Chapter 4: State Implementation of the Rural Hospital Flexibility Program: The First-Year Experience

Rural Hospital Flexibility Program Tracking Project

Chapter 4
State Implementation of the Rural Hospital
Flexibility Program: The First-Year Experience

Andrew Coburn, Ph.D.
David Hartley, M.H.A., Ph.D.
John Gale, M.S.
So. Maine

Introduction

The states have important policy development and implementation responsibilities in the Rural Hospital Flexibility Program (RHFP). States are responsible for, among other things:

Developing rural health plans that are intended to guide policy development and implementation activities.
Developing and applying any state-specific criteria for designating Critical Access Hospitals (CAHs).
Administering federal grant funds that are intended to be used for supporting implementation at the state and community/hospital level.
Providing assistance to hospitals that are considering conversion to CAH status.
Conducting pre and post-conversion licensure survey reviews of hospitals that have applied for CAH status.
Evaluating their state RHFP programs.

This chapter reports on the early experience of the states in the implementation of the RHFP. In most states, the agency designated by the governor as responsible for implementing the program (usually the state office of rural health) has only one full year of experience with the RHFP. Thus, it is early in the history of this program. To learn about this early experience, the RHFP Tracking Project team (teams from all five rural health research centers) conducted site visits in 12 states. These visits included extensive interviews with officials from the state offices of rural health, Medicaid, Emergency Medical Services (EMS), and the health facilities licensing and certification agency, rural health representatives, and representatives from the hospital sector. (See Appendix 3 for Interview Protocols.) The lead site visit team for each was responsible for summarizing these interviews for each state. This chapter summarizes across the 12 states key findings and lessons learned from these case studies. Our discussion focuses on key findings regarding the goals that the states are seeking to achieve with this program, the status of program implementation, the states’ successes and challenges in this first year, and the early lessons and their implications for the future of the RHFP program.

The Status of State Implementation of the RHFP

State progress in implementing the RHFP can be measured in different ways. The number of CAH conversions is one frequently used measure that is tracked by the University of North Carolina (UNC) management information system. In states where there have been few conversions, however, other measures such as the extent of the state’s rural health planning and technical assistance activities are important.

Overall, we see significant variations in the scope and pace of state implementation activity. Some states have been slow in launching their RHFPs, in part because they are monitoring the experience of the other states. Other states, like Minnesota, Texas, and Wisconsin, have moved quickly to implement very active RHFPs. Some states have been more deliberate in their implementation, including the RHFP in a broader agenda. The following summarizes the highlights of our findings regarding the status of state implementation.

Rural Health Planning

The RHFP requires that states develop a rural health plan. Although all of the states we visited have such plans, it is clear that the importance and functional value of these plans varies considerably across the states. Some states, like Minnesota, have used the planning process and the plan to help build and strengthen the rural health constituency and raise the visibility of rural health issues in the state. Other states, like Maine and Missouri, have approached the plan as a hurdle that has to be overcome in order to get access to RHFP grant funds and proceed with hospital conversions. Whether because of limited resources or the demise of state health planning capacity in most states, many states have paid limited attention to the planning functions and activities required by the RHFP. Of course, some of these interstate differences are the result of variations in expertise, past system advancement, and philosophical views of the roles of state and federal governments.

Communication and Dissemination

Several states, like Texas and Minnesota, have placed a heavy emphasis on broadly communicating and disseminating information about the RHFP. While most of the states we visited have communicated extensively with hospitals about the RHFP, others are using the RHFP as an opportunity to reach broader audiences with information about the RHFP as well as other rural health programs and issues. Although it is too early to tell what effects these strategies will have, it appears that these states are successfully capitalizing on the RHFP to try to enhance the visibility and saliency of rural health among diverse policy and practitioner audiences.

Technical Assistance

The states we visited vary in the extent of their technical assistance activities. Some states hit the ground running and have been able to involve eligible hospitals in mock surveys, have developed extensive guidance materials, and have conducted extensive one-on-one and larger technical assistance (TA) sessions for hospitals considering conversion. Others have been slow to launch any significant, formal TA activity. In one state, contracting issues, for example, have prevented the state from hiring TA consultants and as a result have been hampered the ability to deliver formal TA services.

