Geisinger Executive Explains New Program to Improve Healthcare and Lower Costs for Rural Hospitals in Pennsylvania
Karen M. Murphy, Ph.D., RN, executive vice president and chief innovation officer at Geisinger along with Dr. Lauren Hughes and Dr. Patrick Conway published a paper in the Journal of the American Medical Association (JAMA) proposing a strategy to preserve rural hospitals. The paper, entitled “A Path to Sustain Rural Hospitals,” tackles the issue and offers a potential solution based on an innovative payment and delivery model introduced in 2017 by the Pennsylvania Department of Health and the Centers for Medicare & Medicaid Services called the Pennsylvania Rural Health Model. The Department of Health and CMS will begin testing the model in 2018.
The new program will provide rural hospitals an opportunity to transition from a fee-for-service reimbursement system, based on volume, to a multipayer global budget payment method, which is based on value of services that are intended to improve population health outcomes and quality of care while lowering costs.
“The Pennsylvania model was designed to meet the health needs of rural residents and to aid in sustaining a health care system that improves population health and access to health care while offering rural hospital a sustainable business mode,” said Murphy.
In the paper, Murphy points out that more than 58 percent of the hospitals have mounting financial pressures, resulting in break even or negative operating margins. She further explains that there has been a significant number of rural hospital closures in less than a decade. In the past seven years, 83 of the 2,244 rural hospitals in the U.S. have closed due to financial challenges.
The Pennsylvania Rural Health Model is designed to include Medicare, Medicaid and commercial payers. The plan provides that the hospital budget will be calculated and each month the hospital will be paid 1/12 of the total budget amount. This is intended to give rural hospitals a revenue stream to allow sustainability and improved healthcare. The global budget will incentivize rural hospitals to retain the revenue regardless of hospital use.
Murphy explains that other elements of the model include support in transition through the creation of a Rural Health Design Center. The model also includes the implementation of strategies that could save an estimated minimum of $35 million to Medicare over the life of the model.
“Rural hospitals provide imperative health care services and also provide economic stability in the regions they serve,” said Murphy. “If the Pennsylvania Rural Health Model achieves better quality and lower costs, it could be scaled as a model for the nation for rural health care delivery.”
About Geisinger
Geisinger is among the nation’s leading providers of value-based care, serving 1.2 million people in urban and rural communities across Pennsylvania. Founded in 1915 by philanthropist Abigail Geisinger, the non-profit system generates $10 billion in annual revenues across 134 care sites - including 10 hospital campuses, and Geisinger Health Plan, with 600,000 members in commercial and government plans. The Geisinger College of Health Sciences educates more than 5,000 medical professionals annually and conducts more than 1,400 clinical research studies. With 26,000 employees, including 1,600 employed physicians, Geisinger is among Pennsylvania’s largest employers with an estimated economic impact of $14 billion to the state’s economy. On March 31, 2024, Geisinger became the first member of Risant Health, a new nonprofit charitable organization created to expand and accelerate value-based care across the country. Learn more at geisinger.org or connect with us on Facebook, Instagram, LinkedIn and X.
