Rural health care CEOs are thriving in transformative times

Gabriel Perna | December 9, 2019

Key Takeaway:
*Many common issues that health care leaders face are amplified for rural hospitals because their patients struggle with access to care

*Rural health care organizations are using collaborations, partnerships and telehealth technology to improve access to care.

*Successful rural CEOs say it’s a matter of partnering where you can, making sure to achieve positive operating margins to reinvest in facilities, concentrating on workforce and generally pushing forward.
Steve Barnett, CEO of McKenzie Health System

Steve Barnett came to his role as CEO of the Sandusky, Mich.-based McKenzie Health System in 2008, just as the recession was kicking into high gear.

“If you think about where we were nationally with the economy back in 2008, it really set the stage for a precarious time, especially when you think about what ensued after with the debate over health care and the subsequent passing of the Affordable Care Act in 2010. [The ACA] was the single biggest disruption to health care since the beginning of the 20th Century,” says Barnett.

For Barnett, the transformations happening around the industry and the world at large represented a chance to change the culture of the organization. In adhering to the spirit of the ACA, the hospital switched from a sickness/volume model of payment to one that depends on wellness visits and value. McKenzie changed its mission statement, modified staffing and recruiting strategies, and adopted telehealth to improve access to care.

For the nation’s 1200+ critical access hospitals and rural providers, undergoing a transformation like this isn’t just a nice thing to have for a marketing presentation … it could be the difference between staying in business or shuttering. According to research, 102 rural hospitals have closed since 2010 and approximately 700 are currently in danger of doing the same. The health of rural health organizations is one of the most critical issues heading into the next decade.

“When these hospitals close, there is obviously no care in the communities. But also what you see over time, and what has been proven by several studies, is you’ll see the community dry up,” says Mitchell Clark, President of Cerner’s CommunityWorks, which is a sect of the Kansas City-based health IT giant that is geared toward working with rural providers.

Challenges of a rural provider

Darrold Bertsch has seen these struggles firsthand as the CEO of Sakakawea Medical Center, a Critical Access Hospital in Hazen, N.D. In North Dakota alone, five hospitals are at risk for closure — all of which are essential to their communities. While Sakakawea isn’t on that list, the struggles that many of his fellow rural hospitals face are not far from Bertsch’s mind.

“We’re challenged with making sure we can make ends meet and making sure we have positive operating margins so we can reinvest in our facilities and continue to provide the services that are needed locally. That’s a constant challenge to make sure we are financially viable. And rural organizations especially have challenges in recruiting the workforce we need,” says Bertsch, who became CEO of the organization in 2009.

[Related: Carilion Clinic CEO Nancy Agee on transforming a local economy into an innovation hub]

Mike Shimmens, executive director of 3RNet (National Rural & Retention Network), a not-for-profit organization that places health professionals primarily in rural and underserved practices, says that hiring strong candidates to practice in these areas can be tricky. “Finding and keeping a good workforce seems to be even a bigger struggle in a rural area. There’s just not as many bodies to go around for employment,” he says. “You need to have a strategy. The CEO needs to be involved.”

Rural providers are combating these challenges with loan repayment programs and developing recruiting pipelines to get young people interested in health care. Other organizations are using flexibility as a carrot.  “A lot of the workforce wants a flexible type of schedule, a flexible working environment to meet the needs of their family and their profession,” says Shimmens.

Access to care

The list of problems that rural health CEOs face includes many of the same issues many other health care CEO grapple with: recruiting and retaining talent, keeping patients satisfied, curbing overuse of the ED, dealing with the opioid crisis, navigating the regulatory landscape, staying profitable and finding new revenue sources.

But the issues are amplified for rural organizations because their patients struggle with access to care and, in turn, have worse health outcomes. According to one study, rural residence was associated with a 40 percent higher preventable hospitalization rate and a 23 percent higher mortality rate than those in an urban area.

Many hospitals serve patients hundreds of miles away. Improving access to care is a challenge that every rural CEO encounters during their tenure. For Bertsch, the solution was a collaboration between Sakakawea and Coal Country Community Health Center, a federally qualified health center in nearby Beulah, N.D. The two organizations were originally competitive but realized that a combination would increase access to care for both their patients.

“We have an integrated governance model where those two entities work together to address the needs of the patients instead of being competitive. This has led us to expand our health care services, not only in our service area footprint but by doing more behavioral health,” said Bertsch, who is CEO over both organizations. He notes that both entities have remained independent corporations and it’s not an official merger.