Although some of the technical assistance activities require resources and infrastructure beyond the capacity of many states, very useful tools can be surprisingly inexpensive to produce and circulate. The Center for Rural Health Initiatives in Texas, in conjunction with a local accounting firm, developed a two page form to assist potential CAHs, who are not contemplating significant changes in their Medicare patient base or service capacity, in evaluating their current Medicare reimbursement with respect to their Medicare costs. Texas will accept this simplified form in place of a formal financial analysis as part of their conversion documentation. This form has been provided to all potential CAHs in Texas and, according to the Texas Center, has been well received by the hospitals. In a similar vein, Idaho has developed a tool kit for hospitals considering conversion that includes model policies, procedures, and networking agreements. Minnesota and Wisconsin conduct mock surveys to help hospitals identify and correct problems prior to their official surveys.

States have also leveraged their relationships with other organizations to provide technical assistance. The hospital associations in North Carolina and Minnesota conduct initial financial feasibility studies with the support of and, in the case of North Carolina, funding from their state offices of rural health. The Kansas Hospital Association has prepared an application packet that includes eligibility certification forms, a model network agreement, CAH conditions of participation, and CAH survey tasks and interpretative guidelines and works with the state office of rural health in the provision of direct technical assistance to hospitals and communities.

Arkansas has taken a slightly different approach to the provision of technical assistance. They have contracted with a consulting group to train staff from the Health Facility Services and Systems Section of the Department of Health in strategic planning and hospital financial issues. The intent is that those staff will then be able to work with potential CAHs to do strategic and adaptive planning and to help them (the hospitals) understand reimbursement and financial issues related to conversion.

Conversions

Identifying eligible hospitals and helping them through the conversion process has been a priority in all of the states we visited. The number of completed hospital conversions is generally not a good measure of state implementation success, however, because states vary in how they have targeted the RHFP, the financial condition of the hospitals in the state, the number of eligible hospitals, the stance of the hospital association, and the willingness of hospitals to convert.

Conversion Surveys

Over the past several years, states have significantly reduced the frequency of hospital surveys due to reductions in federal and state funding to conduct these activities. As a result, many of the hospitals we visited had not been surveyed for many years. States varied in terms of how they approached the survey process. Some, like Idaho and Wisconsin, saw the survey as an opportunity to review all aspects of hospital operations, including structural and life safety code issues. In the majority of the states, however, the survey process focused primarily on updated policies related to staffing, emergency department management, and other operational areas.

Most of the states we visited have developed small, specialized teams of surveyors to conduct the surveys of CAHs. A number of states mentioned that federal guidance regarding the survey process was minimal, however, and that they have had to invent their own tools for conducting the surveys of CAHs.

Medicaid Payments to CAHs

Medicaid payment rates for small rural hospitals are an important issue that states face in implementing the RHFP. While Medicaid inpatient payments represent a small proportion of revenues in most small rural hospitals, outpatient payments tend to be more important. In Oklahoma, Medicaid payments to rural hospitals, and especially outpatient payments, were identified as a critical problem that was undermining the financial stability of rural hospitals.

Many of the states we visited had developed inpatient payment systems for small rural hospitals. Several, including Minnesota, had revised their Medicaid payment systems to enhance payments for CAHs. Minnesota reimburses CAHs on a cost basis for outpatient services although, because of previous payment adjustments for small rural hospitals, it does not do so for inpatient services. In contrast, Oklahoma has a limited inpatient hospitalization benefits (12 days) in its Medicaid program that rural hospitals claim leaves them with significant un-reimbursed costs. In addition, Medicaid payments for outpatient services are very low. At the time of our visit, the Medicaid agency, with support from the Governor’s Office, had made a commitment to increase payments to CAHs. Effective August 1, 2000, the annual number of compensable hospital days for Medicaid adults increased from 12 to 24 days. At the same time, rate increases for inpatient services were implemented for all hospitals as well as general increases in the rates paid for individual procedures and ambulatory surgical services. The changes have occurred across the board for all hospitals and have not been targeted specifically to CAHs although they do address concerns raised by the administrators of the CAHs we visited.

Key Implementation Issues

State Goals and Legislative Goals and Expectations: Are They the Same?

