Physician Assistants and Innovative Solutions for Rural Hospitals

INTRODUCTION

It is difficult not to envision a downward spiral when reading reports about the viability of rural hospitals in America in the 1990s. Consider these remarks of Jeffrey Human, director of the federal Office of Rural Health Policy, before the House Ways and Means health subcommittee on September 12, 1996.

"There are two major components of the unique problems rural Americans face in getting health care. First, there is a shortage of physicians and other health care professionals in rural areas. The other problem is the viability of rural hospitals. Rural hospitals have been closing at a disproportionate rate for the past 15 years. According to the Office of the Inspector General, there were 2,489 rural hospitals in 1987. By 1995, the number had declined to 2,141 -- a 14% decrease. The rate of closure has slowed during the past five years and the average total margin for rural hospitals was 5.5% in 1994, the highest in over a decade. Despite the improvement in the average rural hospital margin, however, about 25% of the remaining 2,141 rural hospitals have negative operating margins - that is, they are losing money and are at risk of closure. "The consequences of the closure of a rural hospital are frequently more difficult for local people than the consequences of the closure of an urban hospital. Hospitals that close in rural areas may leave local people with no choice, or a very long distance to travel." 1

There are further underlying characteristics of rural communities and their infrastructures that compound the problems of delivering health care to their residents. A 1995 report on federal rural health initiatives notes that most rural communities are losing population, leaving an increasingly elderly population in need of hospital facilities, but too few in number to generate reasonable utilization rates. Industries that form the economic base for most rural communities - farming, mining and timber - have stagnated in the past decade. This has hastened population decline, lowered income, reduced insurance coverage, and increased the burden of public subsidies to local hospitals. Improved transportation and changes in retail structure have led to increasing geographic centralization, even in areas with enduring rural populations. Many rural areas face a competitive disadvantage when recruiting providers. Retention problems also create spiraling low patient volume and financial difficulties for rural hospitals. 2

The report noted that all hospitals nationwide have experienced pronounced declines in admission rates and average lengths of stay. However, rural hospitals have been found to treat precisely the types of cases that have seen the most precipitous drops: adult pneumonia, adult gastroenteritis, and angina. Partly as a result, utilization rates in rural hospitals have fallen faster than those of urban hospitals. Rural hospitals don't have the same economies of scale as larger urban facilities. Many rural hospitals don't have the capital to modernize, improve their staff, or keep up with technology. As urban and larger facilities attempt to attract patients from a larger radius, small hospitals find it difficult to compete. There is some evidence that rural hospital boards have waited too long to respond to the major challenges being created by today's health care industry. Neglected capital structure, unwillingness to market, and an inability to institute cost-control measures are alleged to have weakened some facilities. 2

Despite the forces working against them, hospitals play a vital part in rural health care delivery. The loss of a hospital in a rural or frontier community means more than a longer drive for health care. Many times, the hospital is the largest employer and its closure has devastating economic and social impact. Finding a way to keep a rural hospital viable can make a major difference in the life of a rural community.

INNOVATIVE SOLUTIONS

Saving an endangered rural hospital requires creative thinking and flexibility. It may require financial and in-kind support from other local industries and a community board willing to develop a plan and carry it out. Some innovative programs that rely on physician assistants (PAs) to staff very small hospitals have had to negotiate exemptions from various state and federal regulations that prevented the flexibility required. Physician assistants can play an essential role in the survival of rural hospitals if regulations - such as those governing Medicare payment - can be modified to allow maximum, flexible utilization of PAs within the parameters of their state practice acts.

