Nearly half of all rural hospitals in Pennsylvania are operating with negative margins and are at risk of closure. The Commonwealth of Pennsylvania recently announced it has added eight more hospitals to its new Rural Health Model, designed to ensure the financial viability of hospitals in rural areas across Pennsylvania. The model is the first of its kind in the nation.
The Rural Health Model is an alternative payment model, transitioning hospitals from a fee-for-service model to a global budget payment. Payment for the global budget comes from multiple payers, including private and public insurers. Instead of hospitals getting paid when someone is admitted to the hospital, they will receive a predictable amount of money at a specified time to provide services in the community.
The goal is that through this change in payment model, the hospitals will be able to transform care locally to better meet the health needs of the community. This includes opportunities to assess items that may traditionally fall outside of the role of the hospital, such as transportation and broadband Internet access.
Gov. Tom Wolf recently signed Senate Bill 314, which establishes the Rural Health Redesign Center Authority and the Pennsylvania Rural Health Redesign Center Fund. Once established, the authority and fund will administer the Pennsylvania Rural Health Model.
“The Rural Health Model is a transformative step that changes the financial model for hospitals in rural areas,” said state Secretary of Health Rachel Levine, in a prepared statement. “This is a step that will help achieve financial stability for these facilities and aims to improve the overall health of the community.” Levine also is a professor of pediatrics and psychiatry at the Penn State College of Medicine.
The model was designed to help ensure that rural hospitals, which are often an economic driver in rural areas, stay open, that jobs stay local and that sustainable access to health care is available to residents living in rural areas.
The Department of Health has worked with the federal Center for Medicare and Medicaid Innovation, the Pennsylvania Department of Human Services, the Pennsylvania Insurance Department, the Hospital and Healthsystem Association of Pennsylvania, the Hospital Council of Western Pennsylvania, and the Pennsylvania Office for Rural Health to develop the model.
Announced earlier this year, the first five participants are Barnes Kasson, Endless Mountains, Geisinger Jersey Shore, UPMC Kane and Wayne Memorial.
Now joining those hospitals are the following eight hospitals:
- Armstrong County Memorial Hospital in Kittanning, Armstrong County
- Chan Soon-Shiong Medical Center at Windber in Windber, Somerset County
- Fulton County Medical Center in McConnellsburg, Fulton County
- Greene Hospital in Waynesburg, Greene County
- Monongahela Valley Hospital in Monongahela, Washington County
- Punxsutawney Area Hospital in Punxsutawney, Jefferson County
- Tyrone Hospital in Tyrone, Blair County
- Washington Hospital in Washington, Washington County
A total of 67 hospitals are eligible for participation in the model based on the definition of a rural hospital developed by the Center for Rural Pennsylvania. With the above 13 hospitals involved in the program, nearly 20 percent of eligible hospitals will be participating in the program in 2020.
In addition, Aetna will join five previously announced insurance providers as private insurance payers for the model. In addition to Aetna, Gateway, Geisinger, Highmark, Medicare and UPMC are also participating in the program. Together, the commercial insurers represent nearly half of the individual and small group market insurance population in the state.
The Department of Health has developed three main strategies for improving health in rural communities. Strategies being carried out include: transforming healthcare delivery in rural communities; improving the population health status in rural communities; and creating healthcare services that match the needs of the community.
