September 1999
A Report of the
Office of Rural Health Policy
Health Resources and Services Administration
Public Health Service
U.S. Department of Health and Human Services
Prepared by
Anthony Wellever
Delta Rural Health Consulting & Research
Table of Contents
Introduction
In 1996, Public Law 104-299 authorized the Rural
Network Development Grant Program. The objective of the program
is to "expand access to, coordinate, restrain the cost of, and improve
the quality of essential health care services, including preventive
and emergency services, through the development of integrated health
care delivery systems or networks in rural areas and regions." The
program is administered by the Office of Rural Health Policy (ORHP),
Health Resources and Services Administration, Public Health Service,
U.S. Department of Health and Human Services.
Thirty-four rural health networks received Rural
Network Development Grants from the ORHP in October 1997. The majority
of these networks requested funds for programs for managed care,
community health, or telemedicine development. The five case studies
that follow are examples of rural health networks drawn from the
34 networks awarded grants in the first cycle of the program. Since
1997, ORHP has funded 41 networks.
These case studies are not intended as models.
The diversity of local circumstances argues against the notion that
the forms and functions of networks can be plucked from one locale
and replicated in another. Networks must be built one "community"
at a time. However, by illustrating how some networks have approached
issues of organization and development, these examples may help
local decision-makers think through their problems and arrive at
their own solutions.
The five rural networks profiled here are located
across the country and offer a variety of different services to
members and the public:
- CHOICE Regional Health Network, Inc.,
Olympia Washington, is a network governed by hospitals.
It has a close association with an urban hospital and a not-for-profit
health care system. Despite its dominance by hospitals, CHOICE's
programs have a decidedly public health orientation. The Regional
Access Program is CHOICE's most visible program. It attempts to
enroll uninsured residents of the area in state-subsidized insurance
plans.
- Community Health Council of Manhattan,
Inc., Manhattan, Kansas, is a broad-based network composed
of local providers, business leaders, local government leaders,
educators, social service providers, and the public at large.
The Community Health Council has focused much of its energy on
health planning and creating the infrastructure for greater cooperation
in the area. It has partnered recently with another organization
to establish a buyers' cooperative for purchasing health insurance.
Through the cooperative, the Community Health Council hopes that
health insurance will become more affordable for small employers.
- Eastern Panhandle Integrated Delivery
System, Inc., Martinsburg, West Virginia, is a network
composed of hospitals and physicians in a nine-county area. The
region is diverse, yet all of its providers perceive the need
for a strategy to cope with the pressures of managed care they
feel bearing down on them. Eastern Panhandle Integrated Delivery
System developed a managed care strategy that features a provider
network for managed care contracting, a third-party administration
function for contracting with self-insured employers, and a private-label
point-of-service insurance product.
- Lake Okeechobee Rural Health Network,
South Bay, Florida, was formed initially by a grant from
the state of Florida, which required, by statute, a diverse membership
of local providers. In partnership with a managed care organization,
the network created its own health maintenance organization, the
Okeechobee Health Plan. The HMO was developed as a way of reducing
outmigration to urban areas, improving retention of providers,
and assuring a level of access to medical services for those unable
to pay.
- Northern Sierra Rural Health Network,
Inc., Nevada City, California, is composed of a variety
of public and private providers who reside in a geographic space
almost the size of West Virginia. Initially formed to develop
a response to the spread of managed care to this region of the
state, the network changed its primary focus to overcoming the
burdens of travel and isolation by developing a telemedicine system.
Leveraging grants from several sources, the network was able to
establish a 20-site telemedicine network.
CHOICE Regional
Health Network, Inc.
Olympia, Washington
Evolving Purpose
and Structure
Three distinct phases mark the development of
CHOICE Regional Health Network, each a response to a continually
shifting rural health environment. The first phase was a defensive
alliance among hospitals aimed at protecting, and possibly enhancing,
their market shares in an increasingly competitive market. The second
phase of the development of CHOICE may be characterized as a period
of stagnation and eventual re-definition of purpose. Following four
years of marginal accomplishments, the members of the network asked
whether they should continue their association and, if so, what
direction the network should take. The decision to continue the
network led to the third phase of development, a strategic partnership
that targets key problems in the environment.
Phase One
In 1992, seven hospitals (six rural and one urban)
in central Southwestern Washington State came together to form a
horizontal rural health network in response to competitive pressures
from a for-profit hospital system. The for-profit system had recently
acquired a hospital in metropolitan Olympia, Washington, that had
been operated previously as a not-for-profit facility. In an effort
to capture market share, the new owners of the hospital adopted
an aggressive strategy of establishing medical clinics in the rural
area surrounding Olympia. These clinics competed directly with local
physicians and diverted admissions from rural hospitals to Olympia.
The health care delivery systems of the six rural
communities were tied to Olympia for medical specialty and tertiary
care services. The perceived threat posed by the for-profit hospital
drove the rural hospitals into the camp of the for-profit hospital's
primary competitor, St. Peter Hospital, a member of Providence Health
System, owned by the Sisters of Providence, Seattle. Urban St. Peter
Hospital historically had engaged in bilateral collaborative activities
with the rural hospitals comprising the emerging network. One of
the six rural hospitals was owned by Providence Health System.
The seven hospitals began their relationship
by simply meeting to share information and build trust. The group
adopted the name CHOICE Regional Health Network, and in late 1993,
obtained a $40,000 grant from the Washington Health Foundation to
pursue networking. The stated purpose of the grant was "to develop
a rural network consisting of hospitals, physicians, and ancillary
providers, dedicated to sharing resources and capable of providing
capitated comprehensive care to residents of the five county area."
The rural hospitals in the network began to use certain administrative
services provided by St. Peter Hospital, but other goals of the
grant were not fulfilled: physicians and ancillary providers were
not brought into the network, and the network was not used as a
vehicle for region-wide managed care contracting.
Phase Two
Several events in the health care environment
came together in the period 1993 to 1996 that slowed the momentum
of CHOICE and eventually led to its members questioning whether
the network should continue. Following a consistent stream of state
policy development and accelerated by enthusiasm for national health
care reform, the legislature of the state of Washington passed comprehensive
health care reform in 1993. Managed care was at the heart of the
reform initiative. Because CHOICE was not prepared to serve as a
contracting vehicle and because providers perceived the need to
associate quickly with a contracting entity to cope with managed
care, physicians began to form their own networks, and three physician-hospital
organizations (PHOs) developed in the network service area.
In 1995, Providence Health System, the owner
of St. Peter Hospital, signed management contracts with two of the
remaining five independent rural hospitals in the network. The signing
of these agreements meant that four of the seven hospitals in the
network were either owned or "controlled" by Providence Health System.
These hospitals benefited from the corporate services provided by
Providence Health System without having to belong to CHOICE. During
this period, the fundamental purposes for CHOICE's existence began
to erode: managed care contracting by members was proceeding without
the need for CHOICE, and one-half of the rural hospitals in the
network did not need CHOICE to obtain administrative and clinical
support from St. Peter/Providence Health System.
The year 1995 was a watershed year for CHOICE.
An executive director had been hired to combine all of the contracting
entities into a super-PHO and to conduct a strategic planning exercise.
It quickly became clear that a super-PHO could not be fashioned
from the various contracting entities within the service area. The
entities were at different stages of development and mistrust of
CHOICE, especially among physicians, was high. Attempts to overcome
these difficulties are reflected in the original make-up of the
newly formed corporation (the network incorporated in 1996 for the
purpose of obtaining and handling money). The Board of Directors
of CHOICE Regional Health Network, Inc., consisted of three PHO
executives, five physicians, two hospital representatives, and three
community representatives (who were never appointed).
The strategic planning exercise changed the direction
of the network. By 1996, comprehensive health care reform in Washington
State had begun to disintegrate. The failure of health care reform
lessened the need for the network to serve as a contracting vehicle.
Based on a comprehensive analysis of the service area and an evaluation
of strategic options, the members decided to shift the purpose of
the network from joint contracting to public health improvement.
The shift in purpose is reflected in the network's attempt to "reach
out" to physicians and public health agencies and it's development
of four strategic programs. By 1998, the Board of CHOICE had reverted
to its hospital dominance; five hospital administrators and two
executives from Providence Health System comprise the Board. A Regional
Planning Forum brings other providers into network decision-making.
The Regional Planning Forum is made up of the Board of CHOICE plus
two hospital administrators, one PHO executive, one physician, and
five public health department executives.
Four programs covering access, health promotion,
patient care, and strategic planning emerged from the strategic
plan of phase two. To help finance these programs, the network applied
for and received a Rural Network Development Grant in 1997 from
the federal Office of Rural Health Policy.
Phase Three
Phase three of CHOICE's development is the implementation
of the phase two strategic plan. The strategic plan identified four
goals for which network programs should be developed:
- Expand access to services in rural areas (access)
- Improve the health status of targeted groups
(health promotion)
- Improve facility-to-facility coordination
(patient care)
- Facilitate regional planning (strategic planning)
Begun in 1997, phase three of CHOICE's development
continues today.
Current Programs
CHOICE developed a number of programs under each
of the four strategic areas. Three of these programs are outlined
below.
Regional Access Program (Access)
In an assessment of the five-county service area,
CHOICE discovered that 12 percent or approximately 45,000 residents
were without health insurance: one-half of them were children. CHOICE
surveyed the uninsured and found that 41 percent of them were unaware
of affordable options and that 31 percent had encountered some barrier
to enrollment. The most frequently cited barrier was unclear or
overwhelming information about benefits and the enrollment process.
CHOICE developed a program to improve enrollment. The linchpins
for the Regional Access Program (RAP) are the state of Washington's
Basic Health Plan, a subsidized health insurance program provided
through the state, and Healthy Options, the state's Medicaid program.
The RAP features the following elements:
- Marketing and advertising:
CHOICE developed several brochures to inform residents about the
Basic Health Plan and Healthy Options. These brochures are made
available though a variety of community-based organizations. Marketing
materials are available in doctor's offices and hospital waiting
rooms; brochures are sent home with school children; and information
about state insurance programs and RAP application assistance
is made available through newspaper advertisements and other area
publications.