Like many grant-in-aid programs, the RHFP is jointly administered by the federal government and the states. Successful implementation of the legislative goals of the program is highly dependent on the degree of alignment between the legislative goals and expectations and those of the states. The history of program implementation tells us that in many cases, policy goals change dramatically as programs are shaped to fit state goals and expectations. And we know, as well, that for better or worse differences among the states in their goals and political cultures, in their policy histories, and in the orientation and capacity of the agencies responsible for program implementation usually result in 50 different implementation experiences.

The RHFP is no different. The state’s goals, the focus they have chosen for the RHFP, and the approaches they are taking to implementation vary significantly in the 12 states that the Tracking Project teams have visited. Although there are common themes across many of the states, there are significant differences as well, which may have implications for how the program evolves. The influence of state goals and expectations on the implementation process was especially evident in several states. In Montana, the state’s prior experience with the Medical Access Facility (MAF) Program is significantly shaping the state’s approach to the RHFP. As one official describes it, the state’s approach has been to operate as if nothing has changed from the MAF to the RHFP program. In North Carolina, the state office of rural health has used the RHFP to pursue two key state policy objectives: (1) getting small rural hospitals into formal networks with larger supporting hospitals and (2) requiring that CAH hospitals provide indigent care to uninsured, vulnerable populations. Texas and Arkansas are taking a similar approach in advancing state policy goals by tying their eligibility criteria for CAH conversion to these same goals. In Missouri, where rural health is not featured prominently on the health policy agenda, both the state and hospital community are holding back to see how the program develops in other states and whether federal support for the program will continue.

The broad scope of the federal goals for the RHFP has contributed to the variations in state goals and implementation approaches. Perspectives on the original intent of the RHFP vary. Some see the program as essentially a hospital conversion and reimbursement program, while others, like the Federal Office of Rural Health Policy (FORHP), describe the intent of the program as rural health infrastructure building. Although these are not necessarily mutually exclusive nor conflicting goals, there is a tension with regard to which of these objectives should be pursued. In reality, most states have effectively targeted their efforts to hospital conversions, if only because the poor financial status of such hospitals and limited state resources prevent them from pursuing both objectives at the same time. An important question for the future, however, is whether and to what degree states will turn their attention and resources to this broader objective and how this might change the complexion of the RHFP.

At least one state expressed concern about its own lack of clarity with regard to where the RHFP is likely to lead next, once the state has been able to get through the initial backlog of hospital conversions. They noted that so much of the intent and emphasis is tied to the conversion process that little of their thought has been given to post-conversion needs and priorities for CAH facilities and communities. In response, this state has initiated a planning process to address the issue of rural long term care. How states address the development of program goals and approaches to this issue, with or without federal guidance, remains to be seen. In fact, depending on philosophical bent, states would argue about the wisdom of greater or lesser federal guidelines.

The problem of “mixed messages” from various federal agencies regarding both program intent and implementation requirements is a related issue that a number of states have encountered. Although most of the reported problems were small, involving details regarding the grant application process or the facility survey process, the question of whether hospitals undergoing conversion needed to complete the Medicare Health Care Provider/Supplier Application (HCFA Form 855) was raised by a number of state respondents since it delayed the approval process for early-converting hospitals by as much as six weeks. As with any new program involving multiple federal agencies (i.e., FORHP, HCFA-Central and Regional Offices), it is inevitable that such a problem will occur. Nevertheless, states noted that problems such as these have created delays and other problems that affect implementation.

Variations in CAH Eligibility Criteria

States are using a variety of strategies in establishing criteria for designating CAHs and targeting grant funds and other technical assistance. Some states are being very inclusive in setting criteria while others are more narrowly targeting their CAH and RHFPs.

Many of the visited states have taken advantage of the provision in the federal regulations that allow for the state designation of “essential” or “necessary” providers, thereby allowing hospitals that do not meet the 35 mile separation requirements to participate in the program. This provision has been particularly important for states such as North Carolina and Oklahoma where large numbers of hospitals are distributed throughout comparatively small geographic areas. The typical strategy selected by states that adopt an inclusive approach to the program is to broaden the eligibility criteria to allow as many rural hospitals as possible to qualify for conversion to CAH status. This is most commonly done by reducing the minimum allowable distance between rural hospitals from 35 miles as mandated in the Federal regulations to as low as 15 miles. This reduction in the minimal distance between hospitals is justified through the development of standards that allow hospitals to qualify as essential community providers whose closure would present a threat to the health of the residents of the area in which they are located. These criteria generally involve some standard of demographic, health, or economic hardship. Typically, a hospital has to be located in an area that has a higher percentage of elderly and/or low income residents than the state average, a higher level of unemployment, a higher death rate from defined leading causes of death, a death rate that exceeds the state average for all causes of death, or a designated shortage area.