Two innovative initiatives - one state-sponsored and one federal -- rely on PAs and nurse practitioners to staff rural hospitals. The Medical Assistance Facility (MAF) program in Montana allows very isolated rural hospitals to have limited licenses under less stringent rules. This modification of requirements enables them to remain open and continue to provide a certain level of care in frontier communities. 3 The second initiative - the federal Essential Access Community Hospital/Rural Primary Care Hospital (EACH/RPCH) program - links several small rural hospitals with one participating larger referral hospital in a state. A primary goal of the federal initiative is to encourage the development of rural health networks to reduce fragmentation in rural health services, eliminate redundant services, and better support limited-service rural hospitals. 3

THE MONTANA EXPERIMENT

A pilot program created by the Montana Hospital Association and approved by the state legislature in early 1987, the Montana MAF program was the first limited-service rural hospital model established by law. It offers very small, isolated rural hospitals relaxed licensure requirements, which in Montana are similar to the Medicare conditions of participation. After two and a half years of model development and negotiations with the Health Care Financing Administration, the MAF program gained a Medicare waiver in December 1990. Within days, the first MAF was licensed. 21

One of the key components that has allowed the MAF program to succeed is that Montana law and the Medicare waiver allow reliance on physician assistants and nurse practitioners; a physician must review all admissions by telephone within 24 hours and must visit the facility every 30 days. Other staffing and support service requirements are relaxed to allow reduced staffing when there are no inpatients, offering tremendous overhead savings.

Admissions in these facilities are limited to 96 hours, after which the patient is either discharged or transferred. The facility must provide emergency services. Basic laboratory services essential to diagnosis must be available; more complicated services can be provided on contract. A physician assistant, nurse practitioner, or physician must always be on call and available physically within one hour. The MAFs must have formal agreements with hospitals, skilled nursing facilities, and home health agencies to meet patient needs they cannot meet, creating a type of rural health care system.

By February 1997, there were 12 MAFs operating in Montana, several more developing in the wings, and Medicare had approved the demonstration through July 1, 2000. Medical staffing at four facilities was provided by a combination of PAs and physicians on site. Staffing at four others was by PAs with off-site physician supervision. The other four had various combinations of physicians, PAs, and NPs on site. (Personal communication, Keith McCarty, Montana Hospital Association, February 25, 1997.)

A 1993 HHS Inspector General's report found that among other factors, the "flexibility in staffing is critical to the success of MAFs. Non-physicians, such as physician assistants, admit patients and provide medical care in MAFs. They do so under the supervision of a physician who can be in a different town. The flexibility allowed in MAFs helps attract and retain medical professionals in frontier areas." The report concludes that "MAFs hold promise as a viable alternative for frontier community health care. The MAF program is a practical and flexible way to provide access to basic inpatient and emergency care in frontier areas - particularly those that are struggling to keep a failing hospital open, and those that do not have adequate local health care." 4

THE EACH/RPCH EXPERIENCE

Implemented in seven states by Congressional authorization, the Essential Access Community Hospital/Rural Primary Care Hospital (EACH/RPCH) program links limited-service rural hospitals with larger referral hospitals. As with the Montana MAF program, the EACH/RPCH program relaxes federal rules to allow greater reliance on PAs and NPs to staff the rural facilities. The program provided initial grant money to support planning, facility conversion expenses, and rural network development. Although that funding ended, the program continues to provide a higher, cost-based Medicare reimbursement rate for the RPCH facilities and recognizes the larger EACH hospitals as "sole community providers," thus raising their Medicare reimbursement rates. Sole community provider rates are based more on historical costs than is normally allowed under Medicare's prospective payment system.

The program, launched in the early 1990s in California, Colorado, Kansas, New York, North Carolina, South Dakota, and West Virginia, is intended to ensure the availability of primary care, emergency medical services, and basic acute inpatient services through a limited-service hospital linked to a network that includes at least one supporting hospital. Staffing criteria allow a PA or NP to provide required inpatient care and emergency room services as long as a physician is available by telephone or radio. Patients can be admitted to the rural facility for a limited stay before discharge or transfer. The original law limited the stay to 72 hours. That was later amended from a flat 72 hours per admission to an average of 72 hours for all admissions on an annual basis. 5

Early lessons from the EACH/RPCH program indicate that limited service hospitals can play an important role in building local networks of providers beyond the hospital-to-hospital linkage. They appear to be useful mechanisms for helping rural communities that are at risk of losing access to basic health services. 6

