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Surviving small

This series looks at rural hospitals and the challenges they face.

  • Chapters will be posted once a month over the course of five months starting in January.
  • The first part of the series, which was posted on January 18, looks at Iowa's rural population, what its rural health care system looks like and the benefits communities see from hospitals.
  • The second part, which were posted on February 15, investigate the shortage of doctors in rural communities and what those towns are doing to help recruit more physicians.
  • The third part, which was posted on March 15, looks at some rural hospitals that have grown more rapidly than expected, causing some to take on big expansion projects. But those projects come with big price tags.
  • The fourth part, which was posted on April 19, discusses the high portions of Medicare and Medicaid patients that are making hospitals vulnerable.
  • The fifth part, which was posted on May 24, details the benefits and challenges of rural hospitals affiliating themselves with a larger health care system.
  • The sixth part, which was posted on June 21, details how remote health facilities find ACA rules especially challenging.

The nation's health care systems are in transition. And while hospitals across the country are grappling with changes to payment systems and quality measures, the smallest hospitals in rural areas must work even harder to keep up.

In Iowa, the rural health care system is made up of 82 critical access hospitals — a special Medicare designation for smaller 25-bed facilities — and 142 rural health clinics, making it one of the largest rural health systems in the country, said Gloria Vermie, director of the State Office of Rural Health Director, which is part of the Iowa Department of Public Health.

Iowa has a rural population of more than 1.4 million people — or about 46 percent of the state's population.

But planning their futures — whether that is attracting physicians, fundraising or dealing with aging infrastructure — can be a challenge.

'Iowa has some of the best rural hospitals and clinics in the nation,' Vermie said. 'Improving access to quality, whole-person health care — while ensuring organizations and health care professionals stay on course with state and federal changes — requires vigilant dedication.'

As health care evolves, small hospitals don't want to be left behind, said Kirk Norris, Iowa Hospital Association president and chief executive officer.

Shifting focus to increasing the quality of care could benefit small hospitals, he said, because with fewer patients, they can respond quickly to problem areas. But at the same time, he said, because of limitations on how long critical access hospitals can keep patients, some quality measures such as infection rates can't be applied to them.

Economic Impact

Rural health care facilities are more than just sites for health care treatment. They are economic drivers in their communities — often a top-five employer with the greatest number of college-educated employees and one of the few places in a small town where people interested in health care can advance their careers.

Iowa's rural hospitals directly employ more than 17,000 people and indirectly more than 6,300. In addition, employees generate more than $206 million in retail sales, which creates more than $12.4 million in sales taxes, according to the Iowa Hospital Association.

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The National Rural Health Association estimates that 23 jobs — direct and indirect — are created for every physician recruited to work in a community health care facility. These facilities make up 20 percent of total economic development dollars in their communities.

'That is significant,' said Brock Slabach, senior vice president for member services at NRHA. 'It's a huge chunk.'

At the same time, communities stand to face huge losses if rural hospitals close. The hospitals struggle with narrow financial margins, and Slabach said changes in the payment system and budget cuts have resulted in the closure of hundreds of small hospitals over the years.

'We're seeing a rapid increase of hospital closures nationwide,' he said.

The University of North Carolina at Chapel Hill's Sheps Center for Health Services Research, which has studied rural hospital closures, took a financial snapshot of rural hospitals that closed in 2000 to compare with hospitals in 2010.

It found 283 hospitals nationwide whose financial profiles matched those that closed a decade earlier and were vulnerable to closing.

'They're hanging on in terms of operations,' Slabach said.

Rural hospitals are responsible for 70,000 patient visits a year, 36,000 health care jobs and 50,000 indirect jobs,

'That could be a $10.6 billion economic-impact loss,' he said.


While all hospitals are dealing with a changing health care landscape — moving from a volume-based fee-for-service payment model to one that focuses more on quality of care — rural hospitals always have dealt with unique challenges.

Rural residents tend to be poorer. Their per capita income nationwide is $7,417 lower than in urban areas, according to the NRHA.

