Hospital CEOs: Time to retool rural health care is now


Rural hospitals are the lifeblood of their communities — providing jobs and economic impact, keeping people healthy mentally and physically — but they’ve had a tough time of it: staffing shortages, supply chain interruptions, the loss of income from elective surgeries, and an uncertain future. 

And that’s just the past two years. Meanwhile, pre-pandemic stresses on rural health systems are still there. Workforce and supply shortages, economic realities, transportation and broadband barriers and access to care are joined by growing pains of transitioning to a national wellness model, cyber threats and the increasing need for behavioral health care as urgent concerns in rural health care.

Recruitment and retention of staff is a recurring theme among health care experts.

“Workforce sustainability is really a short-term and longer-term issue,” said Brian Peters, CEO of the Michigan Health & Hospital Association. “Short term in the fact that we have a shortage of both frontline caregivers and nonclinical staff — all of those people that are critical to making a hospital, which is open 365 days a year, 24 hours a day, function day in and day out.”

In Michigan, health care organizations are reporting up to 20% vacancy rates in staffing.

“There’s a large number of folks who have recently left the health care workforce altogether and they’re at an age where they’re not coming back,” Peters said. “Age or the pandemic or other issues forced them to make a decision to retire perhaps a bit earlier than they otherwise would have.”

A contributing factor is wage imbalance, said John Barnas, executive director of the Michigan Center for Rural Health. 

“They’re competing against other service jobs,” Barnas said. “The Burger Kings and McDonald’s and fast food operations that are paying $15-$18 an hour.”

That’s the same pay range as some of the most-needed job openings in health care, he said. 

“Workforce has really become quite an issue because COVID has taken a toll on the health care workforce – people have left, they’re tired,” Barnas said. “There was a shortage in rural Michigan to begin with of primary care providers and nurse practitioners. There’s a shortage now of medical assistants, radiology techs and other good paying jobs.”

The lack of staffing, especially at entry levels, is the number one issue on the mind of John T. Foss, vice president of operations of Mercy Health Lakeshore Campus in Shelby.

“It’s the economy and the amount of jobs out there,” Foss said. “There are entry level jobs out there where you can make the same amount of money. It’s difficult to compete with that. You can take care of people and deal with the stress with that or go out and stock shelves and not deal with that kind of stress.”

As part of Trinity Health, the nation’s second-largest Catholic Health System, Mercy has offered retention bonuses, and more than 90 percent of the staff took advantage of the offer. That solidifies staffing for about two years but openings remain in entry-level jobs.

The needs, he said, include nursing aides, cooks, food and nutritional services and cleaning staff, “these are typically the positions that bring people into the healthcare field and we’re having a difficult time filling them,” he said. 

To recruit workers and encourage careers in healthcare, Mercy Health has been connecting with local schools, getting middle and high school students to consider job possibilities. Mercy is also tapping recruiters and pushing social media.

"Hospitals do not just need healthcare workers that are face to face with patients but we need mechanics, cooks, environmental service workers, and registration clerks," he said. "There's a job for you at the hospital."


Mercy staff also have been visiting a host of regional colleges to encourage students to pursue careers in nursing and inform them of recruitment bonuses.

Staffing issues across the state point to the need to train more health care workers. 

“The pipeline is going to be so important,” Peters said. “The pipeline as it exists today is not adequate, particularly in rural areas, which are significantly older than non-rural areas and have older and sicker patients. This also means that the phenomenon of folks leaving the field is felt more acutely in rural communities.”

There are partnership initiatives ongoing with local colleges and health care organizations. And earlier this year, Michigan lawmakers appropriated $300 million to help health care providers attract and retain workers.

“This will not solve the problem,” Peters said. “But it’s recognition by our elected officials that these problems are real and that's encouraging.”

‘System of coordination’

The list of what keeps Steve Barnett up at night makes you wonder whether he gets any shut-eye at all. Barnett is president and CEO of McKenzie Health System in Sandusky, in Sanilac County.

He ticks off his list: cyber threats, shortages, recruiting providers, aging infrastructure, “the fact that 5% of the population we care for is paid for at less than cost,” community needs, population management and a competitive wage structure.

