Affiliation improves rural hospital sustainability

https://mailchi.mp/161df0ae5149/the-weekly-gist-december-10-2021?e=d1e747d2d8

In 2020, a record-breaking 19 rural hospitals closed their doors due to a combination of worsening economic conditions, changing payer mix, and declining patient volumes. But many more are looking to affiliate with larger health systems to remain open and maintain access to care in their communities. The graphic above illustrates how rural hospital affiliations (including acquisitions and other contractual partnerships) have increased over time, and the resulting effects of partnerships.

Affiliation rose nearly 20 percent from 2007 to 2016; today nearly half of rural hospitals are affiliated with a larger health system.

Economic stability is a primary benefit: the average rural hospital becomes profitable post-affiliation, boosting its operating margin roughly three percent in five years. But despite improved margins, many affiliated rural hospitals cut some services, often low-volume obstetrics programs, in the years following affiliation. 

Overall, the relationship likely improves quality: a recent JAMA study found that rural hospital mergers are linked to better patient mortality outcomes for certain conditions, like acute myocardial infarction. Still, the ongoing tide of rural hospital closures is concerning, leaving many rural consumers without adequate access to care. Late last month, the Department of Health and Human Services announced it would distribute another $7.5B in American Rescue Plan Act funds to rural providers. 

While this cash infusion may forestall some closures, longer-term economic pressures, combined with changing consumer demands, will likely push a growing number of rural hospitals to seek closer ties with larger health systems.

California hospital alleges retaliation after seeking to end affiliation with Providence

Hoag Hospital by in Newport Beach, CA | ProView

After filing a lawsuit in May to end its affiliation with Renton, Wash.-based Providence, Hoag Memorial Hospital in Newport Beach, Calif., is alleging it is now the target of retaliation, according to the Los Angeles Times.  

Hoag Memorial said that Providence removed Hoag Memorial’s three facilities from its website of Southern California locations and terminated Hoag Memorial’s specialists from St. Joseph Heritage Healthcare, a network of medical providers for managed care plans in Southern California. Additionally, Hoag Memorial said that Providence informed Heritage members they would lose access to Hoag’s 13 urgent care centers by Dec. 31. 

According to the report, Providence’s notice to patients that Hoag facilities and physicians would be dropped from its network all came in the fall of 2020, amid the COVID-19 pandemic.

“It was the most inappropriate, inexplicable and harsh thing to do to a lot of patients,” Hoag President and CEO Robert Braithwaite told the Los Angeles Times. “Finding a new physician or new specialist is particularly hard on seniors and any patient who has a chronic condition and has established a long-term relationship with an endocrinologist or rheumatologist or cancer doctor.”

Providence told the Los Angeles Times it disagrees that patients have been disadvantaged.

“We are committed to the well-being of our communities and to serving patients with high quality and compassionate care,” a Providence spokesperson told the Los Angeles Times. 

Hoag Memorial has been affiliated with Providence, a Catholic health system, since 2016.

Hoag Memorial said the changes all came after the hospital sought to end its affiliation with Providence by filing a lawsuit. Hoag Memorial said in its lawsuit it is seeking to end the affiliation because Providence is undermining local decision-making and Catholic Church restrictions are expanding. 

Providence has fought Hoag’s lawsuit to end the affiliation. The health system claims Hoag doesn’t have the right to unilaterally dissolve the affiliation, and its board members don’t have the authority to file the lawsuit. An Orange County Superior Court judge rejected Providence’s argument Feb. 1 and scheduled another court hearing for March.