In Iowa, data from the U.S. census shows that the median household income for rural residents is $48,496, compared with $55,011 for those in urban areas.

Rural residents also are less likely to have employer-provided health care coverage and rely more on Medicare or Medicaid.

'There is a disproportionate number of people on Medicare who are over the age of 65, or who are chronically disabled,' Slabach said.

Many rural health hospitals also are seeing an uptick in Medicaid patients.

'It's not uncommon to see 9, 10 or even 15 percent of revenues coming from Medicaid,' Norris said, adding that one contributing factor is an influx of immigrants who work in Iowa's manufacturing plants or agricultural industries.

And rural hospitals often are in tight financial spots. A 2010 study by the Shep Center found that critical access hospitals took longer to collect their receivables, obtained more of their revenue from outpatient business and had lower levels of allowances and discounts.

Critical access hospitals 'were consistently less profitable than other hospital classifications,' the study found.

Capping off their problems are recruiting and staffing challenges. Only about 10 percent of physicians practice in rural America despite the fact that nearly one-fourth of the population lives in these areas, the NRHA found.

Iowa has 118 designated health professional shortage areas, which means there is a dearth of primary medical care, dental or mental health providers, according to the U.S. Department of Health and Human Services.

'Iowa hospitals do a great job providing primary care ... but it needs to be able to sustain itself,' Norris said.

According to a Merritt Hawkins survey of 1,200 final-year medical residents, only 3 percent of them would consider practicing in a community of 25,000 or fewer, and only 1 percent would practice in a community of 10,000 or fewer.

Brock Slabach, senior vice president for member services of the National Rural Health Association, said when it comes to recruiting residents, the hospital needs to find a resident with one of two attributes.

'Was that person born or raised in a rural area, or did that person spend some of their residency in a rural community?' he said.

Part of the problem is not enough medical schools offer rural tracks, and there aren't many residencies at small hospitals, Slabach said.

Dr. Duane Jasper, a family practice physician in Independence, concurred. He said he has had an agreement with a hospital in Waterloo since the early 1990s to send residents to work in Buchanan County for one month. 'They get to see what it's like to practice without a specialist at their side and need to be confident in their skills,' he said.

He added that the partnership with the hospital has recruited three physicians.

Loan repayment programs also can provide incentives.

Iowa provides up to $50,000 per year to primary-care physicians, psychiatrists, dentists and other health care providers who commit to practice in a rural area for two years through its Primary Care Recruitment and Retention Endeavor, which is part of the Iowa Department of Public Health.

From 2009 to 2014, the state's loan repayment program gave out more than $1.6 million to 36 providers. Of the recipients, 14 awards were for professionals practicing in Mental Health Shortage Areas, six were in Dental Health Professional Shortage Areas and 16 were in Primary Care Health Professional Shortage Areas, according to the state.

Iowa loan repayment program

This program offers two-year grants to primary care medical, dental and mental health practitioners for use in repayment of student loans. From 2009-2014, the state has awarded grants to 36 people.

The University of Iowa also has a program tailored for students interested in a rural practice that provides up to $100,000 of loan forgiveness for students who commit to practicing in an Iowa town with a population of fewer than 26,000 for five years.

But many large, urban hospitals offer repayment programs, too, said Shea Jorgensen, a second-year medical student who is involved in the program, adding they are not the only answer.

'You have to show people what it's like — the benefits,' said Jorgensen, originally from the 250-person town of Grafton.

UI's program — Carver College of Medicine Rural Iowa Scholars Program — also gives the four students chosen to participate each year a chance to work with rural physicians through mentorships and workshops. This also allows students to get a better understanding of the issues they'll face when practicing, she said.

During her time in the program, Jorgensen has shadowed a doctor in Decorah, where she got to see firsthand what it means to be a rural provider.

'You have to be flexible and assess the community's needs,' she said.

Every morning at 6:45, Dr. Duane Jasper is ready to start his rounds. He's done and in the office by 9:30 a.m., where he spends the rest of his day with patients.