- Outreach to community organizations:
The RAP works with schools and day care centers to help identify
children without health insurance and works with hospitals, physicians,
health departments, and social service agencies to obtain other
referrals.
- Application assistance: The
RAP employs six access coordinators who are assigned by service
area. The access coordinators make contact with clients individually
to inform them of the available insurance programs; help them
complete applications for enrollment; and provide any necessary
follow-up to complete the application process.
- Enrollment case management:
Access coordinators explain the benefits and help clients choose
an affordable health plan. They also serve as a link with the
state Health Care Authority and the Department of Social and Human
Services to facilitate enrollment of clients. Through research
it conducted, CHOICE discovered the disenrollment rate of eligible
clients was 28 percent for adults without children and 19 percent
for families. Access coordinators work with enrolled clients to
help assure they maintain their coverage.
- Advocacy: CHOICE staff serve
as advisors during the enrollment process, assist clients in appealing
decisions, and provide other assistance necessary to improve the
well-being of clients and reduce uncompensated costs to the health
care system. CHOICE "does whatever is necessary" to assist clients.
For example, it has paid all or a portion of the Basic Health
Plan premium for some clients. In other cases, it has paid for
drugs when the client could not afford both the premium and the
cost of prescriptions.
- Consumer education: Once clients
are enrolled they receive information about the health plans and
changes in coverage; information about managed care and how to
navigate the system; and information about how to be a responsible
health care consumer, with a focus on primary care.
- Training for community-based organizations:
CHOICE staff give presentations and conduct training sessions
for organizations interested in reducing the number of uninsured.
The RAP is financed, in part, by a levy of $24,000
per hospital. The program is expected to reduce uncompensated emergency
room visits by making physician office visits more accessible and
to convert uncollectible charges for acute care into a new source
of revenue. Examining only the hospital utilization of clients who
had been enrolled in either the Basic Health Plan or Health Options
through the efforts of the RAP found that one hospital increased
its revenue for the year by $44,000. If this amount is typical,
hospital participation in the RAP would yield a return-on-investment
of 83 percent. The additional revenue for local physicians is unknown.
The RAP has enrolled 4,000 people in state-sponsored
health insurance programs. CHOICE estimates that this program will
save the five-county area approximately $7 million annually in uncompensated
care and will reduce hospital bad debts and charity care by an estimated
14 percent. The total community benefit is even greater. For example,
local residents whose access to care may have been compromised in
the past now have insurance coverage that assures access to services.
The Regional Access Program is the largest and
most visible program of CHOICE. Because CHOICE is not readily identified
with its hospital members, clients and community organizations often
view it as a quasi-governmental organization.
Diabetes Intervention Program (Health
Promotion)
CHOICE participated in a regional health assessment
that included a study of emergency room visits to area hospitals.
Every emergency room visit that did not result in an admission was
analyzed for the patient's age, sex, primary and secondary diagnoses,
and source of payment. Multiple visits by the same patient were
also analyzed. Once the report was compiled, CHOICE members reviewed
the report and suggested interventions that would improve the health
of patients and reduce the use of the emergency room by patients
without insurance. Uninsured patients with diabetes were identified
as frequent emergency room visitors.
CHOICE designed a diabetes intervention program.
Through the program a select number of uninsured diabetics receive
free screening (e.g., blood glucose meters and test strips, foot
and eye examinations), education (training on "living well with
diabetes"), medical supplies (including medications), and care coordination.
Hospital educators and other nursing personnel provide the services.
The purpose of the program is to reduce rates of uncontrolled diabetes,
prevent complications, reduce inappropriate use of high-cost services,
and improve the health outcomes of selected diabetics. The Diabetes
Intervention Program is relatively new and its impact has not yet
been evaluated.
Child Death Reviews (Health Promotion)
The legislature of Washington State appropriated
funds to the Department of Health to conduct child death reviews.
A coordinated, multi-disciplinary, community-based public health
process, child death reviews examine the circumstances of child
deaths and identify whether they are preventable. The goal of child
death reviews is to identify trends and implement changes that improve
the health and safety of children in the community. This is an ongoing
health assessment and health promotion activity.
The State Department of Health contracts with
local public health jurisdictions to conduct the child death reviews.
The local public health agencies in the five-county area of the
CHOICE network came together and sub-contracted with CHOICE to conduct
the reviews on a regional basis. Child deaths are relatively rare
occurrences. By enlarging the size of the population to be studied
beyond a single county, CHOICE increases the odds of identifying
trends in the data and of designing region-wide interventions.
Other Programs
CHOICE administers many more programs, including
1) an effort to improve the transfer process among providers in
the network; 2) the development of a rapid-response-to-stroke protocol;
and 3) area-wide joint strategic planning. Many of these programs
have the explicit goals of improving the health of the population
of the service area by making health care services more available
and of reducing the cost of uncompensated care to providers. To
accomplish these ends, CHOICE programs require hospitals and physicians
to work more closely with public health agencies and to adopt a
more population-based approach to planning and service delivery.
Measuring and Evaluating
Performance
CHOICE attempts to measure the effect of each
of its programs in financial terms. One reason for concentrating
on financial measures is to demonstrate to members that the considerable
cost of participation in the network is worth it. In 1998 the average
cost of network participation per hospital was approximately $38,000,
and in 1999 it was $48,000 (all participants do not pay the same
amount). While the return on investment of the RAP has been calculated
by CHOICE, the evaluation of the financial effect of other programs
is not complete. Nevertheless, to date, satisfaction of members
with CHOICE's performance is high.
Because many of CHOICE's programs are new, it
is not possible to gauge their long-term consequences. As part of
its continuing strategic planning and community assessment process,
CHOICE will attempt to measure the impact that its programs have
had on the health of the general population (through improving access
to services) and special populations (through its targeted interventions,
for example, programs for children and diabetics).
Community Health
Council of Manhattan, Inc.
Manhattan, Kansas
Enhancing Access
to Health Services
Small employers in Riley County, Kansas, are
scheduled to begin participating in a health insurance purchasing
cooperative on January 1, 2000. The health insurance purchasing
cooperative will enable employers with 50 or fewer employees to
improve their access to health insurance and to stabilize, and possibly
reduce, the cost of health insurance without sacrificing current
health insurance benefits. The Community Health Council of Manhattan,
Inc., a rural health network composed of civic leaders, employers,
and health care and social service providers is responsible for
the availability of the health insurance purchasing cooperative
to Riley County employers.
In the spring of 1999, the Community Health Council
(CHC) of Manhattan, Kansas, partnered with Alliance Employee Health
Access, a not-for-profit organization created to purchase health
insurance on behalf of small groups, giving them access to health
care benefits that typically only large employers can afford. Alliance
was created by the Kansas Employer Coalition on Health with initial
funding from the United Methodist Health Ministry. Alliance selected
Sedgwick County (Wichita) as its pilot site and planned to expand
service to serve "most populated Kansas counties" over the next
two years. Wichita was selected as the initial site for operations
because of its dense population and because the Wichita Area Chamber
of Commerce agreed to sponsor Alliance products in Sedgwick County.
Following discussions with the CHC, however, Alliance decided to
include Riley County as a second pilot site, making Riley County
the first rural county in the state to participate in the health
insurance purchasing cooperative.
Structured as a multiple employer trust, Alliance
hopes to make health insurance more accessible and affordable by
aggregating many small groups and buying health insurance coverage
on their behalf. Because the Alliance contracts will cover more
"lives," the cost of providing services should be somewhat lower,
and because poor experience will be averaged over a larger pool
of insured people, the cost of premiums should be more stable over
time. Alliance will contract with multiple insurers and allow individual
enrollees to choose among them. Using this approach, individuals
-- within limits established by their employers -- will be able
to select plans that assure them of the doctors, hospitals, and
coverage they want. Employers will have one administrative contact
for all health plans, will receive one bill, and will have the same
application form for all health plans. The CHC and Alliance currently
are in the process of developing a request for proposals to be sent
to insurance companies doing business in Kansas.
Although the partnership between the CHC and
Alliance is new, the CHC's interest in improving access to and affordability
of health care services in Riley County is not. Through its Rural
Network Development Grant, the CHC planned to explore the feasibility
of a "local/regional health plan that would bring purchasers and
providers together as partners to improve access to care." As a
first step in that effort, the CHC in cooperation with the Manhattan
Chamber of Commerce (a CHC member) conducted an Employer Group Health
Insurance Assessment in the fall of 1998.
The CHC developed an employer survey instrument
and sent it to approximately 1,200 area businesses, receiving a
response rate of 25 percent (307 returned surveys). The respondents
represented all sectors of Riley County's business community. More
than 80 percent of the respondents employed fewer than 50 people.
Almost one-half of the businesses did not offer health insurance
benefits to their employees, citing cost of premiums as the primary
reason for not offering the benefit. Findings from the survey indicated
that availability of health insurance to employees is associated
with the size of the company; employers with 50 or fewer employers
were less likely to offer health insurance. The survey also found
that many employees of firms that did not offer health insurance
benefits were covered by the benefits of another family member.
Small employers expressed interest in the development of a low-cost
health insurance plan by the CHC and the Chamber of Commerce.
In conjunction with the Chamber of Commerce,
the CHC publicized the results of the survey through a media campaign
and community meetings. The CHC decided to move forward with the
design of a locally-owned health insurance product and hired a consultant
to develop a model plan and benefits package and to prepare a business
plan. Rather than offer its own insurance product, the CHC decided
to serve small employers by forming a local purchasing council.
The purchasing council -- like Alliance -- would pool the purchasing
power of employers to improve the cost and stability of health insurance
premiums. The CHC had designed a benefits package and was ready
to develop a request for proposals to be sent to insurers when it
decided instead to partner with Alliance. The Alliance partnership
allowed the CHC to achieve the same goal as its own purchasing council,
but the size of the Wichita market and the potential for state-wide
expansion permitted the CHC to leverage its market power in regard
to insurers.
