Background

As rural hospitals acknowledge their vulnerabilities and prepare for the threats of bioterrorism and emerging microbial diseases, the relationships among rural communities, their health care providers, and policymakers encourage a climate of deliberation, altered business practices, and changed fiscal demands. Rural communities have unique population and infrastructure characteristics and vulnerabilities, which pose unprecedented challenges to rural hospitals as the demands of bioterrorism preparedness and response are considered and addressed. Some of the greatest concerns include alerting remote and dispersed populations to threats and augmenting limited hospital facilities and human resources to meet the demands of an epidemic or a mass casualty medical emergency with limited transportation and communications infrastructures. This is the context that policy changes and funding deliberations must consider to shape the preparedness efforts of rural communities and their hospitals.

The impediments that geographical isolation places on patient transport and emergency response are exacerbated by severe weather conditions for long periods of time in many parts of the country. In some of these areas, the mountainous terrain also disrupts communications.

Defining the Rural Community Poses Policy and Funding Challenges

In preparing to alert populations of a threat and intervene during a health emergency, such as an event of bioterrorism, it is important to understand the demographic distinctions among populations that may signal unique preparedness needs. One of the key findings of a July 2002 Department of Health and Human Services (HHS) Rural Task Force report, One Department Serving Rural America, was that the lack of a common, interagency definition of rural, as well as the lack of a more precise gradient between rural and urban, makes it difficult for governments to target grants, evaluate services, and develop policies to benefit the broad spectrum of rural communities. In general, the U.S. Census Bureau uses the term to classify regions containing small populations of 2,500 people or fewer, or unincorporated areas with population densities below 1000 people per square mile. The census classifies all that is not urban as rural. Consequently, areas that are designated as rural can vary widely from areas with one or two persons per square mile to areas with 999 persons per square mile. The U.S. Office of Management and Budget (OMB), on the other hand, uses the term “non-metropolitan” to indicate rural areas and populations. Non-metropolitan refers to counties that do not meet minimum population requirements, do not contain a central metropolitan area, or are otherwise not associated closely with urban areas. The OMB makes these designations on the county level because, traditionally, population data are reported at that level. 21 Approximately 72 percent of America’s 3,140 counties are in non-metropolitan category. 22 While some overlap exists between the Census Bureau and OMB classification systems, a mutual definition of the term rural is necessary to begin meeting the policy and funding challenges that face these communities.

Additionally, rural populations tend to be more racially homogenous than urban populations, but demographics vary greatly among sub-regions of the nation. For example, rural African Americans are most concentrated in the Southern and Southeast Atlantic States, Native Americans are most concentrated in the Four Corners region, the Northern Great Plains and Oklahoma, and Hispanics are most concentrated in the Southwest states. 23 Such disparities may require variations in health services from region to region based on ethnic, linguistic, or cultural differences between groups that are not taken into account by current policy strategies targeting rural populations.

America's largely rural food and agriculture industry, which contributes $1.24 trillion to the U.S. economy annually and accounts for one in eight American jobs, is particularly vulnerable to terrorist attack. Source: Hitting America's Soft Underbelly: The Potential Threat of Deliberate Biological Attacks Against the U.S. Agricultural and Food Industry, RAND Corporation, 2004

According to the NRHA, the residents of rural areas, who account for 20 percent of the United States’ population, are far more likely than urban residents to die if they experience motor vehicle accidents, unintentional injuries, or gunshot wounds. Elderly individuals and obese individuals make up a greater proportion of the rural population than the urban population. Rates of alcohol and tobacco use are higher in rural counties. Chronic illnesses and suicides are more prevalent in rural areas and it is more common for rural adults to describe their health status as fair or poor. Both male and female death rates are considerably higher in rural areas than in urban areas. 24 Recently, rural communities throughout the country have suffered from epidemic rates of methamphetamine use and related health problems, including exposure to the toxic chemicals involved in methamphetamine production. 25

Limited surge capacity is one of the most pressing issues in preparing rural hospitals for mass casualty events. Hospitals in rural areas tend to be small and resource-strapped, and thus are likely to find it difficult to address large-scale health emergencies. Source: Optimizing Surge Capacity: Regional Efforts in Bioterrorism Readiness, AHRQ, January 2004.

