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Rural Hospitals Scale to Fit Communities’ Needs


Three North Carolina hospital systems, three strategies, ever evolving.

By Taylor Sisk

At the beginning of this, the final, season of “Downton Abbey,” The New York Times published a mock issue of a 1925 Downton Times, the front-page headline of which asked: “Will Downton Cottage Hospital Be Swept Up in Tide of Change?”

One century and an ocean removed, the fate of rural hospitals remains precarious. Smaller, relatively remote hospitals continue to face numerous challenges: declining, aging populations; dwindling margins; difficulties recruiting providers.

It’s enough to give even the Dowager Countess of Grantham pause.

Granville Medical Center in Oxford. Photo credit: Taylor Sisk

Granville Medical Center in Oxford. Photo credit: Taylor Sisk

In North Carolina, as elsewhere, rural hospitals are pursuing varying strategies that they trust fit the populations they serve today. Most all consider themselves hospital systems, from small single facilities, such as Granville Health System, to Western North Carolina’s Mission Health.

Serving a broad region

Asheville-based Mission is the state’s sixth-largest system, covering 18 Western North Carolina counties. With the exception of Buncombe, those counties are largely rural.

Mission’s system includes the 552-bed hospital in Asheville and five smaller hospitals: two in Macon County and one each in McDowell, Mitchell and Transylvania. Of those five latter, only McDowell isn’t a critical access hospital.

The system also operates a broad network of primary care and specialty practices throughout Western North Carolina.

The comprehensiveness of this system, said Bob Bednarek, Mission’s vice president for rural health planning and development, affords a “seamless delivery of care” and a “strong relationship with a tertiary center” for some remote, mountainous areas. (The largest town west of Asheville is Waynesville, with a population right at 10,000.)

It’s the kind of system that Jeff Spade, executive vice president of the North Carolina Hospital Association’s NC Center for Rural Health Innovation and Performance, believes is well suited for that region.

“North Carolina is a very diverse state geographically,” Spade said. “You have major urban areas and rural areas geographically dispersed.” By contrast, he said, Kansas and Nebraska, for example, have hundreds of miles of rural terrain within which a large hospital isn’t viable.

Kathy Guyette is Mission Health’s senior VP for patient care services and president of regional member hospitals. Photo courtesy Mission Health

Kathy Guyette is Mission Health’s senior VP for patient care services and president of regional member hospitals. Photo courtesy Mission Health

This geographic diversity, he said, lends itself to health systems that have “all the parts you’re looking for,” including a multi-specialty medical center, rural hospitals and community-based physicians.

In most rural areas, Spade said, your major payers are Medicare and Medicaid, with a large number of uninsured, reflecting populations that skew old and very young and often low income. Serving urban areas as well, which are likely to have relatively more privately insured patients, helps keep larger systems out of the red.

“If you can group all that work into a health system, then you can start making the financial resources available across a broad region,” Spade said.

Mission has incrementally brought regional hospitals under its umbrella, and Kathy Guyette, senior VP for patient care services and president of regional member hospitals, acknowledged there’s “always a little bit of that angst” for independent hospitals when joining a system. But that’s generally soon alleviated, she said, by the benefits gained – access to specialists, information systems, purchasing power, career-development opportunities and leverage in recruiting and retaining providers among them.

Mission’s executive team’s immediate focus, Guyette said, is on placing primary care practices throughout the whole of Western North Carolina: “That’s just absolutely the cornerstone. And then we’ll look at what [additional] specialists we need out in our regions.”

Particular needs

Lumberton-based Southeastern Health is a regional system on a smaller scale. It serves all of Robeson County and also has clinics in neighboring Bladen, Cumberland and Scotland counties. Much of its region is distressed: Robeson and Scotland have per capita incomes about $10,000 lower than the statewide average of $25,284; Bladen’s is about $6,000 below.

In 2013, Southeastern Health changed its name from Southeastern Regional Medical Center to signal a shift toward a more comprehensive, out-in-the-community approach to health care.

Southeastern Regional CEO Joann Anderson said she worries that changes to certificate of need laws would undermine her hospital's financial stability.

CEO Joann Anderson of Lumberton-based Southeastern Health. Photo credit: Rose Hoban

Southeastern president and CEO Joann Anderson said the Affordable Care Act “really laid the groundwork that the transition is moving from an inpatient focus to an outpatient focus.”

