Latest / Becker’s Healthcare Podcast / Rural Health Transformation Funding and Strategies for Hospital Sustainability

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Rural Health Transformation Funding and Strategies for Hospital Sustainability · Becker’s Healthcare Podcast

• 0:00
  - Hello, everyone. This is Erica Spicer Mason with
• 0:02
  - Becker's Healthcare. Thank you so much for tuning
• 0:04
  - in to the Becker's Healthcare podcast series.
• 0:07
  - Today, we're going to talk about rural healthcare
• 0:09
  - transformation funding and challenges,
• 0:12
  - as well as strategies to foster sustainability and
• 0:14
  - resiliency.
• 0:16
  - Joining me for this conversation is Michael Morgan,
• 0:18
  - the senior vice president of strategic analysis for
• 0:21
  - Community Hospital Corporation.
• 0:24
  - Michael, welcome to the podcast. It's so great
• 0:26
  - to have you with us today. Yeah. Thanks,
• 0:28
  - Erica. It's great it's great to be here.
• 0:30
  - Well, Michael, it's great to have you with
• 0:31
  - us. To get us started, would you mind
• 0:33
  - telling us just a little bit more about
• 0:35
  - your role at Community Hospital Corporation
• 0:38
  - as well as the work that you're doing
• 0:39
  - across the rural and community hospital space?
• 0:42
  - Yeah. So I'll start with, CHC. Our our
• 0:45
  - organization has been in existence for, thirty years
• 0:49
  - now, and and we really exist to support
• 0:52
  - the the vibrancy of community hospitals across the
• 0:56
  - country. We do that through through solutions and
• 0:59
  - services that we offer.
• 1:01
  - I serve as the senior vice president of
• 1:03
  - strategic analysis. So in my role, I I
• 1:05
  - both support our hospitals operationally.
• 1:08
  - I I work a lot on our kinda
• 1:10
  - corporate development and strategy side,
• 1:12
  - and I've been involved with our, our company's
• 1:15
  - efforts to support hospitals,
• 1:18
  - applying for
• 1:19
  - rural health transformation program,
• 1:21
  - funds. So it's it's been an active kinda
• 1:23
  - recent
• 1:24
  - part of my role, and it... It's, you
• 1:27
  - know, been an interesting
• 1:28
  - evolution
• 1:29
  - as the, the the federal government and then
• 1:32
  - the states have rolled out the RHTP program.
• 1:35
  - We have had some success with our hospitals
• 1:38
  - so far applying for these funds and and
• 1:41
  - are in the process now of going through
• 1:42
  - kinda grant agreement evaluation and finalization.
• 1:46
  - So,
• 1:46
  - you know, there's definitely been been some ones
• 1:49
  - there for the community hospitals. I think there
• 1:51
  - are some challenges too, which we'll talk about,
• 1:54
  - but but, I do think the funding can
• 1:57
  - can provide some unique opportunities for hospitals. We've
• 2:00
  - seen that, and and we've we've looked for
• 2:02
  - kinda creative and thoughtful ways to to apply
• 2:05
  - for funds and
• 2:06
  - and in the in the very near future,
• 2:08
  - you know, roll out those programs and and,
• 2:11
  - projects to the communities that we serve.
• 2:14
  - Michael, you touched on the rural health transformation
• 2:17
  - program there, and I'd love to dig into
• 2:18
  - that just a little bit more. This program
• 2:21
  - by CMS entered its first year of implementation
• 2:24
  - this year in 2026
• 2:26
  - with funding administered at the state level. So
• 2:28
  - what does that mean for how rural hospitals
• 2:31
  - are planning right now?
• 2:32
  - Yeah. Yeah. Happy to do that. And and
• 2:35
  - I'll kinda start
• 2:36
  - at a higher level, and then and then
• 2:38
  - we can,
• 2:40
  - we can focus a little bit more specifically
• 2:42
  - on on rural health transformation.
• 2:44
  - Yeah. So so rural health transformation program, RHTP,
• 2:47
  - came out of,
• 2:48
  - HR one,
• 2:50
  - which was passed,
• 2:51
  - last July
• 2:53
  - 2025.