However, researchers evaluating the program found that networking has generally been difficult for the rural facilities. In addition to local politics, other factors can make it difficult to create a viable network. These include changes in program personnel and fluctuating interest at the larger referral facility, community concerns related to historic rivalries or community control, and the fact that sometimes the designated referral facility is not a natural partner for the rural hospital. In other words, there may be another hospital in the area with which the rural facility already has a strong referral and support relationship, but that hospital was not designated as the official referral hospital. 2

Supporters of the Montana MAF program say it imposes fewer service restrictions and focuses on saving a small hospital without the complications of formal networking and restructuring local health systems. But it also remains to be seen whether the MAF program, designed for tiny hospitals in the very isolated frontier areas of Montana, would translate easily to very different rural communities throughout the United States.

OTHER MODELS

In addition to these two initiatives, there is an expanding variety of similar models and proposals. Florida has passed legislation that allows hospitals to convert to acute care, rural acute care, or emergency care status, but Medicare regulations had stymied any conversions by November 1996. The Florida initiatives, like MAF and EACH/RPCH, would allow more flexible staffing by PAs in these limited service facilities. 7 Other states have developed their own models, including the Alternative Rural Hospital Model (ARHM) in California and the Rural Health Care Facility in Washington State. The widespread interest in the limited-service concept makes the operational experience of the MAF and EACH/RPCH models especially valuable. 2

The National Rural Health Association has called for a single national limited-service hospital model, similar to an MAF or RPCH, that would be allowed in any state, not just the seven identified in the EACH/RPCH program. The NRHA model would preserve access to emergency services and primary care. It would combine improved Medicare reimbursement with relaxed Medicare operating requirements, such as allowing PAs to staff the hospitals with off-site physician supervision to the extent allowed by state law. 8

Some rural advocates also believe a national program for rural hospitals would indirectly benefit the federal rural health clinics program. They believe more systematic support for rural hospitals would relieve some of the pressures that have led hospitals to take advantage of loopholes in the rural health clinics program.

CONCLUSION

The successful MAF demonstration program in Montana and the possibilities inherent in the EACH/RPCH program affirm the value of using physician assistants to extend medical services to rural populations. The AAPA supports innovative and flexible solutions for meeting the health care needs of rural communities, including solutions that preserve the availability of inpatient facilities, primary care, and emergency services.

REFERENCES
  1. Prepared statement of Jeffrey Human, Director, Office of Rural Health Policy, Health Resources and Services Administration, Department of Health and Human Services, before the House Committee on Ways and Means, Health Subcommittee. Sept. 12, 1996. Federal News Service - Congressional Hearing Testimonies.
  2. Wright G, Felt S, Wellever AL, et al. Limited Service Hospital Pioneers: Challenges and Successes of the Essential Access Community Hospital/Rural Primary Care Hospital (EACH-RPCH) Program and Medical Assistance Facility (MAF) Demonstration. Mathematica Policy Research, Inc., Washington, DC. Draft Final Report, March 28, 1995.
  3. Glenn KJ. Latest in make-overs: rural hospitals. Medicine and Health Perspectives, June 26, 1989.
  4. Office of the Inspector General, Department of Health and Human Services. Medical Assistance Facilities: A Demonstration Program to Provide Access to Health Care in Frontier Communities. July 1993, p. ii.
  5. HCFA finalizes rule to improve hospital, emergency treatment access. Health Care Policy Report. Bureau of National Affairs, Washington, DC. May 31, 1993, p. 575.
  6. Campion DM, Dickey DF. Lessons from the essential access community hospital program for rural health network development. J Rural Health, 11:1995;38.
  7. State of Florida, Hospital Licensing and Regulation, Sec. 395.602.
  8. The Need for a National Limited-Service Hospital Program. National Rural Health Association, Kansas City, MO. November 1996.

Policy Brief: Physician Assistants and Innovative Solutions for Rural Hospitals
Adopted 1997

 

 

Last Revised: 2/1/02