Reimagining Rural Healthcare

“How do we create a system — not a business?”

For the past 40 years, healthcare providers in rural Minnesota — hospitals, clinics, physicians, and specialists have been vanishing.

According to a 2020 report by The Center for Rural Policy and Development (CRPD), a variety of factors have contributed to this trend. Beginning in the 1950s, health insurance companies, employers, or the government compensated healthcare providers for individual services.

This fee-for-service model meant that “every step of the way comes with its own expense or fee,” explains Kelly Asche, research associate at the Center.

As the healthcare system grew, federal officials in the 1980s realized that Americans were paying more for healthcare than anywhere in the world with some of the worst outcomes.

Officials also realized the fee-for-service model did not incentivize healthcare providers to value the overall health of patients. Thus came a shift to a value-based model of care. Providers whose patients have better health outcomes receive better compensation and more opportunity to make a profit.

The shift has put pressure on rural hospitals in Minnesota. The CRPD report indicates that strategies healthcare systems use in more populated areas are not easily replicated in rural settings. For example, in metro areas, providers can see a larger group of patients to reduce the average per-patient cost. Rural providers have a more limited pool of patients from a wider geographic area.

Technological investment allows providers to chart a patient’s health journey. These investments may not be possible for rural hospitals with tight budgets. In 2018, the profit margin for rural hospitals on average was .1 percent, town/rural mix was 1.8 percent, and urban hospitals 6.2 percent. A healthy margin is 4 percent.

This pressure leads many rural providers to merge with or be acquired by larger systems, who do not tend to be based in the communities they serve. Asche says, “What you’re seeing is a dating game. Smaller rural healthcare providers are positioning themselves to look attractive to the larger healthcare systems because they feel like that’s one of the ways they can survive.”

Mergers and acquisitions mean communities have less oversight on the providers that serve them. Employment is the largest expense for healthcare providers, so jobs are often the first to go when cutting costs. Since healthcare is one of the top five employers in most rural counties, loss of income is an added stress.

Some rural communities are working to re-open health services. After the Mayo Clinic announced closure of its Albert Lea facilities, residents organized to attract another hospital system. MercyOne is now leasing a former department store in the area with plans to develop it into a trauma center.

Not every community can achieve what Albert Lea did, yet CRPD’s report indicates a strong desire for local input. “It shouldn’t be allowed that a hospital system decides to consolidate services without any sort of process,” Asche says. “These things are being done without any assessment of what impact it’s going to have.”

“I think there’s always going to be this acknowledgment that we’re always going to have to travel a little further for healthcare in rural areas, but right now we don’t know what that looks like for a lot of folks,” Asche continues. “And I would argue that right now we don’t have a clear definition of what appropriate healthcare access looks like.”


What Determines Health?

Others are looking beyond the clinical model to improve access to quality care in rural areas.

Through her work at the Duluth-based National Rural Health Resource Center, Kap Wilkes develops programs that build the capacity of rural communities across the country to improve their health. She says when we talk about a lack of accessible healthcare in rural areas, what people are really referencing is “sick care.” She points out that many social determinants contribute to a person’s health, and the current system of healthcare does not always address that.

Research indicates that only 10 to 20 percent of our health is attributed to work with care providers, and 80 to 90 percent is determined by where and how we live — for example, having access to nutritious food and human connection.

“We know that healthcare providers can’t address sick care and health care alone,” Wilkes says. “People that are caring for others in rural communities are talking about how we can do this together — building bridges between providers and those who are helping people live their lives with more vitality.”

This includes connecting people to resources around unemployment, transportation, and housing, as well as building stronger networks of resource providers that can coordinate systems of care. For those with broadband access, telehealth usage sprang to life because of the pandemic, connecting people to providers.

Wilkes puts it this way: “How do we create a system — not a business?”


Action = Change

  • Organize neighbor discussions around defining what appropriate health care looks like for your community.
  • Hospitals saw a substantial dip in revenue when many services were halted, and current state subsidies are mostly only available to support COVID-related needs. Call lawmakers about providing no-strings-attached support to all hospitals.
  • Learn more about initiatives to strengthen broadband access from DEED’s Office of Broadband Development.
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