• 2:54
  - So so
• 2:56
  - lots of kind
• 2:57
  - of information
• 2:59
  - implications
• 3:00
  - affecting community hospitals came out of that, both
• 3:02
  - both, you know, kind of headwinds and then
• 3:05
  - also
• 3:06
  - opportunities.
• 3:07
  - So the headwinds
• 3:09
  - really get into
• 3:10
  - insurability.
• 3:11
  - We... We've already seen across the country
• 3:14
  - lower numbers of,
• 3:16
  - enrollees on the ACA plans. And I think
• 3:18
  - if you look at the data
• 3:20
  - year over year as of February,
• 3:22
  - over over two and a half million,
• 3:24
  - enrollees have fallen off those ACA rolls with
• 3:27
  - the the federal subsidies going away as a
• 3:30
  - part of that legislation. I don't... That...
• 3:32
  - That's largely not a surprise to anyone, but
• 3:34
  - hospitals across the country are
• 3:36
  - feeling those impacts, feeling some of that payor
• 3:38
  - mix deterioration, and and that's applicable to community
• 3:42
  - hospitals as well and rural hospitals. So, you
• 3:44
  - know, some challenges there.
• 3:46
  - We know that there are some some,
• 3:49
  - of the
• 3:50
  - the ramifications
• 3:51
  - related to supplemental payments,
• 3:54
  - state provider tax programs, things things of that
• 3:57
  - nature that are coming in the future. So,
• 4:00
  - a lot of a lot of headwinds related
• 4:02
  - to to that legislation,
• 4:03
  - but then, you know, the the part of
• 4:05
  - the
• 4:06
  - specific opportunity
• 4:08
  - within that for for rural and community hospitals
• 4:11
  - is rural health transformation program. So,
• 4:14
  - the dollars that were specifically earmarked in that
• 4:17
  - to,
• 4:18
  - be awarded by CMS to the individual states
• 4:21
  - for their rural health transformation,
• 4:24
  - program plans.
• 4:26
  - So we've been in this in this kinda
• 4:28
  - cycle now where, you know, states have applied
• 4:31
  - for the funding from CMS. There's there's been
• 4:33
  - funding awarded. And so now we're in kind
• 4:36
  - of this first first year of a five
• 4:38
  - year program where states have rolled out their
• 4:41
  - plans. Many have different initiatives
• 4:44
  - that are a part of those plans. All
• 4:46
  - of it is designed around
• 4:48
  - some of the the federal kinda make America
• 4:51
  - healthy again initiatives
• 4:52
  - that the the federal side is focused on.
• 4:55
  - Many of the states have have more or
• 4:57
  - less, you know, mirrored some of those
• 5:00
  - initiatives and how they put their plans together.
• 5:02
  - And now we're in the the stage
• 5:04
  - where, via the states where we work in,
• 5:07
  - a number of those initiatives have have been
• 5:10
  - competitive grant awards.
• 5:12
  - So that's been a huge focus of ours
• 5:13
  - is is, you know, how do we how
• 5:15
  - do we support our facilities
• 5:17
  - with their application processes,
• 5:19
  - thinking through
• 5:20
  - compelling project plans that fit within the the
• 5:23
  - published
• 5:24
  - state plans.
• 5:25
  - It's a lot of information.