Existing Workforce shortages and Barriers to Health Care Access May Impact Rural Hospital Preparedness and Response Efforts

Workforce and health service capacities have been identified as major issues in hospital preparedness efforts in both urban and rural settings. Although rural communities have an obvious need for a full spectrum of health services commensurate with those offered to urban communities, current reports indicate that these areas remain relatively underserved by the medical community. Because rural areas tend to have about half as many physicians per capita as urban areas, nearly 75 percent of rural counties have regions that are designated as Medically Underserved Areas (MUA) 26 and rural areas are nearly four times more likely to be designated Health Professional Shortage Areas (one primary care physician per at least 3500 residents) than are metropolitan areas. 27 Rural populations tend to suffer from a significant shortage of medical specialists as well: nearly 90 percent of all specialists practice in urban areas. Rural Americans are also less likely to receive routine dental care. Rising malpractice insurance premiums, particularly in high-risk specialties like obstetrics, are exacerbating the shortage of medical specialists in rural areas. 28 There are fewer mental health professionals per capita practicing in rural areas and rural hospitals are far less likely than urban hospitals to provide emergency mental health care. 29 Additionally, the provision of emergency medical services in rural communities is relatively limited. 30

Rural hospitals have filled an important niche in providing primary care and community health services, but they must rely on a “stabilize and transport” model if patients require complex tertiary care.

Rural residents are not only relatively more underserved by the medical community than their metropolitan counterparts, they also have greater difficulties accessing health care providers. For example, the frequently limited or absent public transportation infrastructure in rural communities impedes general population mobility as well as travel to reach a hospital or a physician for routine or urgent care. 31, 32 Presenting a greater barrier to health care access and preparedness in rural communities is the limited versatility of rural hospitals in providing care and expanding services as compared to their urban counterparts. Geographic isolation, limited specialized medical services, and a generally constrained budget often render rural hospitals unable to provide care in the just-in-time manner of urban hospitals and emergency facilities. For a number of reasons, rural hospitals tend to be more poorly equipped and less versatile in treating patients than urban and suburban hospitals. Rural hospitals also have lower profit margins, which limits their abilities to attract investors, make improvements, and maintain stocks of supplies. A study conducted at the University of Minnesota Rural Health Research Center found that capital investment in rural hospitals are unprofitable; therefore, most investments are made in the form of charity. 33 These charitable investments are not sustainable solutions, however, and are rarely sufficient for significantly improving medical services and maintaining supply reserves. As an increasing number of urban residents have opted to move out of metropolitan areas to rural communities, the rural health care system has not seen the financial and strategic investments necessary to sustain its viability. Urban sprawl has thus placed greater burdens on the rural health care infrastructure. 34

Widespread poverty and a limited availability of health insurance also continue to impede access to health care in rural areas and strain relations between communities and health care providers. On the average, per capita income in rural America is $7,417 lower than in urban areas. 35 Rural workers are twice as likely to earn minimum wage, and less likely to advance in employment status over time. Rural individuals are more likely to live below the poverty line; 14 percent of rural Americans, and nearly 24 percent of rural children, live in poverty. These factors place rural residents at a great disadvantage in affording personal health insurance for themselves and their families. Unfortunately, rural areas have fewer large employers who are willing and able to absorb some of the cost of health insurance for their employees. Rural workers are more likely to work for small businesses and are less likely to be offered health benefits from employers. 36 In 1999, up to seven percent of rural counties had no access to coverage by any HMO. 37 In these counties, even employers wishing to offer health insurance to employees would not be able to do so. It is common throughout the health care industry, in both rural and urban settings, for insurance plans to deny coverage for mental health care. 38 The difficulty in affording and obtaining private insurance can be seen in the data showing that only 60 percent of rural non-elderly residents have private insurance, while 72 percent of the non-elderly population in urban communities are privately insured. 39

The high rates of poverty found in rural communities contribute to a variety of health problems and diminished access to quality health care and health insurance.