“Wages are becoming exorbitant,” Barnett said. “In terms of wage structures, those are really the result of a lot of people leaving health care because of the burnout, they’re tired of what we’ve been through the last two years. Now that people could retire, many did.”
Health systems large and small across Michigan saw lower-wage staffers migrating to fast food chains, Barnett said, without the “headache” of what's going on in health care right now.

“The whiplash with that, it's going to impact the number of people entering health care,” he said. “We’re in a strange position that may not let us out even when the public health emergency is over.” 

The health care financial model is changing. 

Barnett points to the 2010 Affordable Care Act as pivotal for health care organizations to transition care from a “sickness” model to a “wellness” model. 

“The wellness value model at some point in the future will be changing how healthcare is financed in the country to reflect that,” he said. “The fee for service model now … will be transitioning to a global payment model. We’re moving through that and while we’re moving through that, many of us public health players — Medicare, Medicaid for example – we are paid below what it costs us to deliver the care.”

That gap must be filled with payments and patients who bring a commercial plan with them, he said.

“What costs more, me delivering care when they’re sick or creating an environment where there are more healthy people?” he asked rhetorically. “That’s where we’re moving through this transition. If I were being paid a fixed rate to provide health care to 1,000 people in this community, the faster I figure out what's going on and take care of it, the less likely we are to have long-term complications.”

The current payer versus. provider system is an administrative burden, he said. “It consumes a lot of money just trying to get paid.”

“The good news is that rural health care organizations like mine throughout this country are in probably the best position to pilot these new payment models and delivery models and figure out how to make them work and then how they can be expanded … extrapolated on in an urban environment,” he said.

Cyber concerns

Health care organizations are trying to gather data and information about the population they are managing. This puts them in the sights of cyber criminals, who are increasingly targeting health care.

“They’re threat actors: they find a way in and they shut you down,” Barnett said. “Just about everything in healthcare today has an IT component to it. Once they gain that kind of access and leverage they will hold you hostage — seek ransom. We then have to decide, are we going to pay it or not? Is it real or not?”

It’s another added cost for health care, shoring up IT staff and employing forensic experts to find “ransom notes” embedded in compromised systems. 

“We went to electronic medical health records 15-20 years ago with a sense of urgency that this was going to be a way to better manage health care, and it’s clearly better than paper, but you’re then exposed to these kinds of threats that have become increasingly greater in the last few years,” Barnett said.

“So we have to redirect dollars that we make on those little margins we are hoping to create because of how we get paid for adding new services or improving our infrastructure … things you expect us to do …. We end up spending money on servers and firewalls to keep that health system protected. And we’re not paid for that. The payer isn’t saying we’ll compensate for that.”

Peters said cyber security has “exploded” on the radar screen. “We hear from the FBI that health care is the No. 1 target globally for cyber criminals. Data housed by hospitals and health care is incredibly rich data and it’s financially sensitive. It has put a massive target on our backs.”

Many rural hospitals are old structures.

“Many of them have aged … they were never built with technology in mind. They weren’t built to support telemedicine. They were built to deliver basic care. We need to replace these facilities and that would be a great investment with tax dollars to be used and spent.”

Rural hospitals have a long history of innovation and their position and smaller scale has often meant flexibility to try things and seek solutions larger organizations couldn’t manage, Barnett said.

“We’re the sports cars of the healthcare industry.”

Rural systems also struggle with access – transportation is a challenge, specialty medicine is difficult to find, and broadband availability can be iffy, creating a roadblock for telemedicine. Virtual care seemed like a lifeline during the pandemic.

But it was another struggle for rural communities without internet availability and aging hospital infrastructure.

“We’re trying to transition in how we provide care in a very innovative way,” Barnett said. “So our system is about how our EMS is dispatched to a home and then can communicate with our emergency department, and we can diagnose and manage this patient long before they get here. There’s a system of coordination.”

‘Be a voice for what we could do differently

To JJ Hodshire, Hillsdale Hospital president and CEO, potential hospital closures are a warning bell for the industry. Concern over that issue prompted Hodshire and Director of Marketing & Development Rachel Lott to start the “Rural Health Rising” podcast in 2020.