• 5:28
  - In many instances, it's it's not always crystal
• 5:30
  - clear
• 5:31
  - on exactly what's gonna be asked of or
• 5:34
  - or,
• 5:35
  - you know, even even reviewed and audited on
• 5:38
  - the back end. So so really just managing
• 5:41
  - an ever changing landscape of information
• 5:44
  - for our hospitals applying to these programs because
• 5:46
  - we know, you know, while while it's certainly
• 5:49
  - not a perfect program,
• 5:50
  - there are some challenges related to it, there
• 5:53
  - is funding available for
• 5:55
  - for rural and community hospitals, and it comes
• 5:58
  - in a a variety of forms. So we've
• 6:01
  - really been focused on, you know, kind of
• 6:02
  - on our side, what can we control, how
• 6:04
  - can we support our hospitals to think through
• 6:08
  - compelling
• 6:09
  - projects that we think will have a good
• 6:11
  - chance at being funded
• 6:13
  - while also navigating
• 6:14
  - the kinda operational dynamics of standing up new
• 6:18
  - projects, you know, executing on a project plan
• 6:21
  - that's getting sent to the state where we
• 6:23
  - know there are grant dollars
• 6:24
  - that, need to be spent within a certain
• 6:27
  - framework. So,
• 6:28
  - you know, really just just focused on both
• 6:30
  - the strategy side and the execution side. So,
• 6:33
  - you know, really moving from the the strategy
• 6:36
  - brainstorming
• 6:37
  - application
• 6:38
  - phase of our HTTP
• 6:40
  - to,
• 6:41
  - you know, okay. Now now the picture is
• 6:43
  - clear on on the funding that's available
• 6:46
  - and the projects that we now need to
• 6:48
  - to go execute on and and really deliver.
• 6:51
  - So, you know, it's been good. It's it's
• 6:53
  - not been without its challenges and and, you
• 6:55
  - know, kind of, again, the ever changing
• 6:58
  - communication and messaging and and trying to keep
• 7:01
  - up with all of the latest,
• 7:02
  - kinda news related to this. But like so
• 7:05
  - many things in rural health care, you know,
• 7:07
  - the the the kind of underlying community of
• 7:09
  - hospitals and and state collaboratives and just everybody
• 7:12
  - participating in this is fairly tight knit. And
• 7:15
  - so,
• 7:16
  - you know, I think, like in many other
• 7:18
  - instances of our work, you know, we found
• 7:21
  - willing,
• 7:22
  - kinda supporters as as far as
• 7:24
  - different organizations who are looking at this,
• 7:27
  - options to get access to new information and
• 7:30
  - just make sure that we feel like, you
• 7:32
  - know, we're helping the hospitals put their best
• 7:34
  - foot forward in in this, in this program
• 7:36
  - and in these these grant applications for these
• 7:39
  - funds.
• 7:40
  - So it sounds like now it's full on
• 7:42
  - execution mode as you mentioned.
• 7:44
  - And I also wanted to mention, I... I'm
• 7:46
  - glad that you also gave some surrounding context.
• 7:49
  - RHTP is such an exciting program and opportunity.
• 7:52
  - But, of course, within that, under that broader
• 7:55
  - HR one,
• 7:57
  - umbrella,
• 7:58
  - which
• 7:58
  - is imposing some challenges with funding and and
• 8:01
  - things like that. So it's quite a complicated
• 8:04
  - landscape, but one where I'm sure you and
• 8:06
  - your your partners are seeing some great opportunity.
• 8:08
  - But setting aside any single funding source,
• 8:12
  - what forces are most shaping the financial outlook
• 8:15
  - for rural hospitals right now? And how are
• 8:17
  - the leaders that you work with weighing those
• 8:20
  - pressures against decisions about things like services,
• 8:23
  - staffing, and capacity?
• 8:26
  - Yeah. I I think rural health care has
• 8:28
  - always
• 8:28
  - been challenged. You know, I think just...
• 8:31
  - Again, we work in communities that are
• 8:34
  - reliant on, you know, governmental payer sources, Medicare
• 8:37
  - and Medicaid, more so than their urban counterparts.
• 8:41
  - They have kinda more demographic challenges,
• 8:44
  - smaller populations,
• 8:45
  - aging populations.
• 8:47
  - That... That's kinda always been true. So there's
• 8:50
  - always been, you know, kinda specific
• 8:52
  - specific aspects of rural health care that make
• 8:54
  - make the, call it, the revenue piece of
• 8:57
  - the equation,
• 8:59
  - just more of a challenge. They're smaller.
• 9:01
  - So, you know, any any change in any
• 9:03
  - of their revenue sources or streams
• 9:06
  - is impactful to these organizations.
