WILLCOX, Ariz.— Ask Sam Lindsey about the importance of NorthernCochise Community Hospital and he’ll give you a wry grin. You mightas well be asking the 77-year-old city councilman to choose betweenplaying pickup basketball—as he still does most Fridays—and beingplanted six feet under the Arizona dust. Lindsey believes he’sabove ground, and still playing point guard down at the Mormonchurch, because of Northern Cochise. Last Christmas, he suffered asevere stroke in his home. He survived, he said, because his wife,Zenita, got him to the hospital within minutes. If it hadn’t beenthere, she would have had to drive him 85 miles to Tucson MedicalCenter. There are approximately 2,300 rural hospitals in the U.S.,most of them concentrated in the Midwest and the South. For avariety of reasons, many of them are struggling to survive. In thelast five years, Congress has sharply reduced spending on Medicare,the federal health insurance program for the elderly, and thepatients at rural hospitals tend to be older than those at urban orsuburban ones. Rural hospitals in sparsely populated areas seefewer patients but still have to maintain emergency rooms and bedsfor acute care. They serve many people who are uninsured and can’tafford to pay for the services they receive. This copyrighted storycomes from Stateline, the daily news service of the Pew CharitableTrusts. (Learn more about republishing Stateline content) Severalmonths ago, Northern Cochise sought to strengthen its chances forsurvival by joining an alliance with Tucson Medical Center andthree other rural hospitals in southwestern Arizona. Together, theSouthern Arizona Hospital Alliance is negotiating better prices onsupplies and services. And the Tucson hospital has promised to helpits rural partners with medical training, information technologyand doctor recruitment. “We are committed to remaining autonomousfor as long as we can,” said Jared Wilhelm, director of communityrelations at Northern Cochise. “We think this gives us the bestleverage to do so.” Northern Cochise and the other rural hospitalsin the alliance, which is similar to ones in Kansas, Mississippi,Washington state and Wisconsin, hope that by joining they willavoid thefate of 56 rural hospitals that have closed since 2010.Another 283 rural hospitals are in danger of closing, according tothe National Rural Health Association (NRHA). Right now, someArizonans in the region are learning what it’s like to lose ahospital. Cochise Regional Hospital, in Douglas, near the Mexicanborder, closed earlier this month, following Medicare’s decision toterminate payments because of repeated violations of federal healthand safety rules. The hospital was part of a Chicago-based chainand its closing leaves Arizona residents in the far southeasternportion of the state up to 75 miles away from the closest hospitalemergency room. Sam Lindsey shudders to think what a long drive toTucson would have meant for him last Christmas. “If I’d have had togo 85 miles,” he said, “I don’t think I’d be here today.” MultipleAdvantages The alliance offers the rural members multipleadvantages. One of the most important is in purchasing. Theircombined size will enable them to get discounts that are beyondthem now. For example, instead of being a lone, 49-bed hospitalwith limited bargaining leverage, alliance member Mount GrahamRegional Medical Center, in Safford, is suddenly part of apurchasing entity with more than 700 beds. “If I’m just MountGraham and I’m going to buy one MRI every seven years, the salespeople will say, ‘Oh, that’s very nice,’ ” said Keith Bryce, MountGraham’s chief financial officer. “But as part of this alliancethat they want to do regular business with, they are going to giveus a much better price.” Bryce said that he expects the addedpurchasing power alone will save Mount Graham “in the six figures”every year. Similarly, the hospitals expect the combined size ofthe alliance to result in lower costs for employee benefits,workers’ compensation and medical malpractice insurance. Thealliance also helps the rural hospitals recruit doctors and othermedical providers, many of whom are reluctant to work, let alonelive, in isolated areas. Rural hospitals rarely have the contactsand relationships that help urban hospitals find doctors. “We’vebeen trying to recruit another primary care doctor to thiscommunity for the last year with no success,” said Rich Polheber,CEO of Benson Hospital, another alliance member. Tucson MedicalCenter has pledged to use its own recruiting muscle to help itsrural partners find providers who are willing to live in ruralareas, or at least regularly see patients there. As an incentive,Tucson will offer interested doctors help in managing the businessaspects of their practices. The rural alliance members also wantTucson’s help with medical