Rural Hospitals Face Daunting Fiscal Restraints in a New Climate of Threats

Before the 20th century, only a limited number of hospitals existed in the U.S. Those who could not receive adequate home care, including urban workers displaced from family, immigrants, dependants, and the indigent and poor, sought medical attention at almshouses, which had become municipal hospitals in function, if not in name, but offered few services and procedures. With the growth of scientific knowledge, technology, and medical expertise by the early 1900s, however, hospitals became focal points of the emerging medical enterprise. By 1909, there were 4,359 public and private hospitals in the U.S., containing a total of 421,065 beds. 40 All sectors of American society sought treatment in hospitals, when necessary. With increasing dependence on technology and the growing competence of medical capabilities in treating illness, American hospitals required paying patients to provide a more robust financial base. Paying patients had previously played a minor role relative to minimal state and municipal funds, small endowments, and community fundraising activities in financing early hospitals. Private hospitals took on the role of competing for paying customers by offering hospitality, private rooms for patients, and the latest treatment and diagnostic procedures, while public hospitals, for the most part, continued to provide medical care for the poor. 41 Hospitals had become the most economically feasible way to provide health care to communities, but by the 1930s, the cost of hospital care had risen so high that it became unattainable to the middle class—it seemed that only the wealth of the rich or the dignity of the poor could elicit hospital care. 42 Private insurance emerged as a way for the middle class to access hospital care, which was now the dominant venue for health care in general. 43 When healthcare costs became even higher, federal assistance programs emerged, including Medicaid and Medicare in the 1960s, to cover patients previously covered by charity.

As traditional providers for the poor, America's network of large urban municipal hospitals has become a major component of our health care safety net, which acts as the default health care provider for the nation’s nearly 44 million uninsured individuals.44 That safety net includes not only the large urban municipal institutions commonly associated with public health care, but also the network of smaller public and not-for-profit hospitals built under the Hill-Burton Act of 1946 in rural communities, where 20 percent of uninsured Americans live today. 45 As components of this safety net, all of these hospitals are quite reliant on payments from the Medicaid and Medicare programs for revenue. Unfortunately, because of the ways in which costs are reported to federal programs, rates of Medicaid and Medicare reimbursement to rural hospitals and physicians are often dramatically lower than those to their urban counterparts for equivalent services. 46 47 48 During the 1990s, rural hospitals became increasingly dependent on revenue from providing outpatient services, receiving, on average, 40 percent of their revenue from retrospective payment for these services. However, since the Medicaid and Medicare programs provided nearly 60 percent of the payments for these services, the low reimbursement rates had negative impacts on revenue from patient care and limited the opportunities for rural hospitals to recover financial losses. 49

Several attempts have been made to improve the financial conditions in which rural hospitals operate. The Balanced Budget Act of 1997 (BBA), for example, created the federally assisted Medicare Rural Hospital Flexibility (FLEX) Program, designed to directly augment the reimbursements for rural health services. This program set up efficient rural health care networks consisting of at least one critical access hospital (CAH) and one full-service hospital under certain agreements regarding patient referral and transfer, communications, and patient transportation. 50 A CAH is an acute care facility that is downsized by reducing services to minimize the per-patient operational costs of the hospital, and the rural networks are designed to reduce transport costs, which add considerably to operational costs. 51 52 However, by implementing a prospective payment system (PPS) for outpatient services in hospitals, the Act greatly constrained the ability of rural hospitals to generate revenue from outpatient services and, therefore negatively impacted the hospitals’ ability to financially support other services including inpatient care.