He treats whole families, the elderly, babies and a good deal of individuals with chronic health problems such as hypertension and diabetes.

'When I started, I knew I wanted to be in rural Iowa,' recalled Jasper, who is from Manchester.

He's also one of only five primary care providers in the 6,000-person town of Independence.

But he is an exception. Finding health professionals to practice in Iowa's rural areas can be a serious challenge, experts say. Most physicians opt to practice in large cities, in big hospitals or clinics surrounded by restaurants, shopping and other amenities.

This leaves many rural communities across the country desperate for doctors.

According to the U.S. Department of Health and Human Services, the country would need an additional 8,200 primary care workers to fill all the Primary Care Health Professional Shortage areas — a federal designation given when there is one primary care physician per 3,500 residents.

Here in Iowa, there are more than 360 Health Professional Shortage Areas, many of them in rural areas. A look at a map detailing these areas shows huge sections of the state, and often entire counties, where there are not enough primary care providers — that would include a shortage of physicians, physician assistants and nurse practitioners.

Health care shortage areas in Iowa

Compounding this problem is the fact that in 2013 more than 35 percent of active family physicians in Iowa were age 55 or older. That means a large portion of the work force is approaching retirement, according to the Office of Statewide Clinical Education Programs at the University of Iowa's Carver College of Medicine.

Recruiting doctors

Bringing in primary care providers to small communities can be tough,' said Nate Piller, a recruiter for Irving, Texas-based Merritt Hawkins who has helped Iowa hospitals find physicians for 15 years. 'But there are plenty of stories where this works out well.'

On average, Piller said, rural hospitals are able to offer providers salaries within 5 to 10 percent of what metro hospitals can offer. That means small hospitals need to show off the things they offer that larger systems can't, such as a faster turnaround time for labs, more time in the operating room and fewer levels of bureaucracy, he said.

Fewer primary care physicians working in less populous counties

About: This chart shows the ratio of physicians in each county in Iowa as compared to its total population. A ratio of 1 in 1000 means there is one physician for every 1000 residents in the county. Typically, counties with fewer people have a higher ratio. Click the "Change in ratio" tab to see how the ratio changed from 1989 to 2009, the latest year for the data. Hover over or click a point for more information. Data provided by the University of Iowa Carver College of Medicine and can be downloaded here.

'We have to recruit the same professionals as Cedar Rapid or Des Moines,' said Robb Gardner, chief executive officer of the Henry County Health Center in Mount Pleasant, a city of about 8,600. 'The question becomes, how do we get them here?'

Gardner said it becomes a community-wide effort, with city officials, business leaders and school district leaders all participating in the process. They do this, he said, because when a physician comes to town, the whole community benefits.

'Some of our biggest successes are from word of mouth,' Gardner said, pointing to the hospital's general surgeon, Dr. Michelle Tansey, who helped recruit her brother, Dr. Joe Tansey, an orthopedic surgeon from the Chicago suburbs. 'Because if we don't know them, that's one of our biggest barriers.'

The two surgeons have helped fill a void in the community, allowing patients to receive care closer to home.

'It's a huge benefit to have someone who can respond in a fairly rapid fashion,' Joe Tansey said, adding patients often had to have to travel to Iowa City or Burlington for care.

The Tanseys are heavily involved with the community, with Joe stepping in when students are injured at his son's basketball games and Michelle giving community talks about breast health.

'There's a much larger breadth of what you can practice,' said Michelle Tansey, who explained that, while in the Chicago area, she focused primarily on breast cancer surgeries. Now she's performing colonoscopies, dealing with trauma patients and operating on gallbladders.

'But it's more than that,' she said. 'You're taking care of whole families.'

Filling in the gaps

Rural hospitals also can forge partnerships with larger health systems to bring in specialists such as oncologists, cardiologists and OB-GYNs on a rotating basis through their specialty clinics.

This benefits the patients, hospital administrators said, because they don't have to drive long distances for care. It also helps the hospital because it can fill a health care gap without spending the dollars to employ a specialist full time, especially in areas with such small populations.