• 9:09
  - And then on the expense side,
• 9:11
  - you know, with with some of those demographic
• 9:14
  - and and, you know, kind of volume challenges
• 9:16
  - comes just the the the need to manage
• 9:19
  - your expenses very, very efficiently,
• 9:22
  - which isn't always easy for small independent hospitals,
• 9:26
  - to get some of the same economies of
• 9:28
  - scale,
• 9:29
  - to,
• 9:30
  - you know, to have the same kind of
• 9:32
  - level of services and service lines where you
• 9:35
  - have a a a wide swath of things
• 9:37
  - that you're doing. Rural rural hospitals are are
• 9:40
  - a bit more narrowly focused,
• 9:42
  - right... Rightly so. But
• 9:44
  - all of that has has historically, you know,
• 9:47
  - been the case for for rural health care.
• 9:48
  - And I think where we find ourselves now
• 9:51
  - is, you know, kinda getting back to some
• 9:52
  - of the HR one stuff. Rural hospitals and
• 9:55
  - institutions just, again, have less, you know, call
• 9:57
  - it less
• 9:59
  - room for margin
• 10:01
  - to really absorb any any negative changes.
• 10:04
  - So to kinda get back to the revenue
• 10:06
  - side, if if there's payer mix deterioration, if
• 10:09
  - all of a sudden our levels of of
• 10:11
  - self pay,
• 10:12
  - and charity care are increasing,
• 10:14
  - that's gonna hit rural hospitals,
• 10:17
  - fairly hard.
• 10:19
  - So, you know, in that sense, you know,
• 10:21
  - what are ways that we can manage that?
• 10:22
  - Something that that we've, you know, been focused
• 10:25
  - on as an organization along with really the
• 10:27
  - the rest of the industry is the ever
• 10:29
  - changing complexities of the revenue cycle process. So
• 10:32
  - in many of our communities, we... We've seen
• 10:34
  - significant shifts from... Over the years from traditional
• 10:37
  - Medicare to Medicare Advantage that creates additional,
• 10:40
  - complexity and administrative burden on the revenue cycle
• 10:43
  - side.
• 10:44
  - So how are we, you know, kind of
• 10:46
  - bringing solutions and value to our clients on
• 10:48
  - that front? I think, you know, just getting
• 10:50
  - into the
• 10:52
  - the revenue cycle process that we... We've looked
• 10:54
  - at different,
• 10:55
  - tools and services. We've actually recently launched launched
• 10:58
  - our own kind of revenue cycle offering that
• 11:00
  - that provides community hospitals,
• 11:03
  - you know, access to some specific CHC tools
• 11:05
  - on the revenue cycle front.
• 11:07
  - I think the advocacy side is a key
• 11:10
  - is a key aspect here as it as
• 11:12
  - it relates to
• 11:13
  - supplemental payments and programs and and just making
• 11:15
  - sure that our rural hospitals have a seat
• 11:18
  - at the table where some of these larger
• 11:20
  - state state decisions are getting made. And then
• 11:22
  - on the expense side, you know, one of
• 11:24
  - the things that that we have really built
• 11:26
  - our company around is, you know, how do
• 11:28
  - we deliver
• 11:29
  - deliver,
• 11:31
  - larger hospital economies of scale and and kind
• 11:34
  - of corporate services to
• 11:37
  - small independent community hospitals. And and,
• 11:40
  - so supply chain's a big focus of that
• 11:42
  - for most hospitals, second to labor. You know,
• 11:45
  - supplies is one of their most... Is is
• 11:47
  - one of their most significant expenses. So we
• 11:49
  - have a large,
• 11:50
  - GPO business, and and that has continued to
• 11:53
  - grow. I think on the on the GPO
• 11:56
  - side,
• 11:57
  - you know, really what we have seen with...
• 12:00
  - Even to get back to RHTP
• 12:02
  - is, there are many
• 12:04
  - wonderful,
• 12:05
  - regional
• 12:06
  - health care networks and collaboratives, organizations
• 12:09
  - doing
• 12:10
  - things, whether it's in their state or their
• 12:12
  - region, to to support independent hospitals. So we've
• 12:15
  - started working
• 12:17
  - closely with some of those organizations as well
• 12:19
  - to deliver GPO services, to deliver, you know,
• 12:22
  - some of the the,
• 12:23
  - hospital services and and solutions that we provide
• 12:27
  - through some of those channels.