States vary in the number of criteria that hospitals must meet to be eligible for conversion to a CAH. In Oklahoma, hospitals must meet at least one of their established criteria to be eligible for participation. Wisconsin has taken a tiered approach to designating “necessary providers of health care services.” Hospitals between 20 and 34 miles apart must satisfy at least two of Wisconsin’s established criteria. Hospitals less than 20 miles apart must meet at least five criteria. The approach selected by each state depends on how inclusive they wish to be, the overall health care infrastructure of the state, and the geographic and physical isolation of their rural areas.

North Carolina, Texas, and Arkansas have taken the eligibility process a step further by tying CAH participation criteria to defined state policy goals supporting the provision of indigent care and the continued provision of services that would otherwise not exist if the hospital were to close. All these states have expressed their intention to reject a hospital’s conversion application if the facility were unwilling to commit to these obligations. None, however, have indicated what they would do if the hospital did not hold to these responsibilities after conversion.

To date, most of the states we visited have employed very broad criteria for designating CAHs and targeting grant or other technical assistance. The broad criteria, together with the change in the 96-hour rule, may undermine the fundamental incentives to pursue serious network development, in which case, hospitals are primarily motivated by the prospects for cost-based reimbursement.

While states are clearly trying to target hospitals that they think are most financially vulnerable in this first year, over time the pool of potential CAHs will change. It will be important to monitor over time the effects that varying CAH designation criteria may have on the RHFP.

Certificate of Need Regulation

With the following two exceptions, Certificate of Need (CON) regulations did not create significant barriers to conversion in the states we visited. One of our study states, Maine, still requires CON review for changes in hospital services, including conversion to CAH status and the development of swing beds. This has created difficulties for newly converted CAHs that wish to add swing beds and was an impediment to CAH conversion for several other hospitals that sought to add swing beds as part of their overall conversion strategy. Although this did not appear to be an issue in the remainder of our study states, this may become a problem in other states with stringent CON regulation of nursing home bed supply.

North Carolina, in particular, has a very directive approach to working with eligible hospitals. In other states such as North Carolina, hospitals feared the permanent loss of beds given up during their conversion under the state’s CON regulations. Given the uncertainty of the health care environment, hospitals wanted to “keep their options open” in the event that the CAH program did not provide the expected benefits or their market situations changed. They feared that, given the number of hospitals in North Carolina, they would not be able to justify the re-opening of those beds if they were required to undergo CON review in order to do so. North Carolina resolved this by allowing CAHs to “bank” any beds given up during CAH conversion for future use. A hospital can apply to the state to reopen those beds in the future without going through a full CON review that would require the hospital to substantiate the need for additional beds.

The Effects on Implementation of Differing State Office of Rural Health Roles

There are remarkable differences in the roles that states see for themselves in the RHFP. In general, these roles are consistent with the different policy and political orientations of the states. Among the states visited so far, there are a variety of overlapping roles that states are assuming: (1) those that have assumed a highly-structured and, in some cases, regulatory role, (2) those that have a strong advocacy, facilitation and TA orientation, and (3) those that have taken a measured administrative role, focusing largely on the narrow scope of responsibilities associated with managing the hospital conversion process. Some states, like Minnesota and North Carolina, have a highly structured RHFP that requires significant attention to process and policy detail. Other states, like Oklahoma, appear to be more informal in their orientation to implementation. In Missouri, key informants were clear in indicating that a strong state role is antithetical to a state political culture that supports a minimal governmental role in rural health.

What effect do these differences in orientation have on implementation? In general, it appears that hospitals value clarity of expectations from the state office of rural health, licensing and certification, HCFA and other agencies responsible for implementing the RHFP. Hospitals have valued the very detailed manuals which states like Minnesota and Idaho have produced, arguing that it provided a useful framework for reviewing hospital operations and facilitating communications with hospital staff regarding what would have to be done to successfully convert. In contrast, we heard clear concerns among hospitals about “mixed messages,” and other problems in states where state expectations and guidance are more ambiguous.