'From a cost and quality standpoint, the size of the market does not lend itself to keep up these skills,' said Steve Slessor, chief executive officer of the Buchanan County Health Center in Independence.

The critical access hospital has about 175 individuals on its medical staff but only employs two, he said — one provider who works in the emergency room and a chief nursing officer.

It's able to contract with a great deal of groups and hospitals because of Buchanan County's geographic location — almost equidistant between Cedar Rapids and Waterloo.

'It offers more choice,' Slessor said. 'We can also offer more services.'

"'We have to recruit the same professionals as Cedar Rapid or Des Moines. The question becomes, how do we get them here?"

- Robb Gardner

Chief executive officer of the Henry County Health Center in Mount Pleasant

Slessor is working with graduate students from the University of Iowa on a market analysis to see which areas are adequately served and if any additional specialists need to be added.

Telemedicine also is a tool rural hospitals can use to supplement care. Buchanan County Health Center plans to implement a telemedicine program for orthopedic care this summer.

Slessor said that the hospital can bring in a surgeon from Waterloo to perform the initial surgery, such as a hip replacement, and then teleconference in for follow up appointments.

Slessor said when it comes to rural health, it's important to look at all the options.

'It's critical to be aligned with physicians,' he said. 'Employment is just one tactic for that.'

UnityPoint Health-Jones Regional Medical Center in Anamosa is having a growth spurt.

The 22-bed critical access hospital has outgrown its facility, which was built in 2009 — something the hospital didn't anticipate to happen so quickly. So it's adding 20,000 square feet to increase space at its specialty clinics, lab and infusion center, and operating room as well as physical therapy and cardiopulmonary rehabilitation areas.

'Hopefully this will meet the needs for the next seven to 10 years,' said Eric Briesemeister, chief executive officer of Jones Medical.

The hospital has seen growth across the board. Between 2008 and 2014, it saw a 53 percent increase in outpatient visits and 44 percent increase in emergency room visits. It's also tripled the number of operating room procedures it performs on an annual basis during that time period, according to hospital data.

Growth of cardio-pulmonary visits at the Jones Regional Medical Center

Source: Jones Regional Medical Center

'Physicians want to be out here, but we don't have the room,' he said, referring to specialists from larger cities who come to the hospital to offered services.

Nine specialists provided care at Jones Regional in 2009, but that has risen to 16 this year, and space is cramped.

'The cardiologist wants to be here four days a week, but there's nowhere to put him,' Briesemeister said.

But those necessary improvements come with a big price tag — $10.4 million.

That expense can be a big undertaking for an organization that runs as leanly as a rural hospital. In 2013, Jones Regional's total revenues were about $22 million, but its expenses equaled about $29 million, according to its most recent 990 tax forms.

The hospital is working to raise $2 million to help pay for the project, and it's halfway there — raising about $1.1 million since Dec. 2013, officials said.

But fundraising for rural hospitals in small towns brings its own set of challenges.

These hospitals have smaller staffs and don't have fundraising foundations to focus on capital campaigns, as Mercy Medical Center and UnityPoint Health-St. Luke's Hospital do.

Sheila Tjaden is the primary fundraiser for Jones Regional. But that's only part of her job as she also handles the hospital's public relations and oversees other community-development projects

And in smaller cities such as Anamosa — which has a population of 5,500 — there is a limited pool of donors, Briesemeister said.

'We don't have the population base like in Cedar Rapids or Des Moines,' he added.

Jones Regional has the added hurdle of donor fatigue. It wasn't that long ago the hospital needed to raise about $4 million from the community to put toward its $13.8 million building that opened in 2009.

There are also competing groups vying for funds, such as the Anamosa Community School District and the Starlighters II Theatre. But Briesemeister pointed out that larger cities deal with similar issues.

'When there are more people, there are more needs,' he said.

That's why it's important to be good stewards of the community's dollars, Tjaden said.

'Nothing is terribly extravagant,' she said.