Developing the Community
Health Council
The CHC grew out of the planning effort surrounding
the merger of two hospitals in Manhattan. In 1992 the CEOs and Board
Chairs of the two hospitals began meeting as the Joint Planning
Committee (JPC) to explore possible areas of cooperation. These
meetings resulted in several joint ventures including ownership
of a laundry, a medical incinerator, and a magnetic resonance imaging
service. After a year, JPC membership was expanded to include the
Executive Committees of both hospitals and the executive of their
combined medical staff. The expanded JPC sponsored a community needs
assessment that was completed in 1994. Based in part on the needs
assessment, the two hospitals began consolidation talks in December
1994, culminating in a merger in July 1996. During the heat of the
merger talks, the hospitals decided to separate the merger negotiations
from the other business of the JPC, and in January 1995 suggested
expanding the JPC to include a variety of providers, city and county
government officials, school district representatives, Kansas State
University employees, and members of the League of Women Voters
(viewed as a cross-section of consumers). Two months later the Joint
Planning Committee was renamed the Community Health Council.
The CHC did not operate smoothly at first. Because
members were invited to join the network (rather than having formed
the network on their own initiative), members were unsure what the
network could or should do. Because of its diverse membership, there
were various power relationships and stakeholder interests that
clouded CHC business. In November 1996, twenty months after its
founding as the CHC, the network hired a facilitator from Kansas
State University to lead the network through a five-month strategic
planning process. Engaging in this process was a turning point for
the CHC. The strategic planning process resulted in incorporation
of the CHC as a not-for-profit entity; formalization of membership
and membership criteria; establishment of a committee structure
to streamline network decision-making; development of a multi-tiered
dues structure; and identification of a strategic purpose for the
network. The CHC chose as its goals: 1) assisting local health care
providers to network, 2) reducing unnecessary duplication of effort
among health care providers, 3) improving access to health care
services for those not served or under-served, and 4) enhancing
the continuum of health care within the community. The CHC applied
for a Rural Network Development Grant from the federal Office of
Rural Health Policy in March 1997.
The tranquility in the health care market resulting
from the merger of the two hospitals did not last long. In 1998,
a group of local physicians announced plans to open an ambulatory
surgery center in Manhattan that would compete directly with the
hospital. The announcement of the ambulatory surgery center created
tension within the medical staff of the hospital and between the
hospital and certain members of the medical community. These conflicts
carried over to the CHC. As the health care community became less
cohesive, the business community filled the leadership void, assuming
a much larger role in the governance of the CHC. Emphasis on the
purchasing cooperative as a way of improving access to health care
services is indicative of the business community's more expansive
leadership role.
Assessing Health
Care Needs
Manhattan is larger than most rural communities
(45,000 residents) and the existence within its borders of the second
largest university in the state (approximately 21,000 enrollment)
provides the network with access to resources many other rural health
networks do not have. Yet, Manhattan and the region it serves are
similar to many rural areas. Despite low unemployment, many wage-earners
work in low paying jobs; the rate of uninsured individuals is relatively
high; absent the transient populations of university students and
military personnel (Manhattan is also the home of Fort Riley), the
over-age-65 cohort of the population is approximately 20 percent;
the health care community is fragmented; and the service area of
Manhattan includes seven counties encompassing 7,000 square miles.
To get a current picture of health care needs,
the CHC decided to update the 1994 community needs assessment performed
by the Joint Planning Council. Instead of creating a one-time picture
of the health care needs of the community, the CHC wanted to develop
and implement a health status and health needs monitoring system
that could, on an on-going basis, measure unmet needs, target interventions,
and identify service inefficiencies. Data from the assessments would
be made available to health care providers and other community groups
to aid in their planning and decision-making.
Using funding from its Rural Network Development
Grant, the CHC contracted with the Kansas Health Institute in September
1998 to update the community needs assessment of Riley County. The
Kansas Health Institute is an independent, not-for-profit research
organization interested in studying how communities use information
from needs assessments and develop action plans. The Riley County
needs assessment is based on both primary and secondary data. Primary
data was collected through a telephone survey of over 500 households
(the survey instrument was designed by the CHC Health Assessment
Committee, the Kansas Health Institute, and the Institute for Social
and Behavioral Research at Kansas State University) and a Behavioral
Risk Factors Surveillance Survey (part of a project funded by the
Kansas Department of Health and Environment and the Kansas Health
Foundation for selected County Health Departments). Sources of secondary
data include vital statistics data from the state, patient origin
and destination studies, and service use data from local providers.
The results of the assessment will be made public in the autumn
of 1999 at a community summit meeting. The CHC will share the community
health assessment findings with health and social service agency
and community leaders in a three-day meeting in which participants
are expected to develop a community health plan to address key findings
of the assessment.
The CHC is still uncertain about how to change
the episodic, discrete nature of community health assessments into
an ongoing, dynamic process. On an annual basis, the CHC likely
will rely on secondary data from the state and primary data collected
by members and reported to the CHC. The ability of the CHC to maintain
the community health assessment program on an ongoing basis, however,
is inextricably linked to its future financial sustainability. The
current dues structure of the CHC is not sufficient to support the
staff and equipment needed to maintain the system. The CHC recognizes
the problem and is investigating alternative sources of long-term
funding.
Other Projects
Other projects undertaken by the CHC as part
of its Rural Network Development Grant include an effort to establish
electronic connectivity for all CHC members. The CHC has created
listserves for CHC members and committee members, and has developed
a web site as a means of informing the community about the CHC and
member activities. The CHC is also exploring other opportunities
for linking providers through the Internet. In June 1999, the CHC
sponsored a one-day workshop on uses of the Internet by health care
providers. Linking providers electronically has been a challenge
for the CHC. Providers are reluctant to share information and have
limited experience with computer-based communications technologies.
Those that do have experience may have incompatible systems. The
CHC is actively searching for an Internet technology project it
can support, but as of now, one has not been identified.
In its original application for its Rural Network
Development Grant, the CHC planned to establish a Community Health
Foundation to raise funds for the purpose of financing care for
medically indigent residents. This plan has since been abandoned.
Several members of the CHC have their own foundations (for example,
the hospital and long-term care providers). During the discussion
of creating the foundation, the hospice and home care agency --
a member of the CHC -- created a new foundation. The combined hospice/home
health service, beset by challenges imposed by the Balanced Budget
Act of 1997, decided that in order to continue providing services
it had to stimulate sources of non-operating revenue. Accordingly,
it established the foundation to raise money to support the organization.
Sizeable contributions came from the Chamber of Commerce and the
hospital. Network members now agree that the existing foundations
in the community provide an adequate safety-net for the community.
The extent of uncompensated care rendered by local providers to
individuals will be measured in the community health assessment.
Measuring and Evaluating
Performance
The CHC Board Chair believes that the CHC provides
a forum for discussing community health issues that is not dominated
by special interests. The CHC brings together health care and social
service providers and business and political leaders to study and
develop community action plans to solve identified health care problems.
The executive director of the network views the diversity of the
CHC as both its biggest strength and its greatest challenge. The
diversity of membership allows health care problems to be approached
from a community perspective. Health is not viewed in isolation
but, instead, is considered in the context of the entire community.
The diversity of membership also makes finding consensus difficult.
Because agenda topics are not always of compelling interest to CHC
members, the attendance of some members has been spotty and other
members simply defer to the executive leadership of the network.
Finding topics that engage all of the members and ways to engender
enthusiasm for the network among all members are among the biggest
challenges of the network.
The CHC developed a detailed process evaluation
in conjunction with Kansas State University. The evaluation features
a survey of providers and employers to assess their knowledge and
perceptions of rural health networks, managed care, provider integration,
and the role and goals of the CHC. Other indicators of performance
will be the number of employers participating in the purchasing
cooperative, number of goals completed during the grant period,
and the successful implementation of a community health plan.
Note:
Since the site visit upon which this case study
is based, relations between the physician group that intended to
open an ambulatory surgery center and the hospitals have improved
markedly. The hospital administrator was replaced and the new administrator
worked to improve provider relationships. In late summer 1999, the
hospital and physician group announced that the hospital would build
the ambulatory surgery clinic on land it owned adjacent to the hospital
and lease it to the ambulatory surgery group. The hospital will
also be an investor in the ambulatory surgery clinic. The settling
of the dispute between the hospital and doctors was attributed,
at least in part, to the general attitude of cooperation fostered
by the CHC.
Implementing
a Provider Sponsored Organization
Composed of physicians, hospitals, and other
providers in a nine-county area of northeastern West Virginia, the
Eastern Panhandle Integrated Delivery System (EPIDS) is positioning
itself to prosper in a managed care environment. The positioning
strategy employed by EPIDS is complex, as befits the issues it faces.
The counties that make up the service area are diverse, and the
readiness of EPIDS members to enter into managed care arrangements
varies substantially. For example, the counties on the eastern extreme
of the service area are home to bedroom communities for people who
work in the Washington, D.C., area. Many of these people are enrolled
in managed care plans offered through their employers. Some of these
plans do not include West Virginia providers in their provider networks.
The goal in these counties is to broaden the provider networks of
urban managed care plans to include West Virginia providers.
On the opposite side of the nine-county area
are counties with virtually no managed care experience, higher rates
of poor and uninsured residents, and poor health status indicators
caused, in part, by lifestyle (e.g., early tobacco use and teenage
pregnancies). The primary concern in this part of the service area
is to prepare providers and residents for the possible introduction
of Medicaid managed care at some point in the future. In between
the suburban counties in the east and the isolated rural counties
in the west falls a group of counties that are close to small urban
centers in Maryland and Virginia. These counties are home to small
and mid-sized companies (fewer than 500 employees) that provide
health insurance benefits to their employees. Some of these firms
self-insure health benefits and others purchase health insurance
through local agents and brokers. Some employers are beginning to
seek out managed care products for their employees.
The diversity of the EPIDS service area and its
membership makes adoption of a single managed care strategy impractical.
