COVID-19 may have unexpected benefit of freeing up funds for rural hospitals to invest in technology

Photo: Diego Cervo/Getty Images

Federal provider relief funds have allowed rural hospitals to spend money that otherwise would have gone to personal protection equipment and other COVID-19 needs, to something they've long needed: upgraded technology.

"It's freed up money normally used out of operations, for technology investments," said Kelly Arduino, healthcare industry leader for Wipfli, an accounting and consulting firm that specializes in the smaller healthcare space.

Arduino and her team work directly with smaller, rural hospitals, which already faced financial challenges and potential closure prior to the COVID-19 pandemic. However, a substantial amount of money was freed up when the Department of Health and Human Services began distributing American Rescue Plan Provider Relief Funds, such as a recent $25.5 billion aimed at rural, small providers.

WHY THIS MATTERS

The biggest need for rural hospitals is technology upgrades, Arduino said.

Twelve years ago, on December 30, 2009, the Centers for Medicare and Medicaid Services released the proposed rule that became known as meaningful use. It outlined incentive programs to providers that used appropriate electronic health record technologies in meaningful ways to benefit patients and providers alike.

A decade later, the program has evolved to Promoting Interoperability. EHR vendors consolidated. Providers that installed EHR "off-brands" continue to deal with electronic solutions that are not always connected between systems.

Rural providers especially found that their "off-brand" systems are no longer supported and do not connect to a financial system, or an outpatient clinic or office that may have invested in a different system, Arduino said. 

Providers need to invest in the next generation of electronic health records if for no other reason than to meet the more demanding COVID-19 reporting requirements.

As new EHR systems range from $8.5 to $10 million, rural providers have been first partnering with larger urban systems for solutions, and then merging with them, Arduino said.

"We went through a decade when rural hospitals rebuilt facilities," she said. "Seventy percent had a major renovation. Now the new investment is technology and software. That is going to be a challenge for rural hospitals. It's not something they can get a loan for as easily as a building."

There's money in the stalled $3.5 trillion infrastructure proposal for capital planning, but as that term usually means money for brick-and-mortar investments, providers are still awaiting clarity on whether the funds, if passed, could go towards technology investments, according to Arduino.

"The majority of investment is needed on the technology side," she said. Rural providers also want to invest in automating the revenue cycle process, as larger health systems are doing.

THE LARGER TREND 

Many rural providers had already been struggling financially prior to COVID-19.

An estimated 136 hospitals have closed since 2010, according to the Cecil G. Sheps Center for Health Services Research.

Ten years ago, numerous rural providers were swallowed up by larger urban hospitals. That activity has slowed down because of COVID-19, Arduino said. In this way, COVID-19 has perhaps helped rural hospitals hang on.

However, "Surges are hitting rural areas the hardest," she said. There's a big divide between rural and urban hospitals in terms of weathering the storm. 

"It will be interesting to see if additional dollars are eaten up by the expense of patient care," Arduino said of federal funds. 

As far as paying back the grant money, Arduino believes rural providers will be able to keep their federal dollars. "A lot of rural hospitals have been able to keep the dollars, at least on paper," she said.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com