Small-town advantages

Despite those challenges, some rural hospitals across the state have completed successful capital campaigns and expansion projects, including the Regional Medical Center in Manchester and Henry County Health Center in Mount Pleasant.

Regional Medical Center raised $1.5 million to help pay for a 40,000-square-foot expansion needed to better treat an aging population with multiple chronic conditions.

Once complete in 2016, the hospital will have a larger specialty clinic, larger patient rooms, new technology and a new dining area.

But, Tjaden said, small-town residents are willing to open their pockets and give because they rely on the hospital's services and understand how much of an asset it is to the community.

'They know us intimately and know we offer high-quality services,' Briesemeister added. 'People support things they know.'

People who come to the hospital also see how limited space is, Tjaden said, which gives them a thorough understanding as to why the capital campaign is needed.

'They know we don't have the room for cardiac rehab and see people doing physical therapy in the hallway,' she said.

There are other small-town advantages when it comes to capital campaigns, too.

The municipalities and local businesses is very willing to chip in, Briesemeister said. The Jones County Supervisors granted an easement for the hospital's emergency room entrance, a handful of banks provided financing, Weber Stone Co. contributed materials for the project and the city of Anamosa sponsored its loans.

'It's not, Do I help. It's, How can I help?' he said.

Tjaden believes so many people have this attitude because they realize the value of having a hospital in the community — it helps recruit and retain businesses as well as keeps people from having to travel long distances for care.

'Fundraising is successful because of the care provided,' Tjaden said. 'If we don't get that right, it's really hard to raise anything.'

When it comes to a rural hospital's budget, it's all about balance.

These hospitals generally have more narrow financial margins in addition to larger groups of patients on Medicare and Medicaid, which makes them more vulnerable to budget cuts and political fights.

'I learned a long time ago that you have to be in the ear of the people who make decisions,' said Mike Myers, president and chief executive officer of Veterans Memorial Hospital in Waukon, which is in the northeast corner of the state on the Iowa-Minnesota boarder.

The 25-bed hospital provides care to about 18,000 people in Allamakee, Winneshiek, Clayton and Howard counties. About 12.6 percent of residents in Allamakee County lives below the poverty line — slightly higher than the state average of 12.4 percent — and more than 20 percent of residents are over the age of 65 years old, according to 2013 U.S. Census Bureau data.

Myers said those on Medicare make up the majority of the hospital's patients, averaging about 65 percent from month to month. Medicaid patients make up another 10 percent, while only about 17 percent of the patients the hospital sees have private insurance.

The state's Medicaid expansion — the Iowa Health and Wellness program — has helped improve Veteran's Memorial's uninsured rates, pushing bad debt and charity care down between 3 to 5 percent, Myers said.

Even still, the hospital budgets for sustainability rather than growth, he explained. It runs on thin financial margins — about 2 percent — which help cover necessary equipment upgrades but makes adding new services difficult at times.

It doesn't mean the hospital can't step up when certain services are needed — it is now leasing an MRI machine five days a week, for example, Myers said. But the hospital has to be 'pretty conservative.'

More Medicare, uninsured patients

Rural populations generally are older and poorer than those living in more urban areas.

About 31 percent of those living in a rural area are over the age of 55 compared with only 24.2 percent in urban areas, according to census data.

Rural residents in Iowa are older, make less money

Rural and urban areas of Iowa were defined by the USDA. Census data was last updated in 2013. To download the data, click here.

In addition, about 15.7 percent of residents over the age of 60 are living below the poverty line in rural Iowa compared with 12.8 percent of those in urban areas.

So the hospitals providing care to rural residents often see higher percentages of patients who are uninsured or have government-funded health plans.

In 2014:

• About 61.68 percent on patients discharged from a critical access hospital — 25-bed hospitals that provide care in rural communities — had Medicare

• 10.47 percent had Medicaid

• 4.45 percent were self-pay or uninsured, according to data provided by the Iowa Hospital Association.