• 12:29
  - So there's been some innovation there.
• 12:31
  - And all of that just gets to how
• 12:33
  - do we help these independent community hospitals
• 12:36
  - remain sustainable? And it's it's definitely not easy.
• 12:39
  - I think I think, you know, again, in
• 12:41
  - in the face of some of these headwinds,
• 12:43
  - even with our HTP and some of this
• 12:45
  - other stuff that's, you know, kinda coming in
• 12:47
  - on the positive side, it's it's still a
• 12:50
  - very challenged space, and lots of focus is
• 12:52
  - being given to, you know, specific solutions. How
• 12:55
  - do we evaluate them? How do we really,
• 12:57
  - you know, ensure that, that hospitals have levers
• 13:01
  - to pull to remain sustainable in this challenging
• 13:03
  - time if they have, you know, prep... More
• 13:06
  - additional significant pressures on the revenue side of
• 13:08
  - their equation.
• 13:10
  - Yeah. Michael, I appreciate how you broke that
• 13:11
  - down. What a dynamic
• 13:13
  - landscape these organizations are contending with.
• 13:16
  - I wanna go a little bit deeper on
• 13:18
  - sustainability before we close. You know, when you
• 13:21
  - look across rural organizations
• 13:23
  - that seem to be positioned
• 13:25
  - for sustainability in the next five to ten
• 13:27
  - years, what are those organizations doing differently?
• 13:31
  - Is it specific capabilities or partnerships that they're
• 13:33
  - building that others may not be?
• 13:36
  - Yeah. I I mean, I would say first
• 13:37
  - and foremost, the the hospitals
• 13:40
  - that I think are doing this well,
• 13:42
  - the first thing that they're doing well is
• 13:45
  - they they really have,
• 13:47
  - you know, kinda call it a laser sharp
• 13:49
  - understanding
• 13:50
  - of of their organization and their their kinda
• 13:54
  - story. So the ability to communicate this to
• 13:57
  - to their community, to
• 13:59
  - to regional, to state, to federal stakeholders,
• 14:03
  - you know, it's it's not all that dissimilar
• 14:05
  - from the conversation we're having today. Organizations have
• 14:07
  - to be able to
• 14:09
  - know what's what's happening. You know, if they're
• 14:11
  - if they're going through financial challenges, why is
• 14:14
  - that? You know, what are they seeing,
• 14:17
  - within their their revenue sources? What are they
• 14:19
  - seeing within their services?
• 14:21
  - What are their providers telling them about, you
• 14:23
  - know, the the complexities of of, you know,
• 14:25
  - practicing medicine and and, you know, everything that
• 14:28
  - that their,
• 14:29
  - health care providers are are telling them as
• 14:31
  - well, you know, having that that laser sharp,
• 14:35
  - understanding
• 14:36
  - of
• 14:37
  - what what the organization is going through and,
• 14:40
  - you know, an idea for where you think
• 14:41
  - you're headed, I think, is a huge key
• 14:43
  - there.
• 14:44
  - You know, then that can lead you to
• 14:47
  - being more decisive around
• 14:49
  - evaluating,
• 14:50
  - both your revenue and your expenses. You know,
• 14:53
  - where where do we... Where do organizations need
• 14:55
  - to evaluate different things? Where are they potentially
• 14:58
  - paying too much for,
• 15:00
  - services or
• 15:02
  - or vendor relationships? Where do they need to
• 15:05
  - have fewer partners? You know, where where do
• 15:07
  - they really need to kinda manage
• 15:09
  - their expense profile,
• 15:11
  - to to make sure that their margins are
• 15:13
  - at a sustainable level? And then on the
• 15:15
  - revenue side, are there services that just based
• 15:18
  - on their market, on their,
• 15:21
  - provider mix, on their demographics
• 15:23
  - that that just don't make sense to provide
• 15:25
  - locally? Are there ways that they can look
• 15:28
  - into other other tailored solutions that that might
• 15:31
  - lean
• 15:32
  - on other partners in the region, whether it's
• 15:34
  - other health health care systems or key vendors.
