Exploring Healthcare Alliances in Rural Pennsylvania
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Exploring Healthcare Alliances in Rural Pennsylvania By: Chad Kimmel Ph.D., Shippensburg University, and David Sarcone, Ph.D., Dickinson College September 2017 EXECUTIVE SUMMARY Rural America is often at a significant disadvantage, when compared to its urban counterparts, in accessing quality and affordable healthcare. Rural hospitals remain vulnerable to closure due to broad environmental and health industry forces. One such force is an accelerating industry trend to consolidate and coordinate services across increasingly larger service areas. This trend is in response to a rapidly transforming and competitive healthcare environment. Rural health organizations have increasingly aligned with larger healthcare systems to offset operational and financial risks to continue serving their communities. Oftentimes, the organizational structure of these healthcare alliances varies significantly. The frequency and intensity of healthcare alliances in Pennsylvania have not been documented comprehensively, and the question remains as to how these healthcare alliances impact the community health capacity of rural Pennsylvania, and, ultimately, the health-related quality of life of rural Pennsylvanians. To help answer this question, the researchers documented the experiences of five rural healthcare alliances in Pennsylvania to highlight the impact of healthcare alliances in rural Pennsylvania communities. The five rural alliances are: Laurel Health System; Wayne Memorial Health System; Exploring Healthcare Alliances in Rural Pennsylvania 1 Shamokin Area Community Hospital; Penn Highlands Healthcare; and the Tyrone Regional Health Network. The researchers used open-ended, structured interviews with 48 key stakeholders and publicly available data on community social and economic characteristics, community health status, and hospital operational and financial performance to complete the research. Results Not surprisingly, given the current state of healthcare, collaborative efforts across all five cases were influenced by one or more of the following considerations. First and foremost, rural community health leaders simply believed that the benefits of forming an alliance to better leverage scarce resources outweighed the associated costs. Secondly, institutional leaders believed operational efficiencies could truly be achieved by reducing inter-organizational redundancy and improving service coordination. Third, considering the increasing complexity and risk of newly developing healthcare reimbursement and service delivery models, rural community health leaders were motivated by considerations of stability. Alliances could potentially mitigate uncertainty by more broadly sharing the risks associated with change and by committing greater and more expert resources to market adaptation. Finally, on occasion, rural health organizations attempted to collaborate with a more prestigious organization to increase legitimacy. The forms of alliances studied proved to be rich and varied, ranging from informal collaborative arrangements sealed literally with a handshake to formal equity or near equity arrangements represented by full asset mergers, member substitution agreements, and super-parent organization structures. Of interest, the rural community health institutions studied formed alliances at community, regional, and, in one instance, national levels of affiliation. Somewhat surprisingly, the institutions studied did not always immediately seek regional partners, if at all. Oftentimes, they preferred to better serve their communities by collaborating with other community health and social service providers. The Laurel Health System, Tyrone Regional Health Network, and Wayne Memorial Health System are exceptional examples of how to create high performing networks of essential health and health-related services within relatively small Exploring Healthcare Alliances in Rural Pennsylvania 2 rural communities. Through these efforts, these small health networks gained strategic advantage by strengthening their bargaining positions relative to larger systems interested in pursuing some form of affiliation. Overall the outcomes of affiliations are positive. In most cases, these alliances minimized the rural hospitals’ operational and financial risks, and increased community health capacity through increased investment in rural hospitals and their associated services. In many instances, the introduction of new services was based on documented community need. And in several cases, innovative approaches to care were implemented. An example includes the application of telemedicine solutions to improve access to specialty care services. The research documents numerous efforts to improve care coordination and invest in clinical quality. Although conclusively demonstrating that these organizational changes resulted in improved community health status proved to be beyond the scope of the study, the study showed that population-based health management models are in place in several communities, which offer the potential for long-term health status improvement. Numerous factors led to the successful conclusion of affiliation discussions and subsequent organizational integration. In regard to partnership selection, two key factors include prior successful working relationships and shared organizational beliefs and values. Especially during negotiations, outstanding leadership within both organizations’ governance and management structures is indispensable. Finally, a well-designed and executed transition plan is essential to minimize the inevitable challenges associated with organizational structure and process integration. The research findings offer support for a number of private and public policy initiatives, including the Medicare Rural Hospital Flexibility Program, which focuses on facilitating improvement in the operational, financial and population management capabilities and competencies of Critical Access Hospitals. Given the role of two critical access hospitals (Soldiers & Sailors, and Tyrone) in the Exploring Healthcare Alliances in Rural Pennsylvania 3 successful community efforts to improve healthcare capacity, public sector policy considerations to further strengthen community health coalitions and/or to reduce the financial vulnerability of critical access hospitals are essential. This project was sponsored by a grant from the Center for Rural Pennsylvania, a legislative agency of the Pennsylvania General Assembly. The Center for Rural Pennsylvania is a bipartisan, bicameral legislative agency that serves as a resource for rural policy within the Pennsylvania General Assembly. It was created in 1987 under Act 16, the Rural Revitalization Act, to promote and sustain the vitality of Pennsylvania’s rural and small communities. Information contained in this report does not necessarily reflect the views of individual board members or the Center for Rural Pennsylvania. For more information, contact the Center for Rural Pennsylvania, 625 Forster St., Room 902, Harrisburg, PA 17120, telephone (717) 787-9555, email: [email protected], www.rural.palegislature.us. Exploring Healthcare Alliances in Rural Pennsylvania 4 Contents EXECUTIVE SUMMARY: ......................................................................................................................... 1 INTRODUCTION: ....................................................................................................................................... 7 METHODOLOGY: .................................................................................................................................... 11 Case #1: Laurel Health System: An Affiliation through a Membership Substitution Agreement .............. 18 Case Summary: ....................................................................................................................................... 18 The Community Served: ......................................................................................................................... 21 Community Health Status, Needs and Resources: .................................................................................. 22 Factors Leading to Affiliation: ................................................................................................................ 22 The Partnership Process: ......................................................................................................................... 27 The New Organization: ........................................................................................................................... 29 Discussion: Community Health Outcomes and Impacts ......................................................................... 35 Closing Remarks & Lessons Learned: ................................................................................................ 39 Appendix A: The Community Served ................................................................................................ 41 Appendix B: Community Health Status, Needs and Resources.......................................................... 43 Case #2: Wayne Memorial Health System: A Cross-Sector Collaboration of Community and Regional Organizations .............................................................................................................................................. 53 Case Summary: ....................................................................................................................................... 53 The Community