That's compared with 42.74 percent of patients on Medicare, 19.2 percent on Medicaid and 2.42 percent who were self-pay or uninsured in Iowa's urban hospitals.

Such reliance on government-funded health plans makes rural hospitals especially vulnerable to budget cuts, including a 2 percent cut to Medicare that resulted from sequestration — across the board spending cuts made in 2013.

The two percent Medicare sequestration will eliminate about $1.3 billion revenue to critical access hospitals nationwide over the next 10 years, according to the National Rural Health Association.

Critical access hospitals are reimbursed by Medicaid at a higher rate than larger hospitals to help offset lower patient volumes. And rural hospital chief executives say the cut has negatively affected their budgets.

Managing Medicaid population

About 60 percent of patients at the Kossuth Regional Health Center in Algona are on Medicare and another 15 percent are on Medicaid, said Scott Curtis, the hospital's president and chief executive officer. The north central Iowa hospital, which has 25 beds, is in a county where about 22 percent of the population is 65 years old or older, according to the Census.

The hospital has a 1 percent profit margin, Curtis said, adding that 'you do what you have to do' to balance the needs of staff, new equipment and additional services.

Percentage of Iowans on Medicaid has jumped since 1998

About: This chart shows the percentage of Iowans enrolled in Medicaid since 1998. The number of recipients was divided against the population of Iowa in each year to get the total. To download the data, click here.

Over the years the hospital has had to eliminate its meals-on-wheels program, which provided about 25 meals a day to the area's elderly, in addition to meals it gave to the prison because of Medicare changes.

It also is unable to fully commit the necessary funds or staff to public health efforts, Curtis said, explaining it only can offer volunteers for communitywide health and wellness events.

However, it has found the wiggle room to add health coaches and navigators, which are needed to help new patients on Medicaid take better advantage of their health care plans, Curtis said. That's because while more patients now have insurance and are receiving preventive care services, the hospital also has seen an increase in the number of people using its emergency room.

'People now have this benefit but don't know the best way to take advantage of it,' he said.

The Iowa Department of Human Services said about 30,000 on the 150,000 on the Iowa Health and Wellness program have received a health risk assessment while about 42,800 have gotten a wellness exam.

Those numbers are encouraging, Curtis said, but still need improvement.

'We're all looking at how to make the system better. When it comes to the Medicaid population, it's how can you better inform these people on the best place to go for care. ...

We need to help them understand,' he said.

About: Kossuth Regional Health Center

• County served — Kossuth

About: Veterans Memorial Hospital

• Patients on Medicare — 60 percent

• Patients on Medicaid — 15 percent

• Percentage of Kossuth County residents 65 and older — 22 percent

• Percent of Kossuth County residents living below poverty line — 8.7 percent

• Counties served — Allamakee, Howard, Clayton and Winneshiek

• Patients on Medicare — 65 percent

• Patients on Medicaid — 10 percent

• Percentage of Allamakee County residents 65 and older — 20 percent

• Percent of Allamakee County residents living below poverty line — 12.6 percent

Rural hospitals are searching for the perfect match.

An ever-changing health care landscape with increased regulations can make maintaining independence difficult and costly for rural hospitals with paper-thin financial margins.

That makes affiliation with a larger health care system — with access to more resources and help — increasingly popular. But starting a relationship with another organization is a big commitment.

'It's like a marriage,' said Brock Slabach, senior vice president for member services of the Leawood, Kan.-based National Rural Health Association, noting you want to find a partner who shares your vision and mission as well as is a good cultural fit.

'If there are key gaps that the hospital can't provide for themselves, they may need to look outside to fulfill them,' he said.

There are four primary reasons why a rural hospital may choose to affiliate with a larger system — clinical needs, capital needs, access to insurance products and health information technology needs, Slabach said.

A 2014 University of Iowa study found that between 2007 to 2012 connecting with a system and participation in a network increased among hospitals of all sizes — from 25-bed critical access hospitals to large, metropolitan facilities.

"If there are key gaps that the hospital can't provide for themselves, they may need to look outside to fulfill them."