We have begun to see that there appears to be some value to separating the regulatory and advocacy/TA functions. This was evident in Minnesota where the state office of rural health has assumed a role as the agency that facilitates and advocates on behalf of eligible hospitals, but has no authority over the survey and other regulatory processes associated with conversion. Although the state’s hospital survey process appears to be very stringent, hospital administrators are able to differentiate the roles that the state office of rural health plays from that of the surveyors. The credibility and effectiveness of the state office of rural health in working with the hospitals is enhanced by not being painted by the regulatory brush of the other state agencies responsible for reimbursement, licensure and other functions.

Although state offices of rural health have played important roles in RHFP implementation in all of the visited states, the roles played by state hospital associations have been equally important. Moreover, a strong relationship between the state office of rural health and the hospital association has been very important to the success of implementation in nearly every state. In Minnesota, Idaho, and Montana, the state hospital association has a very active involvement in rural health issues generally and in the implementation of the RHFP in particular. The state offices of rural health and the hospital associations have teamed up in the implementation of the RHFPs in a variety of ways that have contributed to the critical mass of resources and activity. The hospital association has, for example, contributed to conducting the initial financial feasibility studies for hospitals and has accompanied the state office of rural health staff to regional meetings to explain the RHFP. In addition, the hospital association has been a strong supporter of rural health issues before the legislature.

We observed similar close working relationships in other states as well. Although the relationship between the North Carolina Office of Rural Health and the North Carolina Hospital Association preceded the RHFP, the program has created a vehicle to strengthen and enhance that relationship. The state office of rural health contracted with the hospital association to purchase financial analysis services in lieu of hiring its own staff after its original grant request was cut. In addition, the hospital association and the state office of rural health meet jointly with hospital boards and administrators to cultivate potential CAHs thereby expanding the constituencies of both organizations.

The Idaho Office of Rural Health’s relationship with the Idaho Hospital Association has evolved as a direct result of the RHFP. Idaho’s office of rural health, with relatively limited resources, did not have a history of working with the Idaho Hospital Association prior to the Flex Program. As a result of the hospital association’s interest in the program and its greater resources, the state office has contracted with the hospital association to provide CAHs with one-stop shopping for technical assistance services. In each case, the closeness of the relationship between the state office of rural health and the hospital association seems to have enabled the state office of rural health to gain the trust of hospitals more easily, and, in the process, enabled the state office of rural health to gain access to a larger number of potentially eligible hospitals to begin working with them sooner in the process of conversion. In addition, the state hospital associations may provide a solution to capacity issues, particularly among smaller state offices of rural health.

Location of Program Responsibility Within the State Infrastructure

In most states, the state office of rural health is the lead agency responsible for the development and implementation of the RHFP. State offices of rural health vary widely in their size, staffing levels, administrative capacity, and political influence. Among the states we visited, North Carolina, Texas, and Minnesota have large, well-established state offices of rural health with sufficient resources and political clout to effectively manage the conversion and implementation process. At the other extreme, state offices of rural health in Maine, Idaho, and Missouri are staffed by one person with multiple responsibilities, limited resources, and a lower profile within state government. The others range between these two extremes.

States such as Wisconsin and Arkansas have located responsibility in different agencies. Wisconsin has assigned program responsibility to the Bureau of Quality Assurance located within the Division of Health and Family Services. In Arkansas, the Section of Health Facility Services and Systems located within the Department of Health is the lead agency. In both states, the state office of rural health plays a supportive role and the state has empowered advisory committees to assist in the development of the state plans and policies. In Wisconsin, the CAH Coalition, which includes representatives from the office of rural health, the hospital association, the Wisconsin Rural Health Cooperative, and hospitals that have converted or are interested in conversion, has helped to provide a rural policy focus not present in the more regulatory oriented Bureau of Quality Assurance.

Many states have established advisory committees to support their RHFPs. These committees are composed of representatives from a variety of organizations with an interest in the RHFP, including the state office of rural health, the state hospital association, the rural health association, rural hospitals and providers, and state agencies such as survey and licensure. A more limited number of states involve representatives from their fiscal intermediaries, their state’s emergency medical services agencies, professional review organizations, house and senate offices, the Governor’s office, third party payers, relevant special interest groups and consulting organizations employed by the state. These committees are frequently involved in the original RHFP planning efforts and the development of the state’s rural health plan. If used properly, they can help to develop widespread support for the RHFP and provide an important dissemination vehicle. They can also provide the state with a useful early warning system for problems and barriers that may arise during the implementation of the program.

