Funding Beyond the Hospital: A New Vision for Rural Health
Exploring global budgeting in rural healthcare
The Challenge: The Crisis in Rural Healthcare
Across the United States, efforts to save rural hospitals are critical, but the real challenge is to create a sustainable rural health system—the entire ecosystem of care that supports a community. The traditional fee-for-service model, which rewards the volume of procedures, has pushed this system to the brink of collapse, forcing a search for a more resilient financial foundation. A promising potential solution is a global budget: a fixed, predictable payment designed to serve the health needs of an entire population.
Dive into our thinking:
Funding beyond the hospital
Across the United States, efforts to save rural hospitals are critical, but the real challenge is to create a sustainable rural health system—the entire ecosystem of care that supports a community.
Download PDFFrom Treatment Center to Community-Managed Health System
Shifting to a global budget isn't merely a change in accounting; it fundamentally rewrites the mission of every entity within the system. If a health system is no longer paid primarily for treating sickness, but is instead funded to foster wellness, its entire identity and structure are thrown into question.
If we change the financial model to reward health instead of sickness, what is the new role and responsibility of a health system in its community? The answer requires us to think beyond the hospital walls and envision a community-managed health system, where success is measured not by activity, but by the well-being of the population it serves.
This transformation is driven by four key shifts:
Appoint a System Manager for the Budget
A neutral "system manager," such as a public health authority or community coalition, should manage the global budget to ensure funds are directed toward the community's greatest needs.
Adopt True Population Health Metrics
Success is measured by the well-being of the population. This includes reducing inpatient bed days, decreasing the prevalence of chronic illness, and reserving hospital care for the most complex cases.
Meet People Where They Are
A flexible budget empowers the system to deliver care outside of clinical walls. By partnering with local organizations and investing in digital health tools, care can be delivered where people are in the community.
Create a Hybrid Payment Model
A hybrid approach allows for specialized excellence while driving broad, population-level health improvement. For predictable, procedure-based care, a fee-for-service structure can remain appropriate when closely tied to patient outcomes. For the bigger, more complex challenges of managing chronic disease and improving community-wide health, a system-wide global budget can provide the flexibility needed to support broader interventions.
Chart the Path Forward
For state leaders and health systems engaged in rural health transformation, this is a pivotal moment. The shift to a community-focused system of care requires a sustainable foundation for the future. As you move forward, key questions will emerge around governance, payment models, and digital tools.
To explore strategies and models that can help guide this process, we invite you to learn more about how we are working with states and health systems in this area.
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