As part of its initiative to revitalize and resource the strained rural health care system, HHS allocated $46 million in federal grants for the funding of rural and frontier hospitals across the country for 2003. These grants came in the form of $23 million through the FLEX program and $8 million in grants directly payable to state governments to further improve the rural health care system through technical support and workforce recruitment, among other things. 53 Another $15 million is allocated to hospitals with fewer than 50 beds through the Small Hospital Improvement Program (SHIP) to help pay for costs related to PPS implementation and improve service standards. 54

Rural Hospital Preparedness for Bioterrorism

In response to the terrorist attacks that occurred in the fall of 2001, the Health Resources and Services Administration (HRSA) distributed $125 million in federal funds during 2002 to prepare hospitals for mass casualty events, particularly bioterrorism. In 2003, the level of funding increased to $498 million, and $515 million has been allocated to the program for 2004. The President’s budget request for 2005 is $476 million, which reflects an eight percent reduction from the 2004 funding. The funds from HRSA are accompanied by federal guidance that highlights priority areas for improvement, which include surge capacity, emergency medical services, linkages to public health departments, education and preparedness training, and terrorism preparedness exercises. 55 56 57

Makeshift isolation facilities, like this one found at one of this study’s participating hospitals, will offer little protection to the hospital’s workforce and patients in the event of bioterrorism or a major infectious disease outbreak.

The Joint Commission on Accreditation of Healthcare Organizations (JCAHO), a national accrediting body that had accredited 4,644 hospitals as of 2002, 58 has echoed these preparedness priorities. According to the JCAHO emergency management standards, each accredited healthcare organization is required to have an emergency management plan and must conduct drills at least twice per year to test the plan. The JCAHO standards specify the required components of an emergency management plan that addresses mitigation, preparedness, response, and recovery. The standards require organizations to define their vulnerabilities, coordinate with other community responders, and define roles for individuals and the organization as a whole. 59 Updated in 2001, JCAHO’s Emergency Management Standards now reflect expanded expectations to prepare entire communities for disaster response, rather than focusing only on preparing healthcare organizations. According to a 2003 report released by JCAHO, however, community-wide preparedness plans are very rare and almost all exist in large metropolitan areas. 60 The Secretary of Health and Human Services has included the state offices of rural health, which act as advocates for state rural health concerns, in guiding and advising the HHS Bioterrorism Preparedness Program. This program directs federal funding at improving the capacity of hospitals to respond to bioterrorist attacks and other disease outbreaks or mass casualty events. An April 2002 study titled “Rural Communities and Emergency Preparedness” prepared by the Office of Rural Health Policy within HRSA reported questionnaire results from 32 state offices of rural health regarding rural emergency preparedness among the states. All responding states were developing or revising terrorism response plans. Several of the state offices of rural health noted that their states faced difficulties in coordinating plans between the state government and Tribal Nations, and that the statewide plans failed to target the specific needs and vulnerabilities of rural healthcare providers. These difficulties were unique to preparing rural communities and healthcare infrastructures for response to terrorism. Only five of the responding state offices indicated that their states had adequate epidemiologic surveillance capacity. Most of the others responded that their health systems would require more robust funding, increased workforce, and other resources in order to achieve and maintain adequate surveillance and response capabilities. State offices responded overwhelmingly that the current response infrastructure for a terrorist or bioterrorist attack was either very limited or nonexistent in their rural areas. Some respondents expressed concerns that a significant barrier to preparedness is complacency and the belief that rural communities are not at risk. 61

Rural American communities are far from isolated. Of the three million mile network of arterial, collector, and local roads that links rural and urban areas and carries freight, food, health-care, and other goods and services, 78 percent is in rural areas. Additionally, tourism and recreation industries, such as skiing have become prime economic drivers in rural communities previously dependent on timber, mining, and agriculture. Source: http://www.transportation.org/bottomline/highways05.html

