The Changing Landscape of Health Care Financing and Delivery: How Are Rural Communities and Providers Responding?

Abstract

Rural communities have not kept pace with the recent dramatic changes in health care financing and organization. However, the Medicare provisions in the Balanced Budget Act of 1997 will require rural providers to participate in the new systems. Case studies revealed the degree of readiness for change in six rural communities and charted their progress along a continuum, as reflected in three sets of activities: the development of networking; the creation of new strategies for managing patient care; and the adoption of new methods for contracting with health insurers. Some communities had constructed highly integrated systems, whereas others were just beginning to change their billing practices; a few were signing contracts for capitated care, in contrast to those that were resisting discounts in current fee structures. These six rural areas still have considerable ground to cover before their health care organization and financing reach the levels achieved by urban communities.

Rural Medicare Beneficiaries’Use of Rural and Urban Hospitals

“…Some of these alliances are reactions to competition for patients from urban hospitals. However, the growth of managed care in rural areas and the development of rural hospital systems have lagged in comparison with urban areas (Mueller, et al, 1999). A possible net effect of these changes is that rural residents could have been increasingly drawn to urban areas for inpatient care during the 1990s.…”

The Regulatory Environment and Rural Hospital Long‐Term Care Strategies From 1997 to 2003

“…Obviously, a more definitive analysis of various environmental changes on strategy choice requires a much more sophisticated multivariate structural model. Given the turbulence of the regulatory environment during this period, as well as changes in rural community environments (both market and sociocultural dimensions), 7,16,30 it may be very difficult to accurately specify causation. Even more alarming, however, is the possibility that if the only stable federal policies in this domain reward rural hospitals for downsizing and offering a more restricted range of acute and LTC service options, the concept of strategic choice by rural hospitals may have significantly lost relevance.…”

Enhancing the Care Continuum in Rural Areas: Survey of Community Health Center–Rural Hospital Collaborations

“…20 Although CHCs are more likely than hospitals to formally collaborate with public health agencies, 21 in rural areas, external pressures (such as managed care), for collaboration with hospitals, may be less relevant. 22 Internal factors such as the need to share resources, to avoid unnecessary competition, to meet community needs, and/or to reduce costs through shared services may be important incentives driving collaboration among rural providers. In addition, the small size, limited human and financial resources, and distance of rural providers can hinder interactions between potential rural collaborators.…”

“…Research suggests that CHCs have been developing substantial linkages with other providers, sharing services (eg, laboratory, information technology) or developing formal vertical or horizontal integration mechanisms 20 . Although CHCs are more likely than hospitals to formally collaborate with public health agencies, 21 in rural areas, external pressures (such as managed care), for collaboration with hospitals, may be less relevant 22 . Internal factors such as the need to share resources, to avoid unnecessary competition, to meet community needs, and/or to reduce costs through shared services may be important incentives driving collaboration among rural providers.…”