To respond to the various needs of its members, EPIDS divided managed
care into its component parts and developed each of them independently.
Each component -- or various combinations of the components -- satisfies
the needs of various members. The three components are: the provider
network, health plan administration, and a health insurance product.
Each of these components is considered separately below and then
EPIDS' use of them in developing a three-part managed care strategy
is described. Finally, the evolution of the network is reviewed.
The Provider Network
The provider network is synonymous with EPIDS;
both have the same membership. Incorporated as a not-for-profit
entity in November 1996, EPIDS currently is composed of 140 physicians,
four hospitals/health care systems, a hospice, several mental health
and primary care clinics, public health departments, and other health
care providers. (A participating provider network of out-of-area
specialists has also been developed, but these providers are not
members of EPIDS.)
The primary function of the provider network
is to deliver or arrange for the delivery of high-quality, cost-effective
health care services. The provider network is offered to employers
for inclusion in their purchased or self-insured health plans. EPIDS
also serves as the provider network for its own private-label health
plan. As the provider network for the plan, EPIDS members deliver
services to enrolled patients and, when the need arises, refer patients
to providers in the participating provider network.
To assure that the care is high quality and cost
effective, EPIDS performs a variety of other functions. Before being
accepted as a member of EPIDS (or the participating provider network)
a provider is credentialed using a process and criteria established
by the National Committee on Quality Assurance (NCQA), a private
body that accredits managed care organizations. The credentialing
criteria state that if a physician is admitted to the medical staff
of one network facility he is to be considered fully credentialed
at all network facilities. The Utilization and Quality Management
Committee of the EPIDS Board of Directors oversees the credentialing
process and makes recommendations to the full Board concerning credentialing,
re-credentialing, and termination of physician participation. Physicians
are re-credentialed every two years.
EPIDS employs a medical director and a nurse
case manger who pre-certify certain services, review hospitalizations,
review costly and complex cases, conduct educational sessions, and
perform other medical management functions. The Board's Utilization
and Quality Management Committee aids the work of medical management.
EPIDS continues to increase the size of the network.
The provider network currently is large enough to provide access
to care for almost all residents of the nine-county service area.
In 1998, EPIDS conducted a gap analysis to identify problems in
the availability of specialists. The analysis helped direct the
development of the participating provider (i.e., secondary) network.
Members pay an entry fee of $1,000 to join the
network. In 1998 there was an added membership fee (a "cash call"
to help finance operations) of $1,500. There are no annual dues.
The Board of EPIDS is composed exclusively of providers, although
an advisory committee of business and community leaders from across
the region is planned. There are four classes of membership, but
only Class A (physicians and "physician equivalents") and Class
B (health care institutions) members may serve on the Board of Directors.
Ten board seats are allocated to each of these two groups. The 20-member
board is elected by the full membership. The current President of
the Board is a primary care physician; the immediate past-president
is a rural hospital administrator.
EPIDS believes that cooperation among members
produces definable benefits for patients: duplicate tests can be
avoided; referrals to specialists can be expedited; and health care
professionals can act more collegially to develop the most appropriate
course of treatment for patients.
Health Plan Administration
EPIDS owns Panhandle Claims Processing Administrators
(PCA), a for-profit entity that provides a range of health plan
administration services. PCA is licensed by the state of West Virginia
to provide the services of a "third-party administrator" (TPA).
TPA services typically are sold to firms that self-insure their
employees' health benefits. Among the services offered by PCA are:
- Claims management:
PCA maintains eligibility files; processes, pays, adjusts, and
denies claims; and prepares explanation of benefits forms.
- Plan administration:
PCA prepares descriptions of health care plans (employee handbooks);
conducts open enrollment; prepares employee communications material;
files all government forms and documents on behalf of the plan;
and arranges for legal, accounting, and actuarial services.
- Member and provider relations:
PCA staff meet, answer questions, and resolve problems for enrolled
employees and participating providers.
- Management reporting: PCA
produces custom reports using any combination of fields on the
UB-92 and HCFA-1500 claims forms; and reviews care of individual
patients. Rather than develop its own management information system,
PCA is linked by personal computer and modem to an MIS vendor's
mainframe computer. PCA uses the programs of the vendor but is
able to construct its own reports and is responsible for all data
entry.
- Utilization management:
Through a contract with EPIDS, PCA provides utilization management
services; PCA makes available EPIDS's practice guidelines.
Health Insurance Product
EPIDS will soon offer a private-label health
insurance product called Panhandle Preferred Health Plan. EPIDS
is partnering with an indemnity insurer to bring the product to
the market. In West Virginia, indemnity insurers can sell preferred
provider and point-of-service products. (Preferred provider and
point-of-service plans encourage members to use the services of
an identified panel of providers but allow members to receive care
from non-participating providers. The enrollee's out-of-pocket expenses
of receiving care from a network provider, however, are significantly
less than that of receiving care from non-participating providers.)
The insurance partner owns the insurance license
and will contract with EPIDS to provide health plan administration
and marketing services. In turn EPIDS plans to contract with PCA
to provide administrative services. EPIDS itself serves as the Panhandle
Preferred Health Plan's provider panel. The insurance partner will
assume the insurance risk of caring for Panhandle Preferred Health
Plan enrollees.
Panhandle Preferred's plan design calls for members
to select primary care physicians to provide and coordinate their
care. Physicians will be paid on a fee-for-service basis with a
withhold. Performance targets will be established that will determine
whether all or a portion of the amount withheld from the physician's
payment will be returned at the end of the plan's fiscal year. EPIDS's
medical director and nurse case manager will provide medical management
for the plan.
Panhandle Preferred Health Plan covers the standard
health insurance benefits of hospital inpatient and outpatient services
and physician office visits. Other benefits are also available including
mental health and substance abuse treatment, preventive care, home
health care, hospice care, durable medical equipment, and chiropractic
services. EPIDS intends to develop relationships with vendors of
dental, vision, and prescription drug coverage and to make those
coverages available to purchasers through the network. Local insurance
agents authorized to represent the insurance partner will sell Panhandle
Preferred Health Plan.
Putting the Pieces
Together
With the development of these three pieces of
the managed care puzzle -- the provider network, a health plan administration
function, and a private-label point-of-service product -- EPIDS
was able to develop a three-pronged marketing strategy that addressed
the various needs of the nine-county area.
- Contract with HMOs and PPOs.
Under this strategy, EPIDS contracts with HMOs and PPOs on behalf
of its members. EPIDS is an attractive provider network to health
plans because it conducts its own utilization management and quality
improvement programs that are likely to reduce costs. This strategy
will be used to market the network to HMOs and PPOs in the Washington,
D.C., area. If these managed care organizations add EPIDS to their
provider networks, residents of eastern West Virginia who work
in Maryland, Virginia, and Washington, D.C., and who receive health
insurance benefits from their employers will be able to receive
health care services locally.
- Contract directly with employers.
EPIDS (the provider network) can contract directly with local
self-insured employers to provide services to their employees.
Additionally, through PCA, EPIDS offers local self-insured employers
a full range of third-party administration services. Counties
that have medium-sized employers will be targeted.
- Market private-label health plan.
EPIDS will market Panhandle Preferred Health Plan through local
insurance brokers to small and medium-sized employers throughout
the nine county region. Under this strategy, EPIDS makes use of
the provider network and the plan administration services of PCA.
This strategy will be employed throughout the region. In the future,
Panhandle Preferred Health Plan may also be a managed care contracting
option for Medicaid and Medicare.
EPIDS has successfully positioned itself to prosper
in a managed care environment. Development of strategy proceeded
in carefully measured steps, evolving slowly over time.
Evolution of the Network
EPIDS began its organizational life as the Eastern
West Virginia Health Services Network, funded in 1994 by a grant
from the Claude Worthington Benedum Foundation. The Rural Health
Networking Project was administered by the West Virginia Office
of Community and Rural Health Services; its initial goals were 1)
educate consumers, providers, and payers about the potential benefits
of networking, 2) conduct needs assessments at demonstration sites,
and 3) develop service integration plans through rural health networks.
In 1996-1997, the Public Employees Insurance
Association (PEIA), the organization that purchases employee benefits
for all West Virginia state employees, county employees, and school
district employees, planned to move its health plan from an indemnity
basis to managed care. PEIA considered the use of provider sponsored
organizations (PSOs) as possible contracting entities for managed
care. The Eastern West Virginia Health Service Network began to
explore the possibility of contracting with PEIA to provide care,
at risk, in the nine-county area. PEIA's idea of contracting with
PSOs created a storm of controversy concerning competition with
existing health plans and consumer protection. Eventually, PEIA
decided not to contract directly with PSOs. PEIA's decision to contract
only with licensed HMOs had little impact on the nine counties because
no HMOs reached out to this area of the state. Nevertheless, the
idea of creating a PSO to contract directly with employers or managed
care organizations had taken root in the network. Changing its name,
in 1997, to the Eastern Panhandle Integrated Delivery System, the
network started to develop its managed care strategy.
Two counties in the eastern part of the region,
Berkeley and Jefferson, were more advanced in terms of their managed
care planning than the other counties in the network. (These two
counties are the most populated and closest to the Washington, D.C.,
and Baltimore, MD, metropolitan areas.) Providers in these two counties
formed a physician-hospital organization (PHO) called the Eastern
Panhandle Health Alliance (EPHA). The hospital members of EPHA created
a Voluntary Employees' Beneficiary Association (VEBA) to provide
self-insured health benefits for their employees in 1997. A VEBA
is a tax exempt trust organized under section 501(c)(9) of the Internal
Revenue Code that allows funds to be set aside for the payment of
life, sick, accident, or other benefits to members (and their dependents
or designated beneficiaries) if no part of the net earnings inures
to the benefit of any private shareholder or individual. The VEBA
was operated under the name EastCare Health Plan. EastCare contracted
with EPHA as its provider network. Providers were paid according
to a fee schedule with a withhold. EastCare purchased its own reinsurance
as protection against catastrophic losses. Originally, EastCare
contracted with a third-party administrator to perform plan administration,
but once PCA was established (July 1998), EastCare contracted with
PCA for TPA services. The costs of developing PCA and its management
information system were partially covered by a Rural Network Development
Grant from the federal Office of Rural Health Policy.
