For citizens living in non-urban areas, smaller, rural hospitals are often the only source of medical care within hours of their home. With more than 46 million residents living in rural areas in 2020, a large percentage of the U.S. population relies on these local providers for services and employment. However, due to a multitude of societal and industry factors, many of these community hospitals are considering closure or acquisition, which can have far-reaching consequences for the entire community.
While there are many factors contributing to rural hospital closures and acquisitions, thoughtful and strategic partnership can be a beneficial alternative.
Why Are Rural Hospitals Experiencing Acquisition Pressure?
Smaller, rural hospitals are facing a number of challenges in the current healthcare landscape. One factor is the changing demographics of these rural areas. As populations age and younger people move away, rural hospitals have a harder time attracting and retaining patients and employees. This has a cascading effect, placing additional strain on the hospital’s finances, which in turn impedes investment into new technology and equipment.
Additionally, the increasing cost of healthcare delivery causes rural hospitals to face a higher burden of uncompensated care, as many rural patients experience higher rates of chronic illness and are often uninsured, underinsured, or on Medicaid. What’s more, even if an individual has employer-sponsored insurance, it’s often with a high deductible that has a high out-of-pocket cost, discouraging them from using the hospital at all. Further complicating the dilemma, the cost of providing care is rising due to factors such as labor shortages and inflation.
These examples support the findings of one University of North Carolina rural health research report: almost 30 percent of all U.S. hospitals were operating in the red as of 2018—the majority of which were found in rural communities.
In addition to these factors, recent healthcare policy trends — like the Affordable Care Act requiring service enhancements with reduced costs and the Medicare reimbursement rate changing — are applying additional pressure to the situation, creating a grim outlook and perfect storm for an acquisition.
Choosing Another Way: Partnership Over Acquisition
At TPC, we want community hospitals to thrive and remain independent. But being independent doesn’t mean you have to be on your own. By working collaboratively, stand alone hospitals that choose partnership unlock a myriad of advantages that help maximize efficiency.
At TPC, our commitment to this cooperative approach is manifested in four key areas:
1. Sourcing Synergy
The power of unity is exemplified through our partnership model's first pillar: collective sourcing. By pooling the resources and collective purchasing might of like-minded community hospitals, we create a compelling case for suppliers. This, combined with data intelligence, enables us to negotiate with the supplier community and secure the best value for our Members. It's more than just cost savings; it's about ensuring that vital resources are acquired efficiently, ultimately bolstering the quality of care delivered.
2. Performance Improvement
Our Members actively engage in collaborative endeavors aimed at elevating healthcare standards. Within strategic committees, they collectively focus on pivotal aspects such as the quality of care, patient experience, and labor management. This collaboration extends beyond brainstorming and discussions; it's substantiated by cutting-edge data tools. These tools empower our Members to benchmark their performance against their peers, fostering an environment of continuous improvement and ensuring that our hospitals maintain a high standard of healthcare excellence.
3. Optimizing Revenue Cycles
The financial challenges faced by our hospitals are met with proactive solutions through TPC's partnership model. Despite resource constraints, our Members gain access to expanded bandwidth and the expertise required to evaluate and implement best practices. By optimizing revenue generation and management, hospitals can secure their financial stability, ensuring they can continue to provide vital services to their communities.
4. Harnessing Comparative Analytics
In an era driven by data, our Members harness the collective strength of TPC to access a wealth of intelligence. Together, they embark on a journey to collect, analyze, compare, and glean insights from financial, clinical, and operational data across the entire membership. This collaborative approach to data-driven decision-making unlocks a multitude of improvement opportunities for all Members. It ensures that rural hospitals not only keep pace with the evolving healthcare landscape but also proactively adapt and thrive.
The benefits of partnership over acquisition for independent hospitals are multifaceted and impactful. Through TPC's partnership model, Member hospitals unite to enhance their sourcing capabilities, elevate performance standards, optimize revenue cycles, and harness the power of comparative analytics. Acting on our core values of accountability, excellence, and integrity, we become an integral force in boosting our Members' ability to deliver exceptional healthcare services. Together, our Members fortify their positions in the healthcare ecosystem, ensuring that the vital services they provide to their communities remain resilient and sustainable.
Achieving More Together
Ultimately, we believe relationships are the conduit to creating familiarity, trust, and mutual accountability. Our primary objective is to empower our Members in achieving what may be beyond their individual capacities. Partnering with TPC provides a robust platform that actively bolsters our Members endeavors, resulting in cost savings, operational efficiencies, optimization, and superior quality.
Harness the power of unity while preserving your unique independence. Reach out today to discover how partnering with TPC can transform your healthcare institution for the better and help you serve your community like never before.