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Rural Health Care: Challenges & Opportunities

Health Policy Perspectives


W. David Helms, Ph.D., President, Alpha Center, Washington, DC.

Ira S. Moscovice, Ph.D., Professor, School of Public Health, University of Minnesota, Minneapolis, MN.

Keith J. Mueller, Ph.D., Director, Nebraska Center for Rural Health Research, University of Nebraska Medical Center, Omaha, NE.

This session outlined how health policy issues such as access, financing, and quality are affected by the realities of the health care system in rural areas.

Providing health care in many rural areas is a challenge. Rural health care systems often directly compete with urban systems for patients. Citizens of rural areas have a right to expect that their local health care meets certain basic standards. The first step in assessing the quality of any product is measurement. The primary objective of quality assessment is to ensure that the health care system is optimizing the health of the people for whom it is responsible.

Dr. Moscovice identified four challenges of measuring quality in rural areas:

  • Small sample size of patients and providers, including volume/outcome issues.
  • Lack of data availability.
  • Denominator issues (broad geographic areas).
  • Shortage area issues, such as the number of medical personnel and adequate facilities.

Current policy initiatives that may affect the quality of care in rural areas include:

  • Medicare+Choice Program. A provision of the Balanced Budget Act of 1997 (BBA), Medicare+Choice allows contracts between the Health Care Financing Administration (HCFA) and a range of managed care entities. This effort, in part, is expected to expand the rural Medicare beneficiary enrollment in managed care plans. Medicare+Choice requires participating managed care entities to document the quality of care provided to Medicare enrollees.
  • Medicare Rural Hospital Flexibility Program. Also created by the BBA, this program allows States to designate rural facilities as critical access hospitals (CAHs) under certain conditions. CAHs must be able to document that the care they provide is at least comparable to their predecessor institutions.
  • Performance-based accreditation. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) has incorporated performance-based outcome measures into its accreditation process. With the aforementioned challenges of measuring quality in rural areas, JCAHO has tried to accommodate rural hospitals by adjusting the required reporting standards to more accurately reflect measures of performance outcomes.

Dr. Moscovice concluded his presentation by reviewing a list of "next steps" in developing quality of care standards in rural health care that are practical, useful, and affordable:

  • Guaranteeing appropriate core services in all rural areas.
  • Ensuring community input into rural health care systems.
  • Investing in information technologies for both clinical care and quality measurement.
  • Establishing a rural set of standards common to all accrediting bodies.

Dr. Mueller addressed the multiple sources of financing rural health care services. His presentation focused on rural hospitals to illustrate financing challenges for the rural health care system. Primary sources of revenue for rural hospitals include:

  • Medicare.
  • Outpatient care.
  • Home health.
  • Skilled nursing facilities.

Dr. Mueller noted that in rural areas, because many single providers perform multiple services, affecting multiple sources of revenue affects the same provider. Therefore, when changes are made in financing that cut across the streams of revenue, those changes affect the single provider, in that it is not easy for that provider to recover from reductions in spending in programs, such as Medicare, when it is done across each of those areas.

Dr. Mueller emphasized that rural health care services require special financing considerations for the following types of providers:

  • Low-volume providers.
  • Providers of multiple services, which are often cross-subsidized.
  • Hospitals with a disproportionate reliance on Medicare and Medicaid payment.
  • Institutions with precarious financial status.

The BBA and the Balanced Budget Refinement Act of 1999 (BBRA) drew a lot of attention to the fragility of the financing system for rural health care services. Most of the provisions of the BBRA have a direct impact on rural health care delivery and access for rural Medicare beneficiaries.

Dr. Helms rounded out the introductory session by discussing access to care in rural areas, including barriers to access and lessons for expanding access. Successfully improving access to health care requires a multifaceted approach:

  • Improve service availability for those who already have health insurance.
  • Expand health insurance coverage to the uninsured.
  • Strengthen and support safety net providers, who provide services to those without insurance coverage. It is important to realize that separate safety net systems often do not exist in rural areas.

Barriers to access in rural areas include:

  • Financial barriers, such as lack of economic resources and inadequate tax base, as well as high uninsured rates.
  • Capacity/resource barriers, such as personnel, technology, and facility shortages.
  • Operational and organizational barriers, such as geographic isolation, inadequate transportation, and lack of integration and coordination among providers.

Dr. Helms recommended the following strategies to build capacity and reduce access barriers in rural areas:

  • Improve the supply and distribution of health professionals through scholarships and loan repayments, recruitment/retention, and training of physicians for rural practice.
  • Provide enhanced payment for service delivery.
  • Improve and support infrastructure development through telemedicine and grants for emergency medical services.

Unlike urban areas, most rural communities cannot support a separate set of safety net providers. Hospital physicians must care for low-income, uninsured, self-pay patients. Metropolitan areas face the same challenges. Communities, and even States, cannot solve this on their own, because it is largely a problem of low-income workers.

Dr. Helms emphasized that access is not only about insurance; it is also about getting the people to the resources. He concluded his presentation with lessons learned on expanding access from a recent Project Hope survey on the implementation of rural State Children's Health Insurance Program (SCHIP) outreach, enrollment, and provider participation including:

  • Coordination of public programs.
  • Simplification of the application process.
  • Use of providers and other State departments in enrollment efforts.
  • Community outreach.


Dunbar JL, Sloane HI, Mueller CD. Implementation of the State Children's Health Insurance Program: outreach, enrollment, and provider participation in rural areas. Washington, DC: The Project HOPE Walsh Center for Rural Health Analysis; 1999.

Moscovice I, Rosenblatt R. Quality of care challenges for rural health. University of Washington and University of Minnesota Rural Health Research Centers. 1999.

Mueller K. Rural implications of the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999: a rural analysis of the health policy provisions. Rural Policy Research Institute (RUPRI). December 1999.

Ricketts TC, ed. Rural health in the United States. New York: Oxford University Press; 1999.

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