training and IT. Some have dipped intotelemedicine, which is particularly valuable for rural hospitalsunderserved by specialists, and are looking to expand thoseefforts. Copper Queen Community Hospital, in Bisbee, the fourthrural member of the alliance and probably the rural hospital in thebest financial shape, is the most advanced user of telemedicine.Its networks in cardiology, neurology, pulmonology and radiologycan connect doctors and their patients to specialists at majorinstitutions such as the Mayo Clinic and St. Luke’s Medical Center,in Phoenix. The alliance also will make it easier for patients whohave surgery in Tucson to be transferred back to their homehospitals for recovery and rehabilitation, saving them and theirfamilies from traveling long distances. A Defensive StrategyDespite the numerous advantages for the rural partners, the ideafor the alliance began with the Tucson hospital, which approachedthe others with the proposal last spring. At the outset, some ofthe rural hospitals were skeptical. “At first, we were like, ‘OK,so why are they doing this? What’s in it for them? Do they want toabsorb us?’ ” said Bryce, the Mount Graham CFO. But after a seriesof meetings, the suspicions disappeared and the rural hospitalseagerly signed on. The Tucson hospital was frank about itsmotivation: to remain independent in an industry moving towardconsolidation. As a result of acquisitions in the last few years,it is the last locally owned, independent hospital in Tucson. “Allof a sudden, we were in a situation where [Tucson Medical Center]found itself isolated and facing its own competitive marketpressures because the environment had so dramatically changed,”said Susan Willis, executive director of market development at thehospital and president of the new alliance. Nearly a quarter ofTucson’s patients come from outside the city, many from the areasserved by the rural hospitals in the new alliance. Cementing therelationship with those hospitals, Willis said, will help Tucsonmaintain a flow of patients who need medical services that arebeyond the capabilities of the rural hospitals. The rural membershave laboratories, diagnostic equipment and therapeutic services,but some have little or no surgical or obstetrical services. Notone is equipped to perform complicated surgeries. “Certainly youcould describe it as a defensive strategy,” Willis said. Decades ofPressure Many of the problems plaguing rural hospitals date to1983, when Medicare began paying hospitals a set fee for medicalservices and procedures rather than reimbursing them for the actualcosts of providing that care. From 1983 to 1998, 440 ruralhospitals closed in the U.S., according to the NRHA. That promptedMedicare to begin reimbursing certain rural hospitals for theiractual costs, which helped stabilize them. But the recession hitrural hospitals especially hard, as did 2011 budget cuts thatreduced Medicare payments by 2 percent. Because the ruralpopulation tends to be older, rural hospitals rely heavily onMedicare payments. The pressure increased in 2012, when the federalgovernment reduced by 30 to 35 percent its reimbursements tohospitals for Medicare patients who don’t cover their share of thebill. “That’s an example of how a little policy change that seemsinsignificant in Washington can have profound effects in the ruralareas,” said Brock Slabach, NHRA’s senior vice president for memberservices. Finally, more insurance plans are increasing copaymentsand other out-of-pocket costs. Many of the patients at ruralhospitals have low incomes. And when they can’t cover their costs,the hospitals have to pick up the tab. “We don’t have cashreserves,” said Polheber, the Benson Hospital CEO. “We live on theedge, day to day, week to week. [The alliance] seemed like the bestway to keep us going.” Given the threats to the nation’s ruralhospitals, many are eager to learn from any models that work, whichis why the Arizona alliance has attracted notice. Slabach, for one,calls it a promising model, although one that may not be replicableeverywhere. “You have to have willing partners willing tocollaborate and provide assistance to each other,” he said. “Youneed partners that share a cultural fit with you.” The ruralmembers of the alliance are major employers in their communitiesand assets in attracting other employers and residents, includingthe snowbirds, who flock to the area every winter. But hospitalleaders, workers and patients say saving lives is the main reasonthe hospitals must remain open. “In medicine, distance lessens thechances of survival,” said Pam Noland, director of nursing atNorthern Cochise. “Even if a patient has to be transferred to[Tucson Medical Center] or somewhere else, stabilizing them here isthe difference between life and death.”

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