We’re challenged with making sure we can make ends meet and making sure we have positive operating margins so we can reinvest in our facilities and continue to provide the services that are needed locally.

Darrold Bertsch, Sakakawea Medical Center

Telehealth and tech to the rescue?

When it comes to improving access to care as well dealing with workforce shortages in rural health communities, many conversations involve telehealth. In fact, legislators, such as Sens. John Barrasso (R-WY) and Tina Smith (D-MN) have introduced telehealth-friendly bills, including The Rural Health Clinic Modernization Act of 2019, to get rural providers reimbursed more easily for telehealth services.

[See also: Entrepreneurial health care CEOs are finding inspiration abroad]

While the bills have gone nowhere, there are a host of funding programs in the federal government, as well as non-profit efforts, to get rural telehealth initiatives off the ground. At McKenzie Hospital, Barnett has used telehealth to power the organization’s stroke network. This initiative allows McKenzie’s patients to connect with a neuroscience center of excellence through Ascension Michigan health system. McKenzie has also done the same thing with psychiatry, behavioral health, cardiology and soon, pulmonology services.

Barnett says that CEOs relying on telehealth in rural communities need to pick their partners well because the platform is generally proprietary to the organization they are working with. “I can’t use the same technology with a variety of tertiary partners, I have to narrow that down. We’re lucky we have a good partner,” Barnett says.

Clark of Cerner says the partnership works both ways. Tech vendors need to understand the rural market before trying to sell them a solution. It’s not an easy market to win. “You can’t just deploy the same strategies to an academic medical center in an urban area as you would a rural provider in Eastern Oregon,” he says. “It won’t work.”

Further complicating telehealth and technology is that many rural communities are still struggling with broadband internet adoption, says Clark. According to the Federal Communications Commission, 39 percent of rural Americans lack access to typical broadband service, compared to only 4 percent of urban Americans. “By not having this access, it really limits what they can do from a virtual health standpoint with telehealth, imaging and interoperability,” he says.

Looking forward

If it’s not poor resources, the lack of technology capability or access to care, it’s something else threatening the existence of rural providers. Walmart recently opened a health clinic in rural Georgia and is pondering the idea of doing the same thing in other communities. Susan Turney, CEO of Marshfield Clinic in Wisconsin, says that national chains are going to go where the people are.

“Walmart is in every community and other national brands have a large presence in our communities. But when you have 2,000 customers walk through your doors every day, buying groceries, over the counter medications, prescriptions, you really have an opportunity to manage the health of that community — we want to be in health as much as health care,” Turney says.

So how does a rural provider thrive in tumultuous times? By looking forward. Sometimes that means investing into technology, other times it means collaborating with partners.

[Related: Marshfield Clinic CEO Susan Turney on rural health care as ‘a core passion’]

Bertsch at Sakakawea is in a Medicare ACO. He joined because he knew the conversations about shifting from volume to value weren’t going away. The ACO has allowed them to conduct more wellness visits, improve transitions of care and help patients with the management of multiple chronic illnesses. At McKenzie Health System, Barnett says the organization is engaged in the accountable care space as well.

“We want to be poised and developed well enough that we perform at the highest level as health care shifts from volume to value. We were one of eight organizations that came together at a national level in 2013 and developed the National Rural Accountable Care Organization,” he says.

Not only has that ACO found success in improving care and reducing costs for its rural patients, that collaboration led to the creation of a service company that has operationalized the process for other rural ACOs. To Barnett, it’s a matter of taking what’s available and pushing forward, not looking back.

“We have developed a culture of innovation at McKenzie. It’s hard … it requires the right leadership and a willingness [of your employees] to engage in innovative activity. It takes resources that sometimes don’t make financial sense. But if you’re waiting for the ACA to be repealed, that train has left the station. You need to adjust,” Barnett says. “Going backwards is not the answer. If you’re not there, move on and take advantage of the information that’s out there.”

About the Author

Gabriel Perna, Senior Manager, Digital Content

Gabriel Perna is the Senior Manager of Digital Content at Health Evolution. He brings 10+ years of experience in covering the intersection of health care and business. Previously, he was at Chief Executive, Physicians Practice and Healthcare Informatics. You can reach him via email at or on Twitter at @GabrielSPerna