Equitable Treatment
For rural providers, managing care isn't as challenging as attracting funds to pay for it
By Michael Muckian
There's an old expression in rural health: When you've seen one community, you've seen one community. The venerable chestnut captures the population and civic diversity that ranges from county to county, from township to township. As in the past, rural people today are independent, hardworking and proud.
When applied to health-care delivery, the phrase also speaks to medical needs and provider availability that vary from community to community. Just as no two patients are alike, no two rural communities are similar when it comes to meeting health-care needs and managing medical resources.
Except, of course, in the eyes of federal government agencies responsible for awarding Medicare and Medicaid payments. To Washington bureaucrats, all rural health-care patients look alike when it comes to reimbursements. No matter what the cost of treatment, rural payments are uniformly lower than those awarded in urban areas. And rural providers say reimbursement inequity along with availability of care, physician supply and other regulatory issues pose some big problems.
"Our biggest challenge is the rural-to-urban payment differential," says Robert DeVita, chief administrative officer for The Marshfield Clinic, arguably the state's largest, most far-reaching rural health-care provider. "Medicare and, to some degree, private insurers, pay rural sectors far less than they do urban ones, sometimes resulting in as much as a six-fold difference."
The Medicare system is based on formulas that compute standard payment ratios for specified medical procedures, then deduct 12 percent off the top with the assumption that someone else -- either the medical provider, a private insurer or the patient himself -- will make up the difference. Under a similar scenario, Medicaid pays only 70 percent of usual and customary treatment fees.
Those equations are further complicated by the fact that different reimbursement scenarios are drafted for different environments. Heart bypass surgery will be more expensive when performed on a patient living in midtown Manhattan, the government reasons, than it will be for a patient living in Clintonville, Wisconsin, regardless of actual treatment costs. Models are computed to adjust payments according to that "logic."
DeVita admits that while the inequity has caused economic challenges for rural health-care providers, it's done little to stem the tide of enthusiasm for treating patients living and working outside major metropolitan markets. "In a rural system, creative solutions are essential," DeVita says. "We've had the good fortune to find a few more of them because we've been in business a lot longer."
But reimbursement is just one factor affecting a rural health-care system, components of which sometimes struggle to survive. The changing health-care economy also has an impact. Availability of care, especially in sparsely populated areas in the northern part of the state, is another issue. Attracting the right number of qualified physicians also has posed a challenge, especially given the prospects of increased operational costs and decreased revenue when compared with more populated urban settings.
All of the above have forced rural health-care providers to develop their own unique set of economies, which many fear regulators, third-party payers and their urban medical brethren don't quite understand. The nature of the market served has led rural providers to develop leaner, meaner service profiles designed to maximize resources necessary to serve sometimes far-flung communities. Greater physician mobility, new technologies and institutional mergers designed to strengthen resources are bringing even more and better care to outlying populations.
"We've always had some form of managed care," says Daniel Hymans, president of Memorial Medical Center, Ashland, and new chair of the Wisconsin Hospital Association. "As a rural provider, we've seen our job as that of a primary care provider serving as gatekeeper to specialists. Most rural providers don't have the resources to be anything else, but that's also really the heart of managed care."
Plainly put, many rural providers adopted managed-care techniques long before they were even aware there was such a phrase. DeVita and others agree few rural providers could survive without them. Yet the concern remains that, like the federal reimbursement differential, outsiders representing urban-based pre-paid plans will march in -- and march over rural delivery options that already have proved cost effective while being essential to existing service population. And that, too, has them concerned.
"The fear of corporatization of health-care is a key complaint rural providers have," says Tim Size, executive director of the Rural Wisconsin Health Cooperative, a loose-knit organization of 22 cooperative hospitals, nursing homes and clinics based in Sauk City. "There's also a related fear over the intellectual fascism that states there's only one way to organize health-care."
Such misunderstandings may be most evident in the Medicare differential, which rural providers label as ineffective and unfair. Fortunately, the reimbursement scenario has begun to change thanks to the efforts of Republican Reps. Steve Gunderson, Osseo, and Scott Klug, Madison, who fought to raise the Medicare reimbursement rate to more equitable levels. According to Size, Klug's efforts to amend HR 2425 to allow for a single fee schedule for the entire state under Medicare Part B earned Wisconsin a place as the only state mentioned by name in the lengthy bill. It's a start, rural providers concede.
Efforts also are underway to increase care availability to underserved rural populations in the state. The Marshfield Clinic, founded in 1916, now has 25 clinics and single-specialty sites scattered from Ashland in the north to Wisconsin Rapids in the south, from Rice Lake in the west to Mosinee in the east.
Marshfield's service area covers a large part of north central Wisconsin, but DeVita says parts of the state still are underserved. Statistics from the Marshfield Medical Research Foundation identify all of Bayfield, Sawyer, Iron, Price, Florence, and Forest counties as medically underserved areas that also suffer from a physician shortage. Increased physician mobility and greater technology usage may be two ways to address those needs, DeVita says.