Minnesota has assembled a broad-based advisory committee that is actively involved in planning and dissemination efforts. Wisconsin’s CAH Coalition provides the rural focus that is not otherwise present in the Bureau of Quality Assurance and Wisconsin Department of Health and Family Services. Arkansas’s CAH steering committee was directly involved in the planning for and implementation of its RHFP. Texas’s CAH Advisory Committee has been cited by state officials as playing an important role in the state office’s ability to respond quickly to the RHFP initiative. A broad-based RHFP advisory committee, if used properly, may provide an important tool to help compensate for a limited infrastructure within many small state offices of rural health.

The Effects of RHFP Grant Funds on States and Implementation Success

States have used their grant funds differently. The majority of states we visited have either diverted most of their grant funding directly or indirectly to hospitals to support community studies, financial feasibility analyses, and other activities associated with hospital conversions. A few states, however, have used their RHFP grants to support the hiring of additional state staff and to address other state office of rural health needs.

The allocation of RHFP funds to hospitals has served to build hospital support for the RHFP and for the state offices of rural health. States have used grant funds to leverage interest, support, and commitment on the part of eligible hospitals. Developing and maintaining contact with eligible CAH hospitals is one of the challenges that some state office of rural health staff noted was made easier by the carrot that could be offered through the RHFP grants. Beyond the grants, states are limited to their regulatory leverage over hospitals through the licensure and survey process. And these processes are not usually located within state offices of rural health.

One hospital administrator commented that, in addition to providing much needed resources for important conversion activities, the RHFP grants created a sense of collaboration with the state office of rural health and gave the hospital a sense of obligation to work with the state office of rural health through the conversion process. In Wisconsin, the RHFP grants have become an important vehicle for the state and its partner, the CAH Coalition, to promote attention to priority areas of rural health development that hospitals, on their own, might not have targeted. Although hospitals receive direct RHFP grants to support their conversion activities, the state, with the support of the Coalition, has pooled 40 percent of its grant funds to be used by CAHs to support development activities in five areas: EMS planning and assessment, telehealth services, community needs assessment, network development, and staff training. A single RFP was used to select consultants in each of these areas. According to the state’s RHFP project director, these pooled funds are an important lever for encouraging hospitals to address priorities that the state and its hospital association partners consider important.

Some states have awarded small grants to hospitals for projects and activities supporting networking activities and development activities developed by the hospitals. In North Carolina, RHFP grant funds were used to develop an on-call system staffed by a registered nurse. This service was opened up to area physicians for use in their practices with the idea that it would increase referrals. In Maine, one of the hospitals received funds to conduct a needs assessment and explore the development of home health and mental health services. Oklahoma and Wisconsin allow hospitals to purchase (within limits) needed equipment including computers and clinical equipment using conversion funds.

There is little question that the RHFP grants have been very important tools for encouraging hospital participation. But how important have they been for supporting the needs of converting hospitals?

Hospitals in most states have received modest grants, on the order of $10,000 to $30,000, to support financial feasibility studies, community assessments, and other conversion-related activities. In some cases, these grants have had a largely symbolic value to the hospital. Other more financially vulnerable hospitals, however, have said that they could not have undertaken the studies and analysis needed for conversion without the resources of the RHFP grants. In several states, including Oklahoma, hospitals have had to fund their conversion studies out of their own funds and have been able to do so without the help of RHFP grant funds.

A number of state offices of rural health noted that the RHFP grant programs have become very time consuming and costly to administer. States that have chosen to administer the grants out of the state agency have encountered significant problems in the state contracting process that have delayed awards or have restricted the states’ ability to make awards. Once awards are made, accounting for the use of grant funds has become a significant burden given the small staff in most state offices of rural health. In general, grants administration is a new function for most state office of rural health and is turning out to be more burdensome than originally anticipated.