- Brock Slabach

Senior vice president for member services of the Leawood, Kan.-based National Rural Health Association

A network is a group of hospitals, physicians or insurers that work together to coordinate and deliver services to their community. A system includes two or more hospitals owned, leased or managed by a central organization.

The study, which analyzed data from the American Hospital Association, found that critical-access hospitals network participation and health system membership climbed in those five years.

In 2007, 20.5 percent of the 1,243 critical access hospitals participated in a network, and 37.7 percent were members of a health system. By 2012, nearly 42 percent of the 1,279 critical access hospitals were in a network and 42.8 percent were in a system.

Finding the right partner

More than three-quarters of Iowa's hospitals have some kind of affiliation, according to the Iowa Hospital Association. But not all affiliations are created equal.

It's important for rural hospitals to forge partnerships that benefit both the hospital and the system, Slabach said.

'Once it's done, (the hospitals) lose control,' he said. 'They have to ensure this is being done in the best interest short-term and long-term for the community.'

Such as with a hospital in Carthage, Miss., that affiliated with a larger hospital in Jackson, Miss. The relationship eased financial burdens and allowed the rural hospital to build a brand-new facility, Slabach said.

Slabach noted that in a good affiliation agreement, there is clear communication. And if there are problems, adjustments need to be made, he said.

'Having a partner being able to support you when you might need it ...

having that relationship is so important,' said Barry Goettsch, chief executive officer of Marengo Memorial Hospital.

The hospital was affiliated with the University of Iowa Hospitals and Clinics for about seven years before joining Des-Moines-based UnityPoint Health three years ago.

Marengo Memorial, a 25-bed critical access hospital, looked at its options before making the jump and, ultimately, Goettsch said the hospital went with UnityPoint because it was the 'right fit.'

The relationship is different from a typical affiliation, he said, because it ensures that the hospital is not owned or managed by UnityPoint.

'But we have access to resources — for instance, our primary legal counsel is through UnityPoint,' he said. 'We could go with another firm, but that comes at a high cost, and this firm has health care-specific knowledge.'

Marengo Memorial also is able to participate in group purchasing, which Goettsch said has a 'significant financial impact,' and orders prescriptions through St. Luke's Hospital's pharmacy.

Those cost savings allow Marengo Memorial more financial flexibility for its upcoming expansion project, which will expand its emergency, surgical and physical therapy departments as well as add new space for administrative and support services.

But he admitted there also are advantages to not being owned or managed by the system.

'We are truly a local health care provider,' Goettsch said. 'The autonomy we have as an independent facility means we can make the best decisions for us.'

Providing Community Services

But Dr. Anthony Leo, a physician who has worked in Oelwein his entire career, is cautious when it comes to affiliation. He can see the benefits the security brings.

'But affiliation means that they don't always fulfill the needs of the community sometimes,' he said.

The general surgeon grew up in Oelwein and returned to the city of 6,200 after he finished medical school at the University of Iowa. He worked with the Mercy Hospital but maintained an independent practice.

Mercy is part of the Wheaton Franciscan Healthcare system, providing 24-hour emergency room services, ambulance transportation, radiology and digital mammography services, as well as rehabilitation therapies and other services.

But the hospital closed its operating room three years ago, Leo said, meaning he now spends more time working in Independence, about 20 minutes away. He believes that change leaves health care gaps in the community.

This has led Leo and other community members to form the Oelwein Community Health Care foundation, a not-for-profit group that is planning to build an outpatient medical facility.

The group just hired a project manager and had land donated to the project.

'We're going to build something that the community is lacking,' he said. 'We want to bring services to this area that are underrepresented or we've lost over the years.'

The passage of the Affordable Care Act in 2010 threw new pieces into an already complex health care puzzle — moving the health care system from a fee-for-service payment model to a value-based system, and requiring hospitals to report quality measures to the Centers for Medicare and Medicaid Services

And today rural hospitals still are figuring out how they fit into that puzzle.

