It’s a gut punch to people living in rural communities when their local hospital closes. It’s also painful to me personally. As someone who grew up in a rural community in Nebraska, I’m intimately familiar with how important these hospitals are to the health of rural residents and to the vitality of the community. What pains me even more is that I know of a way these hospitals can help themselves — if only they were more aware of the opportunity and how to seize it.
The scope of the problem
Nearly 1 in 5 Americans live in rural areas and depend on their local hospitals for medical care. Yet it’s been estimated that more than 700 rural hospitals — one-third of all rural hospitals in the country — are at risk of closing in the near future because of financial problems. More than 100 have closed over the past decade.
That’s a lot of gut punches.
In trying to save these hospitals, the way payers reimburse them for the care they deliver has deservedly received a lot of attention. As the website Saving Rural Hospitals explains, the insurance system heavily favors hospitals with a higher volume of patients, and hospitals in less populated areas suffer as a result.
Many rural hospitals also face the reality that the people they serve are more likely to be uninsured or underinsured, which can cause delays (at best) in trying to collect payment.
Administrative solutions: Taking control of what we can control
Given the number of challenges they face, rural hospitals urgently need to eliminate the administrative inefficiencies that slow their claims processing, impair their cash flow, and decrease their revenue. Yet most of these hospitals don’t realize how big the opportunity is for them to improve this efficiency quickly or how much doing that could improve their financial health and ability to reinvest in care.
For example, the accuracy and speed of International Classification of Diseases (ICD) medical coding have an outsized impact in the billing process. When there are errors, hospitals see claims denied and must expend a lot of time and money to correct the flaws. With incorrect or incomplete coding, they also may get paid less than they should.
Unfortunately, the coding process can get very complex and time-consuming. It often relies on individuals reviewing a large amount of written material — an even bigger challenge for rural hospitals, where staff shortages are more likely to be an issue.
Automation and other process improvements can make a huge difference. A 2021 study found that automating ICD codes decreased documentation time from 20-40 minutes to 30 seconds. In the process-improvement work my company, Signature Performance, has done with rural healthcare clients, we’ve seen coding accuracy jump by more than 20%, on average.
That’s just one example of potential improvements. Areas like patient registration, insurance eligibility checks, and claims tracking (part of the revenue cycle management [RCM] process) are ripe for improvement if you take a close enough look.
Impact
My company worked with one rural hospital system that was at risk of scaling back services if they could not find a way to increase efficiency, cash flow, and revenue. Through a comprehensive assessment of their RCM, we found hugely impactful changes they could implement immediately. These changes included updating physician national provider identifiers; credentialing clinicians with large payers such as Medicare; and gathering metrics to better identify trends in insurance payer issues, denials, and rejections. We found that updating a few simple processes and procedures prevented cash flow delays lasting days, weeks, or even months.
By implementing changes like these, the hospital boosted its revenue by 10%. It lowered its accounts receivable days — the average number of days it takes to collect payment — by 27%. Most important, the financial improvements allowed the hospital to resume plans to add a wing and increase service levels.
This rural hospital isn’t closing — it’s expanding. That’s the type of news I like to hear. That’s the future I see for rural hospitals and the communities that depend on them.