21. According to the OMB, a metropolitan area consists of a densely populated core area and adjacent counties that are economically and socially integrated with the core area; it must include at least one city with 50,000 or more inhabitants or a Census Bureau-defined urbanized area (with a population of at least 50,000) and a total metropolitan population of at least 100,000. Ricketts et. al, Definitions of Rural: A Handbook for Policy Makers and Researchers, Federal Office of Rural Health Policy, July 1998.
22. National Advisory Committee on Rural Health. A Targeted Look at the Rural Healthcare Safety Net. 2002.
23. Rural Policy Research Institute, Rural by the Numbers: Information about Rural America, Data from 1990. Available at http://www.rupri.org/resources/rnumbers/demopop/demo.html#Map percent205
24. “What's Different About Rural Health Care?” National Rural Health Association. Available at http://www.nrharural.org/pagefile/different.html.
25. Butterfield, Fox, “Across Rural Midwest, Drug Casts a Grim Shadow,” The New York Times, January 4, 2004.
26. Kaiser Commission on Medicaid and the Uninsured. “The Uninsured in Rural America.” 2003.
27. Federal Office of Rural Health Policy, “Facts about Rural Physicians,” September 1997. Available at http://www.shepscenter.unc.edu/research_programs/rural_program/phy.html.
28. Rowley, Thomas D, “High Insurance Premiums Jeopardize Rural OBs,” Rural Health News, Vol. 9, No. 1, Spring-Summer 2002.
29. “What's Different About Rural Health Care?” National Rural Health Association. Available at http://www.nrharural.org/pagefile/different.html
30. National Rural Health Association. “Rural and Frontier emergency Medical Services Toward the Year 2000.” 1997.
31. “What's Different About Rural Health Care?” National Rural Health Association. http://www.nrharural.org/pagefile/different.html.
32. Department of Health and Human Services Rural Task Force. Report to the Secretary: One Department Serving Rural America. 2002.
33. Stensland, Jeffrey, et al. Rate of Return on Capital Investments at Small Rural Hospitals. University of Minnesota Rural Health Research Center Working Paper #45. January 2003.
34. Belsie, Laurent, “Rural America’s New Problem: Handling Sprawl,” The Christian Science Monitor, December 10, 2002. http://www.csmonitor.com/2002/1210/p03s01-ussc.html.
35. Gibbens, Brad, Rural Hospital Flexibility Program: Moving Forward, presented to the 2003 July Trustee Conference, Leadership and Accountability in Health Care, Minnesota Hospital Association. July 12, 2003.
36. Kaiser Commission on Medicaid and the Uninsured. “The Uninsured in Rural America.” 2003.
37. McBride, Timothy, Courtney Andrews, Keith Miller, and Michael Shambaugh-Miller, “An Analysis of Availability of Medicare + Choice, Commercial HMO, and FEHBP Plans in Rural Areas: Implications for Medicare Reform,” Rural Policy Research Institute, Rural Policy Brief, Vol. 8, No. 5 (March 2003).
38. Rural Communities and Emergency Preparedness, Office of Rural Health Policy, Health Resources and Services Administration, and the US Department of Health and Human Services, April 2002.
39. Kaiser Commission on Medicaid and the Uninsured. “The Uninsured in Rural America.” 2003.
40. Public hospitals are operated and supported by elected governing bodies while private hospitals are owned and managed by legal entity other than a government agency. With respect to management and ownership, private hospitals fall into two general categories: for-profit or not-for profit. For-profit hospitals are owned by investors, to whom profits are returned; not-for Profit hospitals are owned by non-public corporations and are typically run by a boards of trustees. Not-for-profit hospitals are also exempt from federal tax requirements and use their profits to cover capital expenses and future operating costs. Alabama Hospital Association, Hospital Terminology, available at http://www.alaha.org/terms.pdf.
41. Rosenberg, Charles E, The Care of Strangers: The Rise of America’s Hospital System (Basic Books, Inc., Publishers: New York), 1987.