Since EPHA is also a member of EPIDS, formation
of EastCare and the development of PCA to administer EastCare gave
EPIDS an opportunity to field test its managed care components before
offering them to a wider public. Other features of the managed care
strategy were also tested first on EastCare members. For example,
the benefit structure and the provider payment plan are similar
for EastCare and Panhandle Preferred Health Plan. EPHA and EPIDS
merged in 1998.
Also in 1998, EPIDS began to search for a managed
care partner. After much hard work, a partner was identified and
Panhandle Preferred Health Plan is expected to be introduced to
the region in late 1999 or early 2000. In 1999, EPIDS also began
to market the provider network and its TPA services to local self-insured
employers. As of this writing, no contracts have been signed, although
several firms have expressed interest in PCA.
Approximately three years have passed since EPIDS
first began to develop its managed care strategy. All of the pieces
are now in place. In the future, EPIDS will increase its marketing
of its products and services, expand its provider network, and evaluate
the effectiveness of its strategy.
Lake Okeechobee
Rural Health Network, Inc. South Bay, Florida
Developing A Vision
As all networks do, the Lake Okeechobee Rural
Health Network (LORHN) started with a conversation. During an informal
meeting of the chief executives of the Everglades Area Health Education
Center, the Palm Beach County Health Care District, and the Palm
Beach County Public Health Department in mid-1994, the discussion
turned to the problems caused to residents and providers of the
western, rural side of Palm Beach County by out-migration to the
urban, costal area of the county for primary and secondary health
care services.
With managed care penetration rates reaching
near-saturation levels in the eastern part of the county, health
maintenance organizations (HMOs) were reaching out aggressively
to rural areas. The provider networks of these urban-based HMOs
tended to refer rural enrollees to urban areas for secondary and
tertiary services. In some cases, managed care organizations and
urban integrated delivery systems established primary care clinics
with limited hours of operation in rural areas to compete with the
existing primary care practices. The area around Lake Okeechobee
had always had trouble recruiting and retaining physicians -- especially
specialists -- but the referral practices of the managed care organizations
exacerbated the problem. The transfers and the by-passing of local
physicians drained the region of local health care dollars and increased
the proportion of indigent patients seen by local providers as commercially
insured patients left the community in ever-increasing numbers.
As a result, private practice of medicine became less attractive,
practices closed, and patients were forced more frequently to travel
to the coast for health care services.
The three executives concluded that providing
as many health care services in rural areas as possible would achieve
three goals: it would 1) improve local access to health care services,
2) increase the utilization of local providers, and thereby, 3)
improve the financial viability of rural providers. As a corollary,
the achievement of these goals would improve recruitment and retention
of health care providers and increase the amount of money spent
locally on health services. The executives decided to form a rural
health network to achieve these goals. The Palm Beach County Health
Care District (an ad valorum taxing district) provided
seed money for the planning effort and in October 1994 the network,
now doing business as the Lake Okeechobee Rural Health Network,
received a development grant from the state of Florida.
Palm Beach County is approximately 50 miles wide,
running from the Atlantic coast to the shores of Lake Okeechobee.
Prosperous, urban communities, driven by tourism, occupy a narrow
band of land stretching some forty miles north to south on the eastern
side of the county. Driving west from the coast, the luxury hotels
and beach condominiums barely fade from the rear view mirror before
one enters the canebreaks of the western side of the county. The
counties that surround Lake Okeechobee (the rural portions of Palm
Beach and Martin Counties and all of Glades, Hendry, and Okeechobee
Counties) are dominated by agriculture, growing primarily sugar
cane, fruits, and vegetables. This area is substantially poorer
and more ethnically diverse than the coastal area. Twenty-nine percent
of the permanent population above the age of 16 is engaged in agriculture
and almost 100,000 migrant and seasonal farm workers and their families
inhabit the area annually. The service area of LORHN includes this
entire region.
Building a Community
Service Network
In the early 1990s, the Florida legislature developed
a rural health network program to "ensure that quality health care
is available and efficiently delivered to all persons in rural areas."
A rural health network was defined as "a nonprofit legal entity,
consisting of rural and urban health care providers and others,
that is organized to plan and deliver health care services on a
cooperative basis in a rural area, except for some secondary and
tertiary care services." The Florida Agency for Health Care Administration
was given authority to certify networks. In addition to receiving
grant monies for development, state-certified rural health networks
were given certificate-of-need preference and state-action immunity
from antitrust laws.
To comply with the requirements of the law, LORHN
incorporated as a 501(c)(3) not-for-profit entity in October 1994
and immediately sought state grant funding. Over the next 18 months
LORHN developed its strategies and infrastructure within the parameters
of Florida's rural health network program. As a condition of certification,
the state required that certain providers be included in the network.
LORHN labored for nine months to develop a provider/member list
that would meet the initial requirement for certification. LORHN
adopted an any-willing-provider policy of member development, and
all providers in the service area willing to abide by the rules
of the network were encouraged to join. All providers were required
to sign a provider agreement. The provider agreement required members
to refer to other providers within the network; established protocols
for referrals; required that members abide by the quality assurance
and risk management policies of the network; and specified each
provider's responsibility for indigent care. Each provider was required
to quantify the amount of uncompensated care that would be given
to patients who were unable to pay.
The state of Florida also required networks to
develop a Health Care Service Delivery Plan, defined as "a written
plan adopted by the network board of directors that: a) identifies
core health care providers and the services that are to be provided
by network members; b) describes unmet health care needs in the
network's service area and proposes solutions; c) establishes procedures
for patient referral to tertiary inpatient care and to other services
not available in the network's service area, including payment arrangements;
and d) establishes minimum requirements to be included in network
health care provider agreements." LORHN's service delivery plan
identified the core and optimal services necessary to deliver quality
care in the region. It also highlighted the need to further develop
the provider/member base and the need for "a regional financial
model to control the rural community market and reduce the opportunities
for urban managed care groups to . . . pull targeted populations
from local providers." Culminating almost two years of planning,
LORHN focused on a strategy that would fulfill its vision of improving
local access to services for both the insured and the uninsured:
it would develop its own managed care product to improve provider
payments, lower insurance costs, and stanch the flow of patients
out of the community.
Developing the
Community Service Network Model
The state of Florida certified LORHN a rural
health network in April 1996, following completion of its Service
Delivery Plan. During the next year, LORHN continued to develop
its provider network, a necessary component of its emerging managed
care strategy. LORHN decided on a "community service network" model
of delivering and financing care to the area. Community service
networks (CSNs) are similar to provider sponsored organizations
(PSOs) in that they are at-risk entities that are owned and operated
by providers. CSNs may contract with insurers or they may contract
directly with employers or others financing health care services
(for example, local, state, or federal governments). The difference
between a CSN and a PSO is that in addition to providers, a CSN
includes local businesses, educational organizations, governments,
and community interests in its membership, increasing the probability
of local control of health services. Employing this model was a
conscious attempt to unite the interests of rural providers and
consumers.
LORHN decided to offer a regional package of
benefits and to partner with an insurance company to administer
the program. LORHN would design the benefits, establish regional
rates, and determine the responsibilities of network providers.
It also had to find an insurance partner. To aid in planning and
bringing this local managed care plan to market, LORHN applied for
and received a Rural Network Development Grant from the federal
Office of Rural Health Policy (September 1997).
The network formed an Employer Advisory Council
to help it develop the benefits package and to stimulate interest
in a CSN-designed local managed care product. LORHN also developed
a marketing plan to attract area employers to use network services
and providers.
By the time the federal networking grant was
received, the network included approximately 70 percent of the providers
in the area. Starting with hospitals and the physicians employed
by public agencies, the LORHN executive director (and later the
provider services coordinator) built the provider network by calling
on providers one by one. In each case, the details of the Service
Delivery Plan were shared; the provisions of the provider agreement
(including the requirement of providing uncompensated care) were
explained; and the vision of improving access by improving the financial
viability of providers was set before providers. Although the provider
network today includes virtually all providers in the service area,
the final 30 percent were the most difficult to bring into the fold.
Not surprisingly perhaps, managed care companies
did not line up to participate in the network. LORHN searched for
a managed care partner that would be willing to assume some risk,
reimburse providers at rates superior to those received from other
managed care organizations, and manage and market the LORHN product.
After a year, LORHN struck a deal with a relatively new, relatively
small (40,000 enrollees) HMO, Beacon Health Plans, Inc. Beacon agreed
to offer a private label product -- the Okeechobee Health Plan --
in the area, with LORHN supplying the provider network. The LORHN
provider agreement requires compliance with quality assurance and
utilization management programs of the network. LORHN conducts provider
relations functions for Beacon, for which Beacon pays LORHN a fee
of two percent of premiums sold in the area. The LORHN director
of managed care services is a licensed insurance agent and sells
the Okeechobee Health Plan to employers. When a sale is made, LORHN
receives a commission from Beacon. Independent insurance agents
also sell the local health plan.
By assuming some of the administrative burden
from Beacon, LORHN reduces the cost of running the HMO. It also
helps manage utilization of network providers and builds market
share for the fledgling HMO. Beacon, in turn, pays primary care
providers 125 percent of the Medicare rate for services provided
to enrollees, and pays specialists 100 percent of the Medicare rate.
These rates are greater than those paid to providers by other HMOs.
The higher rates of pay, LORHN believes, will improve provider satisfaction
with their practices and better enable them to provide uncompensated
care. Because the Beacon provider network allows less out-migration
to the coast than other HMOs, the use of local services by enrollees
is increased.
The arrangement with Beacon is not exclusive.
LORHN could strike a similar deal with other managed care organizations
or it could contract with other managed care organizations on behalf
of its members, something it is actively considering. Currently,
LORHN's arrangement with Beacon is the only managed care relationship
enjoyed by the network.
