Are Rural Emergency Hospitals the Answer to Hospital Closures?

Aug. 2, 2022
Motient Co-Founder Richard Watson, M.D., raises questions about reimbursement, partnerships between rural hospitals and larger health systems

During his career, Richard Watson, M.D., has been both a family medicine physician in rural Kansas as well as an entrepreneur, building companies that serve the rural healthcare market. He recently spoke with Healthcare Innovation about the CMS proposal to designate Rural Emergency Hospitals to stem the tide of hospital closures.

Several years ago, Watson co-founded a company providing medical transport for a large region of the Midwest. He and his partners say they became familiar with the “workarounds” required to make  transport possible and the pain points senders, transporters, and receivers were experiencing. Then they founded a company called Motient to help standardize and optimize the process, including offering patient acuity scoring. Motient describes itself as a business-to-business patient movement platform that works with hospitals, hospital systems, healthcare networks, and ACOs.

  If you're writing a check for a $60,000 for air transport, there should be some pretty good idea of what the boundaries around that are,” Watson said. “During COVID, it became really important that we help manage air traffic control, and the Kansas Department of Health and Environment chose us to help manage bed resources, as well as give them insight into how patient movement was affecting resource management. What were the limits that rural hospitals and urban receiving centers could reach during COVID? And how does that affect patient care, morbidity and mortality?”

Watson said during the pandemic it has been interesting to track how many miles people were transported on average. “Kansas is a state that's 200 by 400 miles, and most transports will be somewhere in the 100 to 200 miles range,” he said. “But during the pandemic, we have been getting out as far north as Minnesota and as far south as New Mexico. We are even going as far west as Nevada. We're accessing easily over 100 hospitals, and we access over 120 different transport agencies, just across the Midwest, trying to find beds.”

Watson shared some thoughts about the new proposal from the Centers for Medicare & Medicaid Services (CMS) to protect access to emergency care and additional outpatient services for people in rural communities. CMS is establishing the Conditions of Participation (CoPs) for Rural Emergency Hospitals (REHs). The proposed rule will allow small rural hospitals to seek this new provider designation and provide continued access to emergency services, observation care, and additional medical and outpatient services.

Conversion to an REH allows for the provision of emergency services, observation care, and additional medical and health outpatient services, if elected by the REH, that do not exceed an annual per patient average of 24 hours.

Watson said the newspaper headlines from 20 years ago about rural hospital closures were very similar to the headlines of today, so the Rural Emergency Hospital designation feels like a bit of déjà vu to the days of the creation of the Critical Access Hospital.

“Fundamentally, I totally agree with both of these programs, I think there's a natural evolution that is happening. Rural America is aging. We've got some population change. We certainly have chronic health problems,” Watson said. “And then we have this bad mix of Medicare, and Medicaid vs. other payers.”

He said this underscores a fundamental problem we have with rural reimbursement: There's not a recognition that the rural environment has a different set of rules. “We have to recognize that reimbursement at the Medicare/Medicaid level just doesn't work without the balance of the private payers,” Watson stressed. “No one can make money under the current regulations, and the rural areas just put a magnifying glass on that. So here comes Rural Emergency Hospital. There has been lots of work by hospital associations and medical societies — everyone has had great input into this legislation. I've had conversations with multiple states about how this rolled out. I think everybody felt really good that the feds were listening, but I think the world is different now even than it was in 2020 when they passed the initial legislation. We were in a different place than we are now. Every day we're fighting the lack of inpatient beds; we're really struggling with the numbers right now. It is not going to change quickly. It's not a COVID story; it is truly a medical staffing story, and it's an EMS staffing story, as much as it is a nursing story.”

I noted that the proposed regulation seems to envision a broader role for EMS.

“This model depends on the idea that you have a transport arrangement with a receiving center, and that you have adequate resources to move patients at any time you need to,” Watson explained. “They're expecting 20-plus percent of all presentations to these rural emergency centers to be transported. I think that's where we're really struggling. We're struggling with margin right now. We're struggling with having margin in the system to be able to take surges and make them be treatable. Where the incentives here are to do away with inpatient beds, we need to find a way to incentivize margin, which means more inpatient beds. If you're moving 20 patients a month out of your facility, that can represent $300,000 to $500,000 of inpatient revenue a month. Using telehealth and other supportive services, could you keep a subset of those patients, and keep your census intact and be able to supplement and strategically go after some inpatient revenue?”

With the Rural Emergency Hospital designation starting in January, Watson asked how we keep hospitals from just easily jumping ship with the lure of the increased reimbursement and the fewer hassles. “It is a lot like the Critical Access Hospital story. They'll jump at it, but then either we run out of money or the performance metrics get tougher, the reimbursement gets lower, and we'll be right back where we are asking how do we close these rural emergency hospitals and now just have triage and transport centers that do nothing but move patients?” he said. “I mean, it is a tough story, for sure.”

I asked Watson if he is seeing some successes with telehealth partnerships between, academic medical centers and rural hospitals for tele-ICU and other services.

“I think you're seeing that segment develop, and probably the best one to use is someone who has an ICU capability,” he responded, “but they're really concerned because the patients can get sick pretty fast. So they want intensivists to help manage intensive care units. And that is a perfect example of a very focused telehealth program that has a definite mission. With telehealth, they've tried to overlay it on everything, throw it against the wall, hoping that something makes sense. What we're saying is, maybe it's a maintenance dialysis unit, maybe rather than transferring your orthopedic patient who happens to need maintenance dialysis, maybe that hospital can keep them if they have a telehealth backing from a program based somewhere else. I think there are some real answers there.”

I asked if that depends on having adequate and sustainable funding sources for the telehealth programs.

Watson said the reimbursement is lagging. “We work with that repatriation all the time. We had open beds for less sick patients, but very few people willing to move them back down the chain for fear that they wouldn't get reimbursed either at a transport level or at a patient care level,” he said. “Philosophically, some of the larger hospitals have trouble releasing patients back down unless they fill the bed right behind it. There is a lot of built-in bias against it. But the reimbursement has to lead the way because everybody's dependent on it.”

Getting back to his company Motient, I asked Watson if part of what it does is seek to improve the communication between provider organizations and EMS as that person is being transported so that there's more continuity of care.

“Yes, I think everyone who's in the industry wants to think that there's almost like this magical handoff that everybody is in the same communication loop,” he responded, “but a lot of times each silo is a black hole. And we found that particularly on the receiving end, where hospitals don't know when someone's going to arrive, the patient that gets there often is not the patient that was described to them when they left and instead of going to a floor bed, the patient actually has to be stabilized in the ER before they go to the ICU. So all along the way, there's opportunity for making things better, Let's put patients into the system in a single funnel; let's give the same set of information so that everybody knows what to expect, and then in the middle allow the entities to talk to one another. That way, the transport vendors can see the same thing the sender sees, and the receivers know exactly where they are in the process. If the blood pressure's dropping, if there's a change in status, they know that ahead of time. These are the sorts of things that the software tools can easily put in front of healthcare providers.”

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