The smaller populations that rural hospitals treat can make participating in some of these new initiatives — such as Accountable Care Organizations and submitting certain quality measures — difficult, expert say.

'We definitely want the quality known, it's just coming up with metrics that are workable for them,' said Kirk Norris, president and chief executive officer of the Iowa Hospital Association, which represents the state's more than 100 hospitals.

For example, hospital are supposed to submit metrics relating to ventilator-associated pneumonia, a lung infection that develops when a person is on a ventilator. But most rural hospitals don't have intensive care units, which means they wouldn't deal with that type of illness.

'They'd have nothing to report,' Norris said. 'A lot of measurements don't apply to them, but if they were to put 'not reportable' that could raise questions.'

Low volume

Critical access hospitals are rural facilities that provide short-term care and have no more than 25 beds that are given a special Medicare designation. This designation means Medicare reimburses them at a higher rate to help offset their low patient volumes.

These very low patient volumes can make obtaining the necessary data for certain designations or measurements, difficult, said Jim Atty, chief executive officer of Waverly Health Center, a 25-bed critical access hospital.

'There seems to be a movement from volume to value, but the rules are not necessarily written to play the game,' he said.

The hospital, which Atty describes as one of the larger critical access hospital in the state, has a birthing center, emergency department, physical therapy, cardiac rehabilitation services and specialty clinic among other services more unusual for smaller hospitals, including a spa and psychiatrist on staff.

It has worked hard on patient satisfaction, he said, pointing out that it was one of about a dozen Iowa hospitals to get the full five-star rating from the Centers for Medicare and Medicaid Services, which rated 3,500 of the country's hospitals on patient experience.

Waverly Health Center also has its Planetree designation, which measures the level of patient-centered care and looks at everything from patient education to providing a healing environment.

But Atty said that, as the hospital has undergone the redesignation process, he's realized there are many areas in which it doesn't have enough patients to submit.

'We're working with Planetree to work through it,' Atty said, 'because we don't always have the statistically significant numbers.'


Another big piece of the ACA jigsaw puzzle is Accountable Care Organizations, or ACOs.

ACOs are groups of physicians, hospitals or other health care providers that come together to coordinate care and share savings.

But again, low patient volumes can present a problem. For instance, to be part of the Medicare Shared Savings Program — a federal program that helped Medicare fee-for-service providers become an ACO — hospitals must have 5,000 Medicare patients. That's something a rural hospital typically doesn't have.

Atty said Waverly Health Center is focusing on achieving the Triple Aim, which he said should make the hospital attractive to an ACO. The Institute for Healthcare Improvement nationwide initiative focuses on improving the patient experience, improving the health of the population and reducing the cost —

'Just because we're a smaller hospital, doesn't mean we don't have to hold ourselves to the same standards,' he said.

Meanwhile, Iowa Specialty Hospital-Belmond is taking a different approach. The hospital, along with Iowa Specialty Hospital-Clarion, joined the National Rural ACO, a California-based ACO made up of nine rural health systems from across the country.

Joining the National Rural ACO gives the hospitals access to Medicare claims data as well as help analyzing that data to identify trends and coverage gaps, said Amy McDaniel, chief executive officer of Iowa Specialty Hospital-Belmond, an 18-bed critical access hospital. The facility shares staff and operates clinics with Clarion, a 25-bed hospital about 15 minutes away.

Participating in the ACO also made the hospital eligible for a grant, which allowed it to hire a care coordinator. The coordinator's job is to identify patients who haven't had a checkup in awhile, said Dr. Michael Hurt, the hospital's chief medical officer.

'We can get them to come in, take their blood pressure and, if it's high, put them on medication so they don't have a stroke later on,' he said.

The hospitals together pay a fee of $10,000 a month and in return get access to training, data and analytics as well as guidance on what to do as next steps.

'We're just figuring out which patients to reach out to,' McDaniel said. 'When you look at 2,200 Medicare patients, where do you even start? It can be overwhelming. ...

The ACO provides that guidance.

'It's another tool in our toolbox.'