In 2013 Lost Rivers Medical Center nearly closed its doors for good. In its third year of bankruptcy, the hospital was so laden with debt ($3.5 million, including millions in back taxes and penalties), it was doubtful the staff would be paid on any given week. The infrastructure was in ruins. Needed repairs went ignored and outdated technology languished, providing little value to clinicians. Despite the best intentions of its administrators and board, Lost Rivers was in dire straits — and sinking fast.
The financial struggle of rural hospitals is very real — of the 2,000 rural hospitals in the U.S., 74 have closed since 2010 and nearly 700 more are vulnerable for closure — some filing for bankruptcy protection or announcing mergers with larger institutions in an effort to survive. More than 60 percent of the country’s hospitals are now part of larger, mega-hospital systems, and the trend of “merge or die” continues to rise.
Lost Rivers — a critical access hospital in Arco — is a holdout. It is located in a vast, sparsely populated wilderness where the population of bears outnumbers residents. The 14-bed facility provides 24-hour emergency service and is the only hospital in an area greater than the state of Rhode Island — the nearest facility is over an hour away.
I arrived at Lost Rivers at the height of its troubles and had some tough decisions to make: how to scrape together enough funds to keep the hospital open and who to lay off to save money. Getting control of the financials was the first priority. Second was investing in flexible, network-enabled technology that would secure the hospital’s future by helping us adapt amid fluctuation and uncertainty.
Health IT is a double-edged sword. At best, the right technology helps achieve the triple aim of healthcare: increased cost savings, greater performance insight to advance population health and better clinical outcomes. At worst, it’s a drain on resources and the source of much frustration and distraction.
Achieving both clinical excellence and financial viability requires good — if not the best — technology, and the IT skills to manage it. Thankfully, strides in healthcare innovation have surfaced alternatives to cost-prohibitive software.
In order to survive, rural hospitals need to resist the status quo in health IT — the prevalent notion that the bigger the vendor, the better — and look to nimble, cloud-based network services. Lost Rivers benefits from technology that enables visibility and system-wide integration, data sharing, expedited billing and streamlined referrals. Not only are cloud-based EHR and revenue management services relatively affordable as opposed to traditional software implementation (most of which take years to pay off or show any significant savings), they don’t require expensive software licenses, high-priced servers or a high-paid technology chief to run them.
A cloud-based network also provides benefits beyond any one organization by connecting hospitals or medical groups to one another for data sharing. For instance, Lost Rivers is now able to stay ahead of payer changes because we’re part a network powered by more than 40 million payer rules based on the processing of more than 140 million claims per year. The network can capture data on payer standards, denials and pay-for-performance opportunities, learn from this data to maximize reimbursements, and finally, surface analytics that track progress and success. The ability to take data and put it to work gives Lost Rivers the power of a larger organization.
On the financial side, being on a cloud-based network has dramatically improved Lost Rivers’ bottom line. Days in accounts receivable has decreased from 67 to 42 — much lower than the industry standard for a hospital of Lost Rivers’ size, which is 52 days. When cash flow is tight, this number makes a big difference. The claims denial rate has also gone down, which means we’re leaving less revenue on the table.
We’ve stabilized hospital operations at Lost Rivers, celebrating our second year of profitability. We are now expanding by bringing in new specialty expertise on-site, as well as virtually. Telemedicine is the greatest force multiplier for the rural hospital. We have specialists virtually join from local universities, trauma centers, burn centers and others — expertise we could never recruit due to our remote location.
As the shift in reimbursement moves from volume to value and rural hospitals look to enter risk-based ventures, the pressure is on. Small hospitals are going to be pushed hard to demonstrate both clinical and administrative efficiencies. Add on the importance placed on patient satisfaction and engagement, and hospitals, regardless of size, will need to meet growing billing, performance insight and population health needs.
I measure our hospital’s success by the cost-effectiveness, efficiency, and ease of our technology, which has been — and will continue to be — key to our survival.
Brad Huerta is the CEO/Administrator of Lost Rivers Medical Center. He is also an adjunct faculty member in the Health Care Administration Department at Idaho State University and Weber State, as well as a curriculum and health care advisory board member at BYU Idaho.