Instead of Selling, Some Rural Hospitals Band Together To Survive

BOWMAN, N.D. — Retta Jacobi stepped onto a metal platform that lifted her to an entrance on the side of a custom-designed semitrailer. Once inside, she lay down on a platform that technicians slid into an MRI machine. Jacobi hoped the scan would help pinpoint the source of the pain in her shoulders.

The mobile MRI unit visits Southwest Healthcare Services, the hospital in Bowman, North Dakota, each Wednesday. Without it, the community’s 1,400 residents would have to drive 40 minutes to get to an MRI machine, an expensive piece of medical equipment the hospital couldn’t afford on its own.

Southwest Healthcare Services and 21 other independent, rural North Dakota hospitals are part of the Rough Rider Network, which used its members’ combined patient rolls to negotiate better prices for the mobile imaging truck.

Independent rural hospitals are increasingly joining what are called clinically integrated networks, collaborative groups that allow them to avoid selling out to larger health systems while sharing resources to save money and improve patient care. Many are motivated by the chance to combine their patient rolls for value-based care contracts, a growing reimbursement model in which insurers pay providers based on the quality of care they provide and the health outcomes of their patients.

Supporters of the networks are exploring whether funding from the $50 billion Rural Health Transformation Program — part of President Donald Trump’s recent tax and spending bill — can be used to help start or expand such organizations.

For independent, rural hospitals, the networks are an alternative to shutting down or reducing services, or to giving up local autonomy and joining a large hospital system.

“Anything that can help our rural hospitals and add services is awesome,” said Jacobi, who provides speech therapy to children in the local school district.

Since 2010, 153 rural hospitals in the U.S. have shuttered completely or stopped offering inpatient services, according to the Sheps Center for Health Services Research at the University of North Carolina. A far larger number, 441, merged with or were acquired by hospital systems between 2011 and 2021. That’s according to a report commissioned by the Coalition to Strengthen America’s Healthcare, an advocacy group comprising hospitals and health associations.

The Rough Rider Network provides negotiating leverage to its members, which serve about two-thirds of rural North Dakotans, said Dennis Goebel, CEO of the Bowman hospital.

Health care vendors “probably wouldn’t be talking to us if we’re by ourselves,” he said. “They’re not looking for the little, tiny crumbs. They want a big contract, and they’ll give you better pricing.”

Some rural networks share specialists who aren’t needed full time at any one hospital, according to the Commonwealth Fund, a nonprofit focused on improving the health care system. Some networks also invest in broadband, housing, and other community development projects that can help people stay healthy and access care.

Hospitals can pool staffers for a network-wide employee health insurance plan, said Nathan White, CEO of Cibolo Health, a company that helps launch and manage networks in rural areas. He said they can also enter shared contracts for telehealth, prescription drug programs, and other services.

White said he started Cibolo Health after a leader from an independent, rural North Dakota hospital asked him about collaborating with similar facilities. The Rough Rider Network launched in late 2023 with assistance from the company and $3.5 million from the North Dakota Legislature.

Since then, Cibolo Health has helped start networks in Minnesota, Nebraska, Montana, and Ohio. Once a sixth one opens in September, Cibolo-affiliated networks will represent more than 120 hospitals, with service areas covering 4.7 million people, White said.

The networks, which are nonprofits owned by the hospitals, pay an annual fee to Cibolo Health, a for-profit company, for management services. White said leaders from 10 other states are considering joining this model.

Similar networks have been around for more than 30 years but became more popular after the passage of the 2010 Affordable Care Act, according to a report by the Rand Corp., a research nonprofit.

Rural health care providers are increasingly interested in forming such networks, said Marnell Bradfield, executive director of the Community Care Alliance, a network of hospitals and independent primary care offices that launched in 2015 in rural western Colorado. About once a month, she said, she gets a call from health care leaders exploring similar networks and asking about her experience.

The Rand Corp. wrote in its 2020 paper that it didn’t find any academic studies that examined whether these networks do what its supporters claim — save money and improve patient care.

“In theory, quality should improve with the alignment of health care organizations, but there is no evidence,” the report said. The paper also said such networks could end up increasing prices, something that can occur with traditional mergers and acquisitions.

Bradfield and White said they have the evidence, at least for their organizations.

Community Care Alliance members have reduced their insurance costs while improving patient outcomes, such as reducing their need for inpatient and emergency care, Bradfield said.

White said data from a pilot program between Caret Health, a care coordination company, and SMP Health-St. Kateri, one of Rough Rider’s hospitals, showed the program helped a significant number of patients catch up with preventive care.

Gabby Wilkie, finance director at the St. Kateri hospital, in Rolla near the Canadian border, said Caret Health staff called and texted patients who were behind on annual physicals, cancer screenings, vaccinations, and other visits. She said staffers explained to patients why this preventive care is important for their health before setting up a three-way call with St. Kateri staff to schedule an appointment. White said it took an average of 11 outreach attempts before patients came in for any visits.

“To be honest, we didn’t have the resources to reach out,” Wilkie said.

She said St. Kateri would have spent an estimated $300,000 to do that kind of outreach for 1,000 patients. Meanwhile, she said, the hospital estimates it will earn more than $100,000 when that many patients come in for their preventive care. Cibolo Health and the Rough Rider Network both contribute to the cost of the Caret Health service, which is now rolling out to other network hospitals.

Goebel said joining a network to remain independent is also beneficial for the economy of rural areas, where hospitals are often major employers. He said health systems sometimes cut services and staff at rural hospitals they acquire.

Jacobi is taking medication and doing physical therapy after a doctor examined her MRI results. If that doesn’t work, she may need to make a five-hour round trip to Bismarck to get an ultrasound-guided steroid shot. Jacobi was thankful she could get a diagnosis and treatment advice without having to travel far for the MRI.

“Anytime we can maintain more local control, it’s a good thing for our small towns,” she said.