How rural hospitals can reduce their financial struggles

How rural hospitals can reduce their financial struggles

While rural hospitals continue to be an essential part of their local communities, they are clearly struggling financially. The Rural Healthcare System is facing major challenges when it comes to sustainability.

According to a report from The Becker’s Hospital Review website, 136 rural hospitals have already closed down since 2010, while 354 hospitals across 40 states are at high risk of closing unless their finances improve 1.

As a  rural hospital leader, you cannot control all the factors that have led to this stage. But you do have the necessary resources to improve your facilities’ finances to some extent.

Let us take a look at what they can do right now:

Reduce Existing Costs

To reduce existing costs, you do not need to cut down on resources. Start by creating a list of all the software, services, and equipment vendors you work with.

Talk with your peers and GPO representatives to see how they can help. There is no harm in having discussions and seeking advice. Almost always, you can find a better yet affordable company that provides similar technology or services. These companies are prepared and eager to work with you. Since they are smaller than your existing vendors, you can save costs.

Below is a list of some of the departments and technology that you can start with:

  • Medical Transcription Outsourcing
  • Encoder System
  • EHR / EMR System
  • Medical Coding Software
  • Clinical Documentation Software

A hospital’s finance and information technology leaders can save thousands of dollars by revamping their outdated technology or replacing vendors that have been negatively impacting their facility for years.

According to McKinsey 2, a skillful CIO can not only reduce current IT costs, but also help position a company for recovery and future growth.

Focus on Fundamentals of the Revenue Cycle

As a leader, you are about to begin your revenue cycle improvement journey. Start off by determining the areas that you need to focus on. Only a detailed analysis will reveal the improvement opportunities in your rural hospital’s revenue cycle.

  • What is the current denial percentage?
  • What is the trend? Increasing, decreasing, or constant?
  • How does your denial rate compare with the previous year?
  • Did your study of denials and re-appeals reveal any insights?
  • If yes, what did you do with that finding?

Ask these questions to yourself and your team.

Pinpointing your problem area is the first step. The next step involves addressing the challenges. Establishing a strong revenue cycle practice may require a lot of time and expertise. As a result, many rural hospitals outsource all or part of the process to RCM services or consulting companies. This helps ensure a smooth flow of revenue, even as payment models become increasingly complex and the reimbursement landscape evolves.

If you have outsourced these processes, work with your vendor partner to identify the root cause and stop revenue leakage.

If you are still running your revenue cycle management in-house, create a project. Look at opportunities to gamify a part of the project or the whole project to increase engagement within your organization.

Invest In and Adopt the Latest Technologies

Hospitals can increase their efficiency, productivity, and collaboration by redesigning their clinical and operational processes. You can invest in a Revenue Cycle Management technology stack to reduce redundancy, human errors, unnecessary paperwork, and manual administrative processes that inflate costs.

But as a healthcare finance or information technology leader, you do not need to jump the gun as soon as you see a shiny new technology vendor who falsely entices you with the number game. Also, resist the urge to invest in technology just because your rival or peer has worked with a tech giant 3.

Create a process. Ask for a Proof of Concept (POC) and run a pilot for a month or a quarter. Start discussing the next steps only after you and your team can see tangible results.

To avoid one common trap, leaders need to understand the difference between web-based and cloud-based technology. A tech company can demonstrate their product on a web browser, but that does not mean that the technology is cloud-based. Be wary when a tech company asks you to invest in an on-site server or increase in-house IT personnel. It is usually a trap.

While adopting the latest SaaS technology for a financially stressed hospital, ask for monthly or quarterly payment options. A true SaaS (Software as a Service) always provides the flexibility of monthly, quarterly, or yearly payments.

Once you have evaluated and selected the right technology and vendor for the hospital, you will see a return-on-investment (ROI) in a matter of months rather than years.

Rural Value-Based Care Options

Rural healthcare providers are by no means alone as they transition towards value-based care. Organizations like the National Rural Health Association, the National Rural Health Resource Center (NRHRC), and the American Hospital Association Section for Small or Rural Hospitals are all working to help small and rural hospitals meet their needs.

They also enjoy a variety of options along the journey, including several ways to get engaged with an ACO. The NRACO is one such option, working with small, rural healthcare systems to help them come together and run a successful organization.


Rural hospitals across the country are facing immense financial pressures. As a leader of the organization, you know how vital it is to establish strong revenue cycle practices. But you can often lack the expert resources and up-front capital needed to do so. Overcoming these hurdles is not easy; but the key to achieving it lies in getting together people, processes, and technologies to work in perfect unison.


  1. https://www.beckershospitalreview.com/finance/why-rural-hospital-closures-hit-a-record-high-in-2020.html
  2. https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/a-practical-way-for-cios-to-manage-it-costs-through-the-covid-19-crisis
  3. https://hbr.org/2020/11/when-should-health-systems-invest-in-new-tech
Hardik Kevadiya

Hardik Kevadiya

Hardik Kevadiya is a Senior Manager, Business Development and Marketing at EZDI, Inc. - an AGS Health Company. Hardik is passionate about Healthcare Information Technology and Innovations - Innovations that enhance human lives. He is also a healthcare trend and news follower, his passion for helping Healthcare IT professionals in all aspects of online trends and research flows through in the expert industry coverage he provides. In addition to writing for EZDI, Hardik also mentors a team of Data Analysts and Marketing professionals.

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