“COVID intensified what has been culminating for the last decade,” Hodshire said: reductions in payments at the federal and state levels, as well as from commercial payers; growing restraints placed on health systems, shortage of providers, staffing. “We wanted to be a voice for what we can do differently.”


“What concerns me most is our rural communities are dying,” he said. “Rural hospitals close or merge or get acquired by a big system, which outsources major services to the mothership, and small communities are left with nothing more than a landing pad.”

That results in closed programs, potentially closed hospitals, and a lack of specialty care like obstetrics and mental health services.

“What keeps me up thinking about the industry is we need the backbone of our rural hospitals to sustain health and wellness in the community so patients can get care close to home,” Hodshire said. “Also they are the backbone of a community’s economy. Businesses don’t want to relocate there if there’s no health care.”

The question is, how do you sustain a rural hospital that may have substantial losses on a spreadsheet?

“You essentially look at your operations,” Hodshire said. “You have to reinvigorate the workforce, retool the operation.”

This brings a focus on keeping the patient healthy and out of the inpatient side of the hospital: “As CEOs, we’re thinking we have to fill our hospitals, but that has to become the wave of the future because the payers are telling us that.”

The average length of stay at Hillsdale Hospital is 2.5 days – a significant drop over the past decade or two. “Our goal is to get patients out sooner,” he said. Like other rural communities, Hillsdale has a high percentage of Medicaid and Medicare patients — 70% of the payer mix relies on these federal programs. So his fiscal responsibility is to make sure the patient gets the best care, but also to keep them out of the hospital.

Hillsdale has addressed this with a shift to outside management: telehealth, outpatient services so people can get care without being in the hospital. While other systems have shut down some of these services, Hodshire said it’s a way to “plug the leak in the boat — not focusing on how do you sustain this long term by having some type of outpatient setting where you bring in specialty care.”

This urgency to retool came to the forefront during the height of the pandemic, already a pressure-filled time for rural hospitals. So Hillsdale started to look at specialty care — urology and neurosurgery treatment, for example, and orthopedic and obstetrical services. “We have really taken our model for advanced care and beefed it up,” Hodshire said. He points to Becker’s hospital report as a wakeup call.

“We’ve created a continuum of care, we’re not just depending on ER volumes,” he said, by making sure patients have access to the type of care they might in the past have gone to big systems to obtain. Hillsdale has added a hyperbaric oxygen chamber and wound care clinic, for example, and increased availability of occupational health care and mental health services.

In addition to the new services, Hillsdale launched a pain clinic and utilizes certified registered nurse anesthetists — advanced practice registered nurses who administer anesthesia and other medications — to keep patients out of the emergency department.

“This is on floors that would be sitting vacant today because of dwindling patients,” Hodshire said. “With that shift we had to shift as well.”

This retooling has been his biggest challenge, but also his biggest reward, Hodshire said. And what lies ahead?

He’s worried about Medicare sequestration, a reduction in government spending without placing additional financial burden on patients — essentially imposing the costs on health care providers.

“If sequestration is re-enacted again, that’s a 2% cut we’re looking at again,” Hodshire said, adding that cuts were suspended during COVID. “2% on rural hospitals could close a hospital. We’re break even – that’s what you hope for in rural care.”

Those uplifts can keep rural communities, with high levels of Medicaid patients, poverty and other factors in operation. The need for health systems to make legislators aware of this is key, Hodshire said.

This continuum of care focuses on keeping people healthy. It’s about knowing the needs of the community and meeting their basic needs for food, nutrition, vitamins and care.

“All of those things would not happen if you lost your local hospital,” Hodshire said. And local outcomes would suffer. Adding time to get people to bigger health centers means a loss of life — time is so critical — and worse outcomes.

“We have got to capture the attention of legislators at state and local levels to the importance of local hospitals,” he said. “Minutes matter.”

Hodshire speaks positively of his experiences working with legislators on these issues — he singles out state Senate Majority Leader Mike Shirkey’s efforts on Medicaid expansion in Michigan and Congressman Tim Walberg’s support of increasing connectivity. 

“I think at some level you can’t build the fortress, you can’t put in the sandbags,” he said. “But we’ve got to have partners and support at the state and federal level to find ways to support rural America.”