"We have linkages via video and 3,300 personal computers between the campus in Marshfield and our satellite locations," DeVita says. The clinic's Telemedicine program offers a form of video conferencing that uses audio, visual and data technology to transmit medical information and conduct business over fiber optic telephone lines. The system allows both audio and visual two-way communication, and produces video image quality comparable to that of cable television.
"We can hook specialists from the main campus and various satellites together electronically to discuss a patient's condition, while our PC network provides instant access to the patient's condition, while our PC network provides instant access to the patient's records," DeVita says. The end result is faster, more cost effective service to a more far-flung rural population.
But according to Size, technology is just one alternative. "In fact a lot of technology's advocates tend to be more sophisticated and more urban based," he says.
Technology has its applications, but only in areas where there are physicians to interact with it. And physician recruitment remains a problem, with an urban doctor glut disproportionate to rural needs. "You've also got a rural patient base that tends to be older, poorer, more often uninsured and more dependent and federal reimbursement programs than urban groups," Size says.
"But at the same time you find fewer single parents, stronger family structures and a more meaningful role played in the community," he adds. "This all effects the nature and delivery of care."
According to Hymans, there even are differences within rural models of care delivery. "We currently have 40 M.D.s on staff, serve a city of 8,000 with overall service population of 35,000. That makes us one of the larger rural models," he says.
Memorial Medical Center's model makes it easier to attract physicians. It also makes it easier for its physicians to get specialists help when they need it, have the necessary professional camaraderie they require and get some relief when necessary. The smaller model harkens back to the days when a lone physician without access to peers was responsible for the full medical needs of entire communities.
"Fortunately or unfortunately, the days of the frontier docs in Wisconsin are just about gone," Hymans says.
So, too, are the days of the frontier hospital. With the continued drop in in-patient admissions, fewer can afford to operate independently. More are merging with other facilities or closing their doors entirely.
According to American Hospital Association data, hospital admissions dropped 15.1 percent -- from 36.3 million to 30.8 million between 1982 and 1992. During the same period, Wisconsin inpatient admission dropped 24.2 percent -- from 765,000 to 580,000 -- a margin which implies more effective levels of service by state hospitals. The number of corresponding hospital inpatient days fell 24.5 percent nationally and 38.9 percent in Wisconsin.
"The word 'hospital' is no longer a meaningful term," Size says. "We have to be thinking of the entire picture as a health-care delivery system with different components."
Hymans agrees based on nothing more than the change in the number of beds at Memorial Medical Center. "We started out as a 140-bed hospital, but that was a number that never really had any meaning," he says. "Right now we're licensed for between 105 and 110 beds but we really consider usage in the 70- to 75-bed range."
That decline also is indicated in both national and state trends. From 1982 to 1992, as in-patient admission declined, outpatient visits rose dramatically. Nationally, outpatient visits increased from 248.1 million to 348.5 million, a rise of 40.5 percent. In Wisconsin, outpatient visits grew from 4.4 million to almost seven million, an increase of 59.7 percent. Taken together with inpatient admission, overall visits per hospital jumped 54 percent nationwide, compared to 78.6 percent in Wisconsin.
But the nature of the market was changing, and Wisconsin's rural and specialty hospitals began to close their doors as the medical community sought greater economies of scale. Communities like Algoma in the east, Mondovi in the west, New Berlin in the south and Washburn in the north once had their own hospitals.
But no more. Between 1980 and 1993, 11 rural community and 14 psychiatric and AODA hospitals shut down in Wisconsin. Many of the rural institutions were victims of a disproportionate number of Medicare and Medicaid patients reimbursing the institution at below-market rates. And other rural hospitals could follow, especially in light of employers who insist that prepaid providers can bring even greater economies of scale to rural settings.
"Despite the apparent logic, those arguments don't always work," Hymans says. "In some cases, in fact, the effect is just the opposite."
Citing statistics from the Office of Health Care Information, Hymans notes that the average cost of newborn delivery in Wisconsin is $2,365. The smallest provider groups average only $1,745 per newborn delivery, while the largest groups average $2,771. The same holds true for simple pneumonia. The state average is $6,968 for treatment with the smallest provider groups averaging only $5,496. The largest groups, on the other hand, average $7,882.
"This is really a war of perception between what we can already offer and what prepaid plan providers claim they can do," Hymans says. "We're really at the mercy of whatever program comes marching into town. I'm already anticipating pressure from Northern States Power and James River Corporation -- this area's two biggest employers -- to align with some urban-based provider in an attempt to cut costs.
"But it's really clear to all of us in rural health that no provider or insurer can write a policy for people throughout the state," Hymans adds. "Each area has its own health-care delivery challenges."
Size agrees that encroaching managed-care scenarios will help some providers bring costs and service usages more into line. He also believes it will help health maintenance organization (HMO) penetration, which runs from virtually nil in some northern counties to the state's high of 50 percent in Dane County. But he cautions all providers to reorganize to bring maximum value to the patients they serve.
"We all have our own individual demons, but most of us are in rural health because it's a local business and a community service," Size says. "Our basic fear is that health care will become a commodity sold only by a large, impersonal delivery mechanism."
And that, says Size and others would quickly become the biggest hurdle of all to effective rural health-care delivery.