• 15:37
  - You know, with some of the
• 15:39
  - the things going on in the industry, the
• 15:41
  - the tech... Technology
• 15:43
  - can lead to additional
• 15:45
  - services available through
• 15:47
  - through telehealth solutions. So are there ways that,
• 15:50
  - you know, maybe the provision of services needs
• 15:52
  - to change and adapt,
• 15:54
  - to make it more both cost cost effective
• 15:57
  - or or kinda contribution margin maximizing?
• 16:00
  - You know, what are ways to kinda fully
• 16:02
  - evaluate the organization to put it on the
• 16:04
  - best path for sustainability
• 16:06
  - and being forward thinking about those things,
• 16:09
  - as opposed to just kinda fully reactive to,
• 16:12
  - you know, things are happening and and and
• 16:14
  - you're reacting to
• 16:16
  - everything that the the organization is encountering. So,
• 16:18
  - you know, I think all of that just
• 16:20
  - kinda comes together
• 16:21
  - to put the organization in the best spot
• 16:23
  - for sustainability.
• 16:24
  - And then the other thing is really just
• 16:26
  - community support. I mean, you know, for,
• 16:29
  - we work with a lot of a lot
• 16:31
  - of hospitals who do receive some type of
• 16:33
  - public,
• 16:34
  - support, whether it's,
• 16:36
  - you know, sales tax or or mill levy.
• 16:39
  - You know, so just just ensuring that that
• 16:41
  - public kinda hospital
• 16:43
  - relationship is is there,
• 16:46
  - that that the the hospital is in the
• 16:48
  - community, that the community understands the economic impact
• 16:52
  - of the hospital because it's significant in many
• 16:54
  - of these communities. So just, you know, kind
• 16:56
  - of managing the full
• 16:57
  - scope and picture of that relationship,
• 17:00
  - is is key and and, just ensures that,
• 17:03
  - you know, that the health systems are putting
• 17:05
  - their best foot forward for for sustainability.
• 17:09
  - Well, Michael, it's been fantastic getting your perspective
• 17:12
  - on what you've seen and your your deep
• 17:14
  - work in this area of care delivery.
• 17:17
  - Before we let you go today, is there
• 17:19
  - anything that we haven't touched on or final
• 17:21
  - thoughts that you think are important to leave
• 17:23
  - our listeners with?
• 17:25
  - No. I I I think, this is a
• 17:27
  - great conversation. It's an important one to have.
• 17:30
  - I think there's, you know, there's a lot
• 17:31
  - of information out there about
• 17:34
  - HR one, about rural health transformation programs. You
• 17:37
  - know, I think for your listeners,
• 17:39
  - the main takeaway is that it's definitely a
• 17:41
  - challenging time. I think there's opportunities.
• 17:44
  - There's ways that it's gonna spurn different levels
• 17:47
  - of collaboration and partnership.
• 17:49
  - And, you know, I think I I can
• 17:51
  - speak for the industry
• 17:52
  - when I kinda say that there's a lot
• 17:54
  - of resilient people in health care, and, you
• 17:57
  - know, the future holds lots of new variables
• 17:59
  - and
• 18:00
  - aspects that we all need to adapt to.
• 18:02
  - But I think the missional aspect to
• 18:05
  - exist, to be sustainable, to provide care to
• 18:09
  - the people we live with, our next door
• 18:11
  - neighbors,
• 18:12
  - the people in our communities is a noble
• 18:13
  - thing. It's not an easy thing, but it's
• 18:16
  - definitely worthwhile work. And so there's always that
• 18:19
  - that level of optimism just just underpinning all
• 18:21
  - of this too.
• 18:22
  - Well, Michael, it's been so great having you
• 18:25
  - on the podcast today. Thank you so much
• 18:27
  - for your time and your insights
• 18:29
  - and such a great conversation.
• 18:31
  - Yeah. Thank you. And, of course, we also
• 18:33
  - wanna thank our podcast sponsor for the day,
• 18:35
  - Community Hospital Corporation.
• 18:38
  - Listeners, be sure to tune in to more
• 18:39
  - podcasts from Becker's by visiting our podcast page
• 18:42
  - at beckershospitalreview.com.