The competition for state grants is another aspect of the RHFP grant program that has been troublesome for most of the state offices of rural health we visited. Largely because of the very rapid roll-out of the grant program by the FORHP, states perceive that federal expectations and guidance were not clearly communicated. After the initial RHFP start-up funding, state offices were unprepared for the competitive nature of the award process resulting in some disappointment for those states that received less than originally requested. In addition, states complained about the onerous grant application procedures that have consumed an increasing amount of their available staff time.

Overcoming Implementation Barriers: Lessons Learned

Based on the 12 states visited by teams from the Tracking Project rural health research centers, there appear to be a variety of factors critical to effective implementation of the RHFP. In several of the states we visited, such as North Carolina, Minnesota, and Texas, the history of the state’s involvement in rural health and the capacity of the state office of rural health have contributed significantly to enabling the state to hit the ground running in the implementation of the RHFP. In North Carolina, Kansas, and Montana, experience with the Essential Access Community Hospital-Rural Primary Care Hospital (EACH-RPCH) and Montana Assistance Facility (MAF) programs laid the groundwork for implementation of the RHFP. In Minnesota and Wisconsin, the states were actively working on the development of alternative licensing programs when the RHFP emerged in 1997. In each of these cases, the state’s history and experience in working on small rural hospital issues, in combination with comparatively “high capacity” and strong leadership by state offices of rural health gave these states a significant leg up in the implementation process.

Unfortunately, these circumstances are not easily transferable to other states. There are, however, several factors that have had an important influence on implementation success in a number of the states we visited and could be targeted for replication in other states.

Planning Framework and Guidance

States that have clearly articulated policy goals and rural health plans that support the achievement of those goals have been more successful in implementing their RHFPs than other states. While all of the states we visited have rural health plans, the reality in a number of states is that these plans have little policy or functional value for the implementation of the RHFP. In these states, plans have been generated as administrative requirements with little support for policy goals among key constituencies important to the implementation of the RHFP. In contrast, a number of states have used the planning process to generate support for the RHFP among hospital and policy constituencies. The plans have enabled the state office of rural health to articulate its policy goals and educate key constituencies about the broader scope and intent of the RHFP. So, for example, the state plan in North Carolina communicates the state’s clear intent of requiring specific network arrangements as part of the conversion process. The rural health plan is also an instrument of leverage that state implementing agencies can use to encourage or require policy or behavioral responses and actions by hospitals, state agencies and others important to the implementation process.

Gaining Policy Leverage and Building Coalitions

As mentioned above, one of the challenges that state offices of rural health face is gaining leverage or “traction” in the policy process and with key constituencies, like the hospital community. This is not a problem in states like Minnesota, North Carolina, Texas, and others, that have a history of strong support for rural health issues and a large state office of rural health that has high visibility and credibility. However, many state offices of rural health are small and often lack sufficient visibility to influence the policy process or get the attention of the hospital community.

Although the RHFP represents an opportunity for states to raise the visibility of rural health issues and gain greater leverage on the policy process, the limited resources currently being devoted to the program, in combination with the significant implementation responsibilities, are making it difficult for states to make much headway. Many of the visited state offices of rural health lack a critical mass of staff and other resources. As a result they also do not have the organizational capacity needed to work in and outside of state government to educate and build support around the RHFP and rural health issues more generally.

States that we judge as being the most successful so far in implementing the RHFP have established strong coalitions representing policy, hospital, and rural health advocacy stakeholders. The relationship between the state office of rural health and the state hospital association has been especially critical; implementation of the RHFP has been significantly slower in states where the relationship has been weak. In some cases, coalitions have enabled states to overcome limitations of capacity and resources in the state office of rural health. Most importantly, however, they have provided a vehicle for communicating about the RHFP, developing collaborative problem solving mechanisms, encouraging strong policy coordination, and encouraging learning among hospitals that have converted and those that are thinking about it.

Strengthening State Involvement in the RHFP

Clarifying Goals and Program Intent

Although the FORHP and most states have communicated repeatedly on the network and community development goals of the RHFP, the reality is that these goals have been secondary in most states and communities to the goal of enabling hospitals to convert to CAH status. This is evident in the fact that most of the states are measuring success in this program by the number of hospitals that have converted to CAH status. This is natural given the press of managing the first wave of conversions in most states. The questions remain, however, whether and to what degree the goals beyond hospital conversion, including rural health network and infrastructure development, will receive the same attention as the conversion process. This question is especially salient given the potential changes in the program that may occur as a result of the Balanced Budget Refinement Act (BBRA) modifications in the 96-hour rule and the states’ tendencies to establish broad eligibility criteria for CAH conversion (see above).