Unlike Mission, Southeastern has but one hospital. The system includes primary care clinics (including one in a Walmart with evening hours), specialty clinics, a cancer center, behavioral health care services, fitness centers, long-term care, home care, medical equipment services, outpatient rehab services, an urgent care clinic, a weight-loss center and a pharmacy.

And it now has a transitional care clinic with an aim to ease the bumpy road home for recently discharged inpatients.

Southeastern offers everything a multi-hospital system provides, Anderson said. “It’s definitely a system.”

She said that the board of directors has ongoing discussions on whether the system should continue in its current configuration or realign, affiliate or merge. For today, Anderson said, the board feels “we have a good handle” on the needs of a diverse population. Robeson County is roughly 40 percent Native American, 30 percent white and 25 percent black, with a growing Latino population.

Anderson said that in their discussions, analogies have been made to the consolidation of banking, whereby often the specific best interests of a community are subsumed.

“We believe we have the vested interests of the population in hand,” she said, “and that might be lost if we connected with a larger institution.”

A particular service may operate in the red, but is provided if the board feels there’s a need for it and it matches their mission.

“So we find a way to make it work,” Anderson said.

“I won’t say that we’ll never be a part of a larger institution,” she said, “but as long as it makes sense … the board would like to be independently making the decisions about the future of the organization.”

Hometown product

Among the smallest independents in the state is Granville Medical Center in Oxford, 30 miles northeast of Durham. Granville has 62 acute care beds and 80 long-term care. It too is part of a small, locally focused system, Granville Health System, offering a variety of outpatient services throughout rural Granville County.

Lee Isley is CEO of Granville Health System in rural Granville County. Photo credit: Taylor Sisk

Lee Isley is CEO of Granville Health System in rural Granville County. Photo credit: Taylor Sisk

Granville CEO Lee Isley has headed the system for 10 years. He said when he first arrived, he went downtown and asked people about their impressions of the hospital.

“One of the things that struck me was that everyone knew the value of the hospital to the community and wanted the hospital to be successful,” he said. While recognizing that you wouldn’t expect anyone to say, ‘Get rid of that hospital,’ his experience is that it’s not uncommon for communities to be indifferent.

Isley knew that such support was vital to the success of a small rural health system.

“I think it’s the history,” Isley said of the source of that commitment. The original building went up in 1938, and is still in use. Community elders tell him they remember playing on the front lawn there on College Street. “There’s a connection with the hospital just through a lifetime worth of experiences.”

Granville County residents, like those of many small rural communities, are proud of their self-reliance, their assets, Isley said. The hospital “defines that they have something of their own.”

When Isley arrived, the hospital employed one physician: a general surgeon; it now has some 20 providers. It also operates the emergency medical system for the county.

An advantage of remaining independent, Isley said, is that those who set the vision and provide the governance are the people who are served.

“These are members of the community. They’re at the grassroots level. They’re committed to the community and the organization, and they want the very best,” he said. “Their energy isn’t split amongst four or five difference facilities over four or five different areas. They’re focused right here.”

Another advantage, Isley said, is that any excess margin “is reinvested in the community; it’s reinvested into our services, into the facilities and into our staff.”

The cons of remaining an independent, he said, include “bench strength.” Those in upper management must be generalists. If, for example, they’re going to introduce the federal 340B pharmacy program, which allows for deep discounts on drug prices, he’ll be involved in that process along with his CFO and COO.

Another con is that while Granville belongs to a group purchasing organization, that still doesn’t give them the negotiating leverage of a large system.

A smaller system allows medical staff to work in a “very intimate, collaborative arrangement. Their voices are heard every day,” Isley affirmed. The downside is, once again, bench strength. Medical staff doesn’t have a great deal of backup; most physicians are single-provider practices.

But partnerships with larger systems in the area help alleviate that. Granville also uses these partnerships – including with Duke, UNC and Wake Med – to access assistance in a variety of specialties.

“We need to know when we need help,” Isley said.

He said the management team and board regularly assess the decision to remain independent, monitoring quality, reinvestment and whether they can provide competitive wages.

“It’s getting tougher and tougher to meet all of those areas,” Isley acknowledged. But, “I’m comfortable that we continue to have an open mind.”

This story was made possible by a grant from the Winston-Salem Foundation to examine issues in rural health in North Carolina.

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