Selling the Okeechobee
Health Plan
The Okeechobee Health Plan was introduced to
the market in December 1998. By May 1999, approximately 1,500 people
were enrolled in the plan. LORHN hopes to have 2,700 lives covered
by its commercial product by the end of the first year. LORHN is
also investigating entering the Medicare managed care market. Humana
recently pulled its Medicare managed care product from three counties
in the LORHN service area. Approximately 8,000 people were enrolled
in the Humana zero-premium product. The majority of these Medicare
beneficiaries have not sought supplemental coverage and are waiting
for another zero-premium product to enter the market. Beacon is
not certified by the Health Care Financing Administration to offer
Medicare risk products, but expects to be certified by the first
of the year 2000. LORHN and Beacon plan to offer a product to the
approximately 16,000 residents over age 65 in the three counties
from which Humana pulled out. LORHN projects that in the two years
following the introduction of its Medicare managed care product,
it will have 2,000 enrollees (12.5 percent of those eligible to
enroll).
LORHN contracted with HealthSpectrum to develop
and implement a marketing and sales strategy for the Okeechobee
Health Plan. Central to the marketing plan is recruitment of licensed
insurance agents to sell the Okeechobee Health Plan. A survey of
local employers found that most of them use one of the 6,000 licensed
agents residing in the eastern section of Palm Beach County. One
key component in recruiting agents is increasing the commission
rate for sales of the Okeechobee Health Plan from four percent to
eight percent. Another marketing strategy is to develop a preferred
provider organization (PPO) product and an HMO product with more
limited benefits than the Okeechobee Health Plan. Enrolling Medicare
beneficiaries in the managed care plan once it is available is also
a a key component of the marketing plan.
Planning for the Future
To some extent, the ability of LORHN to achieve
future goals will depend on the success of the marketing plan. LORHN
can become self-sustaining if Okeechobee Health Plan, Medicare risk
products, and PPO sales reach projected levels. Failure to reach
these levels of performance means that LORHN must supplement its
revenue with other sources of funding.
LORHN has several projects in the developmental
stage. In partnership with the Everglades AHEC, it is developing
a continuing education/continuing medical education program for
network members. Educational programs are offered once or twice
per month at a community site within the service area. Occasionally,
interactive video has been used for the programs. LORHN is also
working to develop the telemedicine component of its network. Other
programs in development by LORHN include a network-wide group purchasing
initiative, joint collection services, consolidated marketing programs,
and group liability insurance purchasing.
Finally, LORHN is planning an evaluation of its
performance to date. The network will assess the progress it has
made in the past three years in achieving its three goals. One key
measure of the success of the network will be the amount of money
that it has been able to retain in the area. Prior to the establishment
of the LORHN as a certified rural health network, LORHN estimated
that 50 million health care dollars left the rural service area
each year due to outmigration to the coast. LORHN plans to replicate
this earlier study to see if the Okeechobee Health Plan and the
referral policies of LORHN have reduced outmigration. LORHN leaders
believe that this is a critical year for the network. A successful
evaluation based on empirical data, they believe, will help convince
employers, providers, and the community at large of the value of
the community service network model.
Changing Gears: The
Virtue of Flexibility
Managed care -- or the "threat" of managed care
-- can be a powerful organizing tool. It was the primary impetus
for bringing together an array of different types of providers in
rural northeastern California in the summer of 1994. At that time,
administrators of hospitals and community clinics, directors of
public health departments, and private physicians from four rural
counties met to discuss how to respond to the changing health care
environment. The greatest change in the environment perceived by
the providers was the spread of managed care from heavily penetrated
urban areas of the state to rural areas. The providers decided to
form a network and to offer a managed care product through the network
as a way of preempting the introduction of managed care to the area
by firms headquartered outside of it. Northern Sierra Rural Health
Network (NSRHN) emerged from these discussions and began to plan
and implement steps to achieve its goal of influencing the development
of managed care in the area.
In 1995, the network received $120,000 in funding
from the Sierra Health Foundation, the James Irvine Foundation,
and the California Department of Health Services to organize a "regional
health care entity." With this funding NSRHN developed an organizational
structure, which led to incorporation of the network in January
1996. It also conducted a regional needs assessment, surveyed local
providers for key issues, developed a strategic plan, and sponsored
regional provider education workshops. Its Board of Directors adopted
the Strategic Action Plan of NSRHN in April 1996. Based in part
on the community needs assessment and the provider survey, the plan
highlighted goals and objectives in three key areas: managed care,
telemedicine, and provider recruitment and retention. The primary
focus was managed care.
Fast forward to 1999: a threat that seemed almost
palpable in 1994 is almost imperceptible today. Instead of expanding
more fully into rural areas, integrated delivery systems and managed
care organizations in California have retreated, in the wake of
mounting losses, from those rural areas they had entered. Medi-Cal
(the state's Medicaid program) and CalPERS (the state employee health
insurance program) have modified their goals of implementing state-wide
managed care contracting programs, reducing the likelihood that
managed care arrangements will be negotiated with providers in sparsely
populated rural areas of the state. The managed care climate of
California, at least in respect to rural areas, has undergone a
fundamental change in the last five years.
With this change in the managed care climate,
a primary reason for forming the Northern Sierra Rural Health Network
became less important. The network's members no longer perceived
the necessity of fielding a strategic response to managed care.
Yet, the loss of this motive for forming the network did not result
in its downfall. On the contrary, the energy that had been funneled
into managed care development was channeled into other areas of
network development.
The five years used to plan a managed care strategy
was time well spent. When the members of the network first began
to discuss managed care, many had only a rudimentary understanding
of its principles. Following years of investigation, network members
were much more knowledgeable. They were able, finally, to make the
informed decision that managed care was not the threat it once appeared
to be and to take it off the agenda for the time being. Planning
the managed care strategy kept the members involved in network activities
and taught them how to work together. The experience of working
together, and the belief that individual or community-level problems
can be solved by region-wide joint action, allowed the network to
shift its primary focus from managed care to the establishment of
a regional telemedicine network.
Developing a Regional
Telemedicine Network
Telemedicine has been a goal of NSRHN almost
from its inception. As noted earlier, telemedicine was one of three
key goals of NSRHN in 1996, based in part on a survey of providers.
A second provider survey, conducted in 1997, identified "video conferencing"
as a top priority of the network. Video conferencing was viewed
as a way to 1) connect area primary care practitioners with out-of-area
specialists, 2) provide continuing education opportunities to health
care professionals, and 3) conduct NSRHN and other regional meetings.
Although primary care services were available
locally in most of the service area, specialty and tertiary care
services were located in urban areas that were more than 100 miles
away from some residents of the NSRHN service area. By 1997, the
service area of the network had expanded from four counties to six
counties and covered some 17,600 square miles of mountainous terrain.(1) Video conferencing was viewed as a way to overcome the problems
of limited local access to specialty providers and the barriers
imposed by travel: teleconferencing stations would enable rural
providers to consult with urban specialists and to participate in
continuing education programs.
NSRHN designed a PC-based video conferencing
system. Video cameras sit on top or to the side of personal computer
monitors and send images from one computer in the system to another
(point-to-point conferencing). The images are augmented by real-time
audio transmissions played through the PC's speakers. Through the
use of a multi-port video conferencing bridge, the system is also
capable of multi-point conferencing. The system has store-and-forward
capability and is designed to be used with diagnostic scopes and
special cameras. Because using a PC-based approach to telemedicine
was less expensive than other telemedicine options, NSRHN was able
to propose multiple telemedicine sites throughout the service area.
While this approach may have been less expensive, it was not inexpensive.
It became clear to members that the network needed to obtain additional
sources of funding to implement the telemedicine plan.
NSRHN estimated that $650,000 was needed to finance
the capital expenses required to develop 20 teleconferencing sites.
At a cost of approximately $15,000 per site, each station would
be equipped with a personal computer, high-resolution monitor, video
conferencing software, video camera, microphone, and an ultra-high-speed
modem. The multi-port video conferencing bridge alone cost $150,000.
To finance these expenditures, NSRHN obtained funding from a number
of different sources:
- California Telehealth/Telemedicine Center
- Blue Cross of California Healthy Families
Rural Demonstration Project
- University of California Davis Health System
- Far Northern Regional Center
- Regional Health Occupations Resources Center/Rural
Utility Service Distance Learning and Telemedicine Grant
NSRHN and its individual members also spearheaded
the creation of the North Eastern California Telecommunications
Partnership (known as "coNnECTuP"). This regional partnership includes
representatives from over 50 regional business, education, governmental,
economic development, social service, and health care organizations
interested in developing a regional telecommunications system. Participants
believe costs can be shared through the regional partnerships making
advanced telecommunications technology affordable to individual
users. The partners share information about grant opportunities,
and they are working together to encourage the local service provider,
Citizens Telecommunications, to provide high-speed services to the
area at affordable rates. One example of how the sharing of information
about grants among partners can produce dividends is a grant that
NSRHN obtained from the Northern Sierra Air Quality Management District
to help pay for line charges. The District wanted to fund innovative
projects that reduce air pollutants, with an emphasis on using technology
to reduce driving. NSRHN submitted a grant application that demonstrated
that the use of the video conferencing system would reduce the need
for members to travel to a central location for meetings. A representative
of the Northern Sierra Air Quality Management District participates
in coNnECTuP and informed NSRHN of the grant opportunity.
Initially, planning for the design and operation
of a regional telemedicine network took place on a parallel track
to managed care planning, aided in part by a Rural Network Development
Grant from the federal Office of Rural Health Policy. As it became
clearer that the expansion of managed care into rural areas would
not occur on a massive scale, the interest in the network's telemedicine
program grew and the emphasis of the network shifted.
NSRHN sought out telemedicine partners to provide
linkages and services to its members. Among the partners are the
University of California Davis Health System with which NSRHN is
developing regional care protocols, the University of Nevada, Reno,
School of Medicine, and the Regional Health Occupations Resource
Center (part of the state's community college system). Through these
partners NSRHN hopes to obtain access to specialists and professional
continuing education programs and to develop programs aimed at improving
the quality of care delivered in the region.