42. Rosenberg 1987.
43. Hollingsworth, J. Rogers and Ellen Jane Hollingsworth, Controversy About American Hospitals (American Enterprise Institute for Public Policy Research: Washington, DC), 1987.
44. Institute of Medicine. America’s Health Care Safety Net. 2000.
45. Kaiser Commission on Medicaid and the Uninsured. “The Uninsured in Rural America.” 2003.
46. “What's Different About Rural Health Care?” National Rural Health Association. http://www.nrharural.org/pagefile/different.html.
47. Rural Health Advisory Committee, Minnesota Department of Health, “Rural and Urban Reimbursement: Hospitals, Nursing Homes, and the Minnesota Advantage Health Plan,” January 22, 2002. Available at http://www.health.state.mn.us/divs/chs/rhac/reimbmulder.htm.
48. Note that the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Title IV, “Rural Provisions,” aims to stabilize the financial environment of the rural heath care system by increasing Medicare reimbursements to rural health care workers and hospitals. The bill stipulates that hospital payment rates from Medicare will increase each year over the next four years and aims to equalize payment rates between rural and urban hospitals. Source: Ahrens, James, "Guest Opinion: Medicare Bill Helps Rural Hospitals," The Billings Gazette, November 21, 2003.
49. Mohr, Penny E., et al., “The Financial Dependence of Rural Hospitals on Outpatient Revenue,” The Project HOPE Walsh Center for Rural Health Analysis, 1998.
50. United States Department of Health and Human Services. “Rural Hospitals, Health Care Systems strengthened by $13 million in Grant Awards,” Press Release, September 10, 1999. Available at http://www.hhs.gov/news/press/1999pres/990910.html.
51. Berenson, Robert. Testimony on the Balanced Budget Act and Rural Hospitals before the Senate Appropriations Subcommittee on Agriculture, Rural Development, and Related Agencies. July 11, 2000.
52. Health and Human Services Rural Task Force, Report to the Secretary: “One Department Serving Rural America.” 2002.
53. Department of Health and Human Services, “HHS Takes New Steps To Promote Quality Health Care and Social Services in Rural America,” Press Release, July 26, 2002.
54. Premier, Inc., “HHS announces availability of $15 million in grant funding for rural hospitals; application deadline is June 21,” Advocacy News, June 5, 2002. Available at http://www.premierinc.com/frames/index.jsp?pagelocation=/all/advocacy/issues/107th/2002/other/rural-grant-funding-0602.htm.
55. HRSA Annual Report for Fiscal Year 2002. Available at http://www.hrsa.gov/annualreport/part5.htm.
56. Department of Health and Human Services, “Guidelines for Bioterrorism Funding Announced,” Press Release, May 9, 2003.
57. Department of Health and Human Services: Budget in Brief, FY 2005. Available at http://www.hhs.gov/budget/05budget/fy2005bibfinal.pdf.
58. Established as an independent, not-for-profit organization in 1951, JCAHO is the nation's predominant standards-setting and accrediting body in U.S. health care. JCAHO's standards address an organization's level of performance in key functional areas, such as patient rights, patient treatment, and infection control. A competitive edge in the health care market, accreditation is earned and maintained by meeting standards in many areas and paying for on-site surveys by JCAHO survey teams every three years. Source: http://www.jcaho.org/about+us/index.htm.
59. JCAHO, Emergency Management Standards—EC.1.4 and EC.2.9.1. Available at http://www.jcrinc.com/subscribers/perspectives.asp?durki=2914&site=10&return=2897.
60. Health Care at the Crossroads: Strategies for Creating and Sustaining Community-wide Emergency Preparedness Systems, JCAHO, 2003. Available at http://www.jcaho.org/news+room/press+kits/emergency+prep.htm.
61. Rural Communities and Emergency Preparedness, Office of Rural Health Policy, Health Resources and Services Administration, and the US Department of Health and Human Services, April 2002.