State Rural Hospital Transformation Program Generates ~$12M in Annual Improvements

Challenge

Sixteen Tennessee hospitals have closed since 2012, including four in 2020 alone. From 2019-2022, Guidehouse collaborated with the Tennessee Department of Economic and Community Development to develop transformation plans for 14 rural health facilities. Following a thorough and methodical application and transformation plan development process, Guidehouse zeroed in on revenue generating, cost reducing, and operations improving initiatives individualized for each participating hospital.

Results

Participants in the Tennessee Rural Hospital Program fared better than their rural peers on operating income and operating margin throughout the early phases of the COVID-19 pandemic, and most participants showed a positive directional financial outlook compared to their pre-program status quo with:

• $8 million in estimated annual revenue generation across 14 hospitals
• $4 million in estimated annual cost savings (including $2.3 million reduction in bad debt)

Participating facilities have also reported positive progress toward nearly 60 percent of all facility-reporting metrics as of July 2021.

How They Did It

• Launched the Rural Hospital Transformation Program in collaboration with the State of Tennessee by:
  • Creating a diverse committee of stakeholders to lead the direction of the program
  • Developing a data-driven application process
  • Delivering comprehensive and individualized transformation plans
  • Establishing an engaging and thorough reporting process
  • Providing data analysis and policy opportunities for the state’s consideration
  
  
• Provided collective and targeted implementation support in 2021, including:
  • Developed a service line playbook
  • Conducted “Operations Bootcamp” sessions
  • Created a Community Outreach, Reputation Repair, and Education toolkit (CORE)
  • Provided revenue cycle and clinical documentation improvement (CDI) support
  • Benchmarked performance
    
    
• Leveraged transformation plans to implement strategic and operational improvements, including:
  • An integrated care model to break down siloed departments and create staffing efficiencies
  • Bad debt reduction strategies to elevate financial pressures by negotiating reductions with debt collectors and reduced denials
  • Investing in strategic telehealth capabilities and equipment to keep care in the community
  • Swing bed and post-acute services (e.g., physical therapy)
  • A dedicated rural health liaison position to act as the community representative