Financing the ongoing operation of the telemedicine
network is a challenge for NSRHN, but one that it is meeting with
the same vigor and originality with which it obtained capital funding.
It has applied for telecommunications discounts from the Universal
Service Fund, a federal program that makes rate discounts and subsidies
available to schools, libraries, and health care providers. As mentioned
earlier, NSRHN has obtained grant support from the Air Quality Management
District, and it has also obtained financial support from Blue Cross
of California. In all, NSRHN has identified eight possible sources
of funding to help support the telemedicine network. Changes in
technology in the near future may reduce greatly the operating expenses
of the network.
Evaluating Managed
Care Options
In its 1996 provider survey, 89 percent of respondents
told NSRHN they were concerned about the impact that managed care
would have on their practices. To address this concern, NSRHN hired
a consultant to develop a managed care business plan to prepare
physicians, facilities, and other providers to participate successfully
in managed care arrangements. The consultant suggested that providers
in the region had neither the patient volume nor the expertise to
accept risk as a network, let alone to offer a managed care product
to the local market. The consultant proposed instead that NSRHN
partner with a larger, urban health care delivery system.
Attempting to learn how an affiliation with a
large urban delivery system might work, NSRHN developed a request
for information (RFI) and sent it to five northern California health
systems. Only two of the five responded. Both of the systems attended
NSRHN meetings and made presentations concerning the benefits of
possible affiliation. Before NSRHN could make a decision on its
next step, one of the systems dropped out of contention, citing
losses in the Sacramento market as its reason. Left with only one
possible affiliation partner, NSRHN decided to abandon the notion
of partnering with an urban/regional system. NSRHN members were
fearful of being overwhelmed by a larger partner. As an NSRHN board
member put it, the network didn't "want to become a dot on someone
else's map."
Once it decided not to affiliate with a system,
NSRHN turned its attention to developing the second prong in its
managed care strategy: developing a way for NSRHN to contract with
managed care organizations on behalf of its members. With the help
of legal consultation, NSRHN devised a Participating Provider Agreement
in which network members (participants) authorize the NSRHN to negotiate
managed care contracts with integrated delivery systems and managed
care organizations on their behalf. The majority of provider members
have signed Participating Provider Agreements. No managed care contracts
have yet been negotiated by NSRHN for its members.
The fact that no managed care organizations have
entered the service area selling products or seeking contracts with
providers reinforces the members' belief that managed care is not
coming to northeastern California in a significant way any time
soon. Reflecting this belief, NSRHN has modified its managed care
strategy to concentrate on scanning the environment to identify
possible changes in the operating philosophies of managed care organizations
and major purchasers of health insurance products. In the absence
of managed care, NSRHN is exploring ways to provide incentives to
providers to engage in disease prevention activities and case management
programs.
Coping with the Perils
of Diversity and Geography
Six short-term strategies were developed in NSRHN's
Strategic Action Plan of 1996:
- Develop and expand upon the success of NSRHN
through effective marketing;
- Develop communications to enhance patient
care;
- Prepare physicians, facilities, and other
providers to successfully participate in a managed care environment;
- Strengthen local health care systems by providing
educational opportunities and access to new technologies (e.g.,
telemedicine);
- Create a system that will enable NSRHN members
to share human resources; and
- Establish collaborative purchasing opportunities.
The network made great strides in accomplishing
four of the six strategies. The two strategies NSRHN did not implement
were sharing staff and establishing a group purchasing service.
NSRHN came to understand that the membership of the network is too
diverse and the geography of the network is too vast for many traditional
cooperative ventures to take root and grow.
The network (as personified by its executive
director) views itself as a "resource broker" for the region and
as a regional health care advocate. As a resource broker, the NSRHN's
executive director has been able to identify and obtain sources
of funding for network projects. Had these funds not been made available,
it is highly unlikely that the network would have matured to its
current state of development. The executive director views her role
as channeling resources from outside of the region into the region
for area-wide health system development.
As the executive of a network composed of a diverse
group of health care providers serving an identified rural geography,
NSRHN's executive director is often called upon to represent local
providers on government and business task forces. In this role she
is an advocate for the health care interests of the patients and
providers of the area. This is a role that was not originally envisioned
by the network; happily, it has been thrust upon the network by
the policy environment. The inclusion of the NSRHN's executive director
on state task forces and planning councils has given network members
a new voice in state rural health care policy-making.
Bringing resources into the region and representing
the region before policy makers overcomes the problems of diversity
and geography. These activities are beneficial to all members and,
indirectly, to all residents of the region.
Recurring Themes
Although the five rural health networks just
described differ in many ways, they share several developmental
themes. These recurring themes reflect the reasons why the networks
were formed, how they developed, and how they prepared themselves
to engage in productive activities.
- Rural health networks form in
reaction to a perceived change in the environment. Providers
who formed Lake Okeechobee Rural Health Network (LORHN), Eastern
Panhandle Integrated Delivery System (EPIDS), and Northern Sierra
Rural Health Network (NSRHN) perceived a threat from managed care
organizations headquartered outside of the region. The threat
of losing patients if they did not participate in the provider
panels of urban managed care organizations and of losing income
and clinical autonomy if they did contract with them, drove the
rural providers in these areas together. At the time they began
to meet, they did not know how they would address the problem,
but believed, intuitively, that the solution to their problem
lay in collaborative action.
Networks form when potential network members
are stimulated to action by the perception of a threat or an
opportunity in their environment. Perceived threats initially
provoke defensive action. Perceived opportunities in the environment
will result in collaboration only if a potential network member
believes it needs the help of others to seize the opportunity.
- The initial perceived threats
and opportunities that draw rural providers into alliances may
not be the primary problems upon which mature rural health networks
concentrate their energies. Telemedicine, for example,
overtook managed care in importance in NSRHN, and the programs
of CHOICE are not linked directly to improving the competitiveness
of its members. Initial perceptions of the environment change
when they do not hold up under greater scrutiny. As NSRHN monitored
managed care developments, the threat of managed care in Northern
California diminished greatly without NSRHN taking any action
to affect it.
Environments are dynamic; they change, and
successful networks change with them. EPIDS formed to contract
as a PSO with the state's public employees insurance benefits
association. At the time the providers came together to form
EPIDS, the state was considering contracting with PSOs. Later
the state decided to contract only with licensed managed care
organizations. EPIDS was a PSO with no apparent contracting
opportunities.
Successful networks have the capacity to
identify salient problems and to take action to solve them.
Because threats and opportunities change and perceptions
of threats and opportunities change, successful rural health
networks are flexible and able to change directions.
- A planning process is crucial
to identifying network goals, programs, and actions.
All of the rural health networks reviewed in the case studies
relied on planning to define programs and the steps necessary
to implement them. Some engaged in strategic planning processes
(CHC, NSRHN), some in business planning (EPIDS), and others in
both strategic and business planning (LORHN and CHOICE).
A formal planning process gives the members
of the network an opportunity to test the assumptions that brought
them together initially. After sober analysis, the members may
decide that the original problems identified by members are
not the ones which currently dominate. A strategic planning
process may result in a change of network goals and an accompanying
change of strategic direction, as illustrated by the experience
of CHOICE. Networks with diverse memberships, such as CHC and
NSRHN, use strategic planning to define the interests members
hold in common; obtain concurrence on network goals; and determine
actions the network should take.
Business planning occurs after network programs
have been selected. Business plans assess the environment for
the venture; test its feasibility; identify the resources necessary
for success; and outline the steps to be taken to implement
the venture.
- Networks obtain and use data
for planning and evaluation. All of the networks use
secondary data in their planning activities. Secondary data is
data not produced by the network itself but available, for example,
from members (e.g., financial or use data), trade associations
(e.g., patient origin and destination data), and the state (e.g.,
mortality, morbidity, and natality data). Rural health networks
also use primary data they collect themselves through surveys,
interviews, or focus groups. NSRHN, for example, surveyed providers
to identify problems in the environment, and used the results
in its strategic planning process. CHC surveyed employers to discover
the need for and interest in a low-cost health insurance option.
CHOICE surveyed the uninsured to discover their knowledge of alternative
insurance options and the barriers they had encountered seeking
insurance. Survey data can also be used to evaluate the effectiveness
of the network. LORHN and EPIDS contemplate surveying provider
members and enrollees to judge their satisfaction with the performance
of the network.
Financial and utilization reports prepared
by network members and the network itself are also a useful
source of data. Using these data sources, CHOICE attempts to
measure its performance in term of economic benefit to members
individually and the region collectively. EPIDS collects financial
and use data at the physician and hospital level to gauge the
effectiveness of the network and its members (physicians and
hospitals). Each of the networks in the case studies understands
the importance of obtaining good data for planning and evaluation.
- Formal organization promotes
network cohesion. All five of the case-study networks
are organized as not-for-profit corporations. The reasons for
incorporating varied somewhat. For example, they said they incorporated:
- "to obtain grants"
- "as a way of handling money"
- "required by state law"
- "as a symbol of the formalization
of the network"
Incorporation of a rural health network clearly
establishes the network as an entity separate from its members.
It also creates the organizational infrastructure that allows
a network to develop more fully. An incorporated network can
hire staff; receive and disburse money; obtain loans and grants;
acquire, hold, and sell property; and sue in the name of the
network. Network members ordinarily are not held liable for
the actions of an incorporated network. Incorporation erects
a "corporate shield" that helps protect the assets of individuals
and entities participating in the network if a judgement is
ever made against the network. Corporate bylaws identify the
roles and responsibilities of network members and establish
a framework for network decision-making.
- Grant funding from multiple sources
provides the start-up capital for networks. Of course,
all of these networks received Rural Network Development Grants
from the federal Office of Rural Health Policy. These grants played
an instrumental role in moving the networks forward. In every
case, however, the Rural Network Development Grant was not the
first grant obtained by the network. CHOICE, EPIDS, LORHN, and
NSRHN acquired small grants (usually under $100,000) that financed
their initial development. As they defined their mission and programs,
other grants were sought.
