate with neighboring regional credentialing services.
 
Goal 2 - Develop and implement a model for providers, plans and direct purchasers to collaborate on data collection, site visits and other administrative audits required of practitioners in a rural network (as mandated by regulatory/accrediting bodies, NCQA, Medicare, Medicaid, etc.).
 
Goal 3 - As a rural network, create a common clinical practice guideline review and adoption process and demonstrate rural practitioners' ability to attain desired clinical practice outcomes.
 
Goal 4 - Identify and implement clinical quality management projects in which multiple practitioners, hospitals, health plans and direct purchasers share a common interest at the local level and develop uniform performance objectives and outcome measures to improve the health status of the populations served by multiple health plans.
 
Goal 5 - As a rural network, centralize health plan customer satisfaction surveys to achieve a rural data base that will be large enough to provide meaningful information for local area improvement.
 
 
A Golden Opportunity For Rural America?
 
I have tried to identify why and how rural providers can choose to cooperate in a competitive market. An overarching strategic direction worth considering is proposed in the previously noted Health Care: A Growth Industry for Rural America:
 
"In general, lower intensity and lower cost of care in rural communities is advantageous in an era of cost containment. This reality, combined with health care as a growth industry, creates a golden opportunity for growth of health services in rural areas on a regional basis. However, its realization requires several factors to fall into place:"
 
1) "Rural communities must become aware of the economic and job creation opportunities generated by the health care sector."
 
2) "Strong and visionary leadership must help local communities, providers and residents to move beyond the historical pattern of each community having its "own" hospital, doctor, etc. ... Expand the range of services that can be provided in a cost-effective fashion in rural America. Eliminate or reduce the flow of rural residents to urban areas for services that are available within the rural regional system. When possible, keep ownership, profits, control, hiring and the purchase of health care inputs and supplies within the rural regional system."