While enabling a hospital to achieve greater financial stability through CAH conversion is no doubt a necessary precondition for rural health and community infrastructure development, we currently have few mechanisms for monitoring and assessing this aspect of the program. This is not only a priority for program evaluation, but is critical to enabling the states and federal agencies to justify sustained funding of the program. The development of assessment strategies and measures could be very valuable in clarifying and reinforcing the less easily articulated networking and infrastructure development goals central to the RHFP.

State Rural Health Planning

The role, function, and quality of the state rural health plans vary considerably across states, but, on the whole, these plans are viewed largely as a paper requirement of the RHFP. The FORHP and the states need to consider whether these plans are worth the investment of time and resources if they are not going to be used for an instrumental purpose in program development, implementation, or evaluation. The rural health plan can be very useful for a variety of purposes as demonstrated by the role that these plans have had in generating buy-in and giving direction to the program planning and implementation process in some states.

For the rural health plans to be taken more seriously, states will need to know that their performance will in some way be measured against these plans and that there are incentives and/or sanctions tied to performance (i.e., the states will be accountable for implementing and accomplishing their plans). In addition, education and training around planning may be useful, as most states have lost whatever state health planning capacity they developed in the 1970’s. These are topics that could also be addressed through technical assistance provided through the Technical Assistance and Services Center (TASC) and/or regional National Organization of State Offices of Rural Health (NOSORH) meetings.

Networking and Communication

It seems clear from this first year that one of the successes and benefits of the RHFP has been the communication and organizational networking that have occurred. These have not only been vital to the implementation of the RHFP, but are likely to have had significant spin-off benefits as well, especially in raising the visibility and saliency of rural health issues at the state and local levels.

Most of the states we visited have found the regional NOSORH meetings tremendously valuable for networking and learning about what is working and what is not in other states. The inclusion of local hospital and community leaders has been an especially valuable component to these meetings.

Now that the Tracking Project team has begun to synthesize its first year findings, future NOSORH meetings could provide an important opportunity for the dissemination of those findings. They also can provide a very valuable source of new information for the Tracking Project team, especially from states not included in the Tracking Project site visits.

EMS Development

States and the FORHP will need to pay considerably more attention to EMS if this is intended to be a central focus of the RHFP. As noted above, with the exception of a few states, EMS development activity in the states we visited has been minimal. In most cases, state and local EMS officials are only minimally involved in RHFP planning and implementation activities. Chapter 7 contains specific recommendations for strengthening the EMS development component of this program.

RHFP Grants

While the RHFP grants have been critically important in most states, several limitations surfaced in our state-level site visits. The first is that states have found the process for obtaining grant funds administratively onerous and time consuming. In most states with small state offices of rural health, the burden of preparing the applications has detracted from their other program development and implementation responsibilities. States also noted concerns about the review process and most especially, what they felt were unclear expectations for performance. These problems seem easily addressed if they have not already been addressed in the Year 2 grant process. However, it may be true that the application process burdens are more than made up for through the more effective state preparation that is required.

Of greater concern is the fact that the RHFP grants may not be adequate to support this program beyond the initial period of supporting hospital conversions. To date, neither the federal government nor the states have a vision or plan for what follows the conversion process and how those activities should be structured and funded. As noted above, the Minnesota Office of Rural Health is asking itself this question as it considers what support and technical assistance converted hospitals might need. We have also heard that the RHFP is a stepping stone program, but it is not clear to what it is a stepping stone.

The post-conversion needs of many CAH hospitals are considerable. In particular, the capital and equipment needs of many of these aging facilities remain unaddressed in the current structure of the RHFP. Other critical challenges that continue to exist in many of the communities we visited include the need for more intensive network, service and program development, the cultivation of necessary financial and human resources, and assistance with staff training. With RHFP resources used primarily to facilitate and support hospital conversions, these unmet needs are likely to persist unless existing resources are redirected or new resources are found to support the efforts of converted hospitals and communities to address these challenges.

Chapter 5: Hospital Conversion Experiences (Minnesota)

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