Typically, the five networks in the case
studies obtained three or four grants during the early stages
of their development. These grants were important because they
provided financing at a time before network programs were firmly
identified and implemented. Members may be reluctant to commit
capital to an enterprise if the prospect for return is not foreseeable
in the short-term. Some networks may not produce benefits that
are immediately quantifiable, or they may produce benefits that
are so diffuse that everyone in the service area gains. These
networks tend to rely heavily on grant support because the network
members are not able to fund network operations out of the savings
produced by network programs. Grant money in the early stages
of development pays for network staff and consultants to assist
members in evaluating program options. Having staff (at least
an executive director) and a clear idea of the goals and programs
of the network seem to be necessary prerequisites of future
success. Networks with limited resources, like NSRHN, also use
grants to fund capital purchases and ongoing operations.
CHOICE, EPIDS, and LORHN, all beneficiaries
of early grants, are well on the road to self-sufficiency. CHOICE
invested in programs that yield financial benefits to members.
The members can afford to finance CHOICE programs and still
profit from their participation in the network. EPIDS and LORHN
are developing managed care products that will be profit-making
once the break-even level of enrollment is reached.
- Rural health networks take time to
develop. The developmental activities of rural health
networking (trust-building, goal-setting, organization, program
development) do not move on a fast-track. The amount of time required
to move through the developmental stage of networking varies depending
on the members (and their previous relationships to one another)
and the environment of the network (including the geography in
which the network forms). On average, the five case-study networks
were four years old before they received their Rural
Network Development Grant from ORHP. Most of these networks were
concluding their initial development activities when they received
the ORHP grant. It appears that small grants are important to
begin the network development process and that larger grants at
the end of the initial development process are critical to propelling
rural health networks into the next phases of their development,
which, ultimately, may result in their self-sufficiency.
Points of Difference
The preceding section focused on attributes that
the case-study networks held in common, for example, reliance on
planning and data, and the use of grant funding. This section focuses
on how the case-study networks differ in substantive ways.
- Provider vs. Community Interests.
Only one of the case-study networks, CHC, is dominated by community
members. The other four are controlled by health care providers.
LORHN, CHOICE, and EPIDS obtain input from employers or the public
at large through advisory committees. The failure to include community
members in governance does not mean that the networks are operated
purely for the benefit of providers.
Provider and community interests are not
mutually exclusive. For example, CHOICE is controlled by hospitals,
yet it has a decidedly public health orientation to its decision-making
and programming. By enrolling the uninsured in public-supported
health insurance programs, CHOICE improves access to care at
the same time it lowers uncompensated care for hospital
members. By providing assistance to uninsured diabetics, CHOICE
improves their health status at the same time it reduces
uncompensated emergency room visits and hospital admissions.
LORHN hopes to improve the local availability of health care
services by improving provider retention. It believes retention
will improve if rural practices are more profitable, a goal
of the Lake Okeechobee Health Plan. LORHN, NSRHN, and EPIDS
hope to retain more health care dollars in rural areas by stanching
the outflow of rural patients to urban areas. Keeping the dollars
local will contribute to the local economy of the area they
serve. Community interests can be served by rural health networks
even if community members do not participate in governance.
- Business vs. Public Models.
EPIDS and LORHN are operated according to business principles.
Both networks focus their energies primarily on the development,
sale, and operation of private label health insurance products.
These networks have the experiences of competitors and other managed
care organizations to draw on. There are industry norms and business
conventions that provide direction to the development of the networks'
products. Profit maximization is the implicit goal of both networks
(although profits to owners may take the form of higher payments
to providers for rendering care to enrolled patients rather than
in dividends). CHC, CHOICE, and NSRHN have fewer models to draw
on. CHC is a "political" network in which decisions are made by
accommodation and compromise. No single faction dominates and
sets the agenda for the network. While CHC is clearly the most
democratic of the five networks, it also has the most trouble
agreeing on and implementing actions. When consensus among a diverse
group is required, the decisions tend to be non-controversial
and, possibly, only marginally effective.
The executive directors of CHOICE and NSRHN
remarked that their networks were viewed as quasi-public entities
by the public and policy-makers. Both networks arrange for the
distribution of public goods (government-supported health insurance
and grant monies) and act as representatives for a defined constituency
(serving on public and private health policy boards and task
forces). This role was neither intended nor anticipated by network
founders. It is a role that is likely to occur in areas where
1) no other rural networks or associations of providers exist;
2) the health care policy environment is dynamic; 3) many rural
health policy issues are discussed in open forums; and 4) the
leader of the network is an articulate spokesperson for the
area.
- Make vs. Buy. Several
of the networks (NSRHN, LORHN, EPIDS, and CHC) planned at one
point in their evolution to develop and sell their own managed
care plans. Only two of the networks (LORHN and EPIDS) actually
brought a product to market under their name. In both cases, the
networks decided that it was more efficient -- less expensive
and less time consuming -- to partner with an insurance company
to provide some of the business functions of the enterprise than
to develop them themselves. They decided to "buy" expertise or
the use of a costly asset rather than "make" it themselves.
In the case of LORHN, it decided to use the
license, claims processing, and plan administration functions
of its insurance partner and to develop its own marketing, provider
relations, and medical management functions. EPIDS chose to
develop a wider set of functions internally. It provides all
of the functions of an insurance company, but it "rents" the
insurance license of its partner. EPIDS did not always offer
all of the services necessary to operate an insurance company.
Prior to the development of Panhandle Claims Administrators,
the for-profit third-party administrator owned by EPIDS, EPIDS
contracted with a separate third-party administrator for services.
Both of these networks have learned that it is not necessary
to own all aspects of a program for it to work for the benefit
of network members and the public at large.
CHC also planned to offer its own health
insurance program. When it found that the costs of development
and the risks of operations were too great for the network to
bear, CHC developed another approach. Rather than partnering
with an insurance company to provide an affordable product locally,
CHC is attempting to organize the purchasers of insurance products
to increase its leverage on insurance companies. By increasing
the size of the purchasing pool, CHC hopes to improve the availability
and cost of insurance products. In a sense, CHC achieved its
goal of offering a lower-priced health insurance product to
small and medium-sized employers of the region without either
"making" or "buying" the product.
- Shoring up the Safety-net.
Three networks (CHOICE, CHC, and LORHN) developed programs that
help assure that uninsured residents of their service areas have
access to health care services. How the uninsured are defined
and how services are provided, however, differ. CHOICE identifies
the uninsured as those who are categorically eligible for state-subsidized
insurance programs (Basic Health Plan and Healthy Options). It
provides services to enroll eligible residents in these programs
and to assure that their enrollment is maintained. CHC focuses
its attention on uninsured residents who have jobs. These residents
typically work for small employers or are self-employed. Unlike
Washington State, Kansas does not have a state-subsidized insurance
plan from which these residents might purchase health insurance
benefits. CHC attempts to make health insurance more available
to this population of uninsured residents by making it more affordable
to employers. LORHN requires that providers in the network give
services to those who are unable to pay. The contribution is measured
by the proportion of providers' uncompensated care revenues to
total revenues. To compensate for the requirement that free care
be given to residents, the Lake Okeechobee Health Plan pays providers
at a somewhat higher rate than other insurance plans. Unlike CHOICE
and CHC, who direct their attention toward providing the uninsured
with health insurance, LORHN attempts to improve the availability
of services to the uninsured, "paying" for direct care services
only after they have been consumed.
Summary
These five networks illustrate the diversity
of rural America. Spanning the continent, each network represents
a region unique in its geography, culture, and history: the Everglades,
Puget Sound, the Sierra Nevada, Appalachia, and the Great Plains.
As different as they may be, residents of these regions share common
concerns about the future of health care delivery and financing:
Will providers be available locally to provide the kind of services
needed by rural residents? How can access to health insurance by
rural residents be improved? Can provider costs be contained to
allow them to prosper under fixed-rate payment schemes? How can
quality of care in rural areas be assured? Who will control rural
health services?
The diversity of rural health networks lies in
which of these issues a rural health network chooses to address
and how the network proceeds to develop a response. The possibilities
are limited only by the imagination of the participants.
| Kristen West Executive Director CHOICE Regional
Health Network P.O. Box 3466 Olympia, WA 98509 Phone 360/493-4550
Fax:360/493-7708 Email: westk@choicenet.org |
Andrew Behrman Chief Executive Officer Lake
Okeechobee Rural Health Network 185 U.S. Highway 27 South South
Bay, FL 33493 Phone: 561/993-4221 Fax: 561/993-0495 Email: gatorab@aol.com
|
Gail Urban
Executive Director Community Health Council of Manhattan 1133
College Avenue, Building A100 Manhattan, KS 66502 Phone: 785/539-1610
Fax: 785/539-1090 Email: chc@flinthills.com |
Speranza Avram Executive Director Northern
Sierra Rural Health Network 700 Zion Street, Suite E Nevada
City, CA 95959 Phone: 530/470-9091 Fax: 530/470-9094 Email:
speranza@nsrhn.org |
| Kim Byas Executive Director Eastern Panhandle
Integrated Delivery System P.O. Box 758 Martinsburg, WV 25402
Phone: 304/262-0201 Fax: 304/262-0214 Email: kbyas@ix.netcom.com |
|
The author acknowledges the cooperation of the
above listed network executives, without whom these case studies
could not have been completed.
1. In mid-1997 the Intermountain
Rural Health Network joined NSRHN. Intermountain, a network of rural
hospitals and clinics, formed in 1990 with support from a Rural
Health Care Transition Grant from the Health Care Financing Administration
(HCFA). The coming together of Intermountain and NSRHN was not a
merger. Intermountain Rural Health Network still exists in name,
but it is now dormant. Some of Intermountain's programs were adopted
by NSRHN. In 1999, a seventh county was added to the NSRHN service
area. Today, NSRHN has 41 members spread over 23,900 square miles
and serves 144,700 residents.
|
