Home to the second-largest rural population in the United States, North Carolina has a compelling interest in preserving and strengthening healthcare delivery in all of its 78 rural counties across the state. With that in mind, in 2023 the North Carolina General Assembly charged the Rural Healthcare Initiative (RHI) with creating “effective models of sustainable healthcare for North Carolina rural communities.”
Introduction
By many metrics, things are going well. According to the Commonwealth Fund, North Carolina ranks in the top third of all U.S. states for avoiding unnecessary healthcare use and costs, and it ranks in the top half for racial and ethnic equity in healthcare. The state boasts a number of strong, competitive health systems; nationally recognized medical schools; and an attractive environment for providers who wish to practice in rural areas.
Across party lines, North Carolina’s political leaders have shown they understand the critical importance of rural healthcare. In recent years, the state has invested tens of millions of dollars in rural health clinics, provider training and recruitment, and telehealth infrastructure. Under a recent Medicaid waiver, the state’s innovative Healthy Opportunities Pilot has quickly achieved improved health outcomes and lowered costs by targeting the social drivers of health that are especially acute in many rural communities. Medicaid expansion has further stabilized rural hospitals and health systems, as rural enrollment now outstrips urban enrollment as a percentage of the population.
But not all the news is positive. Despite continued investment and innovation, North Carolina has suffered the nation’s third-highest number of rural hospital closures since 2005, based on data from the Cecil B. Sheps Center at UNC. These closures can mean personal hardship and deteriorating health outcomes for local residents who are no longer able to access care close to home. Beyond the personal impact, there are measurable economic costs, as well: Research has shown significant losses in jobs (-1.4%) and population (-1.7%) when rural communities lose their local hospital.
Once again, the North Carolina General Assembly has taken intentional steps to stem the tide of hospital closures, including establishing a statewide Rural Healthcare Stabilization Program that offers public loans to at-risk hospitals. But such programs are a last resort and a short-term fix, at best. Many people will spend no more than three or four nights in the hospital throughout their entire lives, but hospitals also sustain a huge range of services that rural populations need day in and day out: primary care, specialty care, behavioral health, emergency departments, urgent care, medical imaging, pharmacies, and more. Long before turning out the lights, hospitals typically begin rolling back these crucial services in order to remain solvent.
The goal is not just to prevent outright hospital closures, but rather to ensure that every rural resident has convenient access to the healthcare services they use and need the most. What would that look like on a statewide level? In 2023, the N.C. General Assembly appropriated funds to answer that question with a fully independent, data-driven study designed to show what healthcare services and facilities are sustainable under local market conditions in every rural region. Charged with creating “effective models of sustainable healthcare for North Carolina rural communities,” the Rural Healthcare Initiative (RHI) began its work in late 2023.
As a nonprofit organization representing decades of combined experience in strategy, operations, facilities, staffing, regulation, and communications, RHI devoted more than 18 months to formulating an innovative, statewide model for effective and sustainable healthcare delivery across rural North Carolina. In the simplest terms, that means balancing the needs of rural residents and the services offered in their region. When there are not enough services, healthcare is not effective. When there are too many services, healthcare is not sustainable. (Throughout this report, we use “sustainable” only in the financial sense. Environmental sustainability is a separate consideration that falls outside our mandate from the General Assembly.)
In at least five important ways, we took a different approach than previous government, academic, and corporate studies focused on rural healthcare.
Distinctive 1: Systems Thinking
Many healthcare planning studies look at a single operator or a single county, even though real-world healthcare is much more complex. Systems thinking tells us that all the various touchpoints of healthcare delivery are interconnected, even if they are not integrated. In the U.S., where healthcare is competitive, the connections occur naturally as people cross county lines and switch between corporate brands to find the care they need. When one hospital stops offering a service, patients will look elsewhere; when a new service is added close to home, a more distant provider inevitably will see fewer patients coming through the doors.
Rural counties tend to have small, widely dispersed populations, so it is only logical that the physical footprint for healthcare delivery will look very different than it does in urban and suburban counties. While recognizing that reality, we never approached the work with a scarcity mindset. Instead, we started with a simple but profound question: What is the highest level of healthcare delivery that can be sustained by local demand in any community? Not every rural county needs a hospital with more than 100 beds, but some do. Others might need a 25-bed Critical Access Hospital, a 24-hour emergency room, or an ambulatory medical campus offering multiple specialists and outpatient procedures.
Complexity – not quality – is the differentiating factor. A regional referral center with 150 beds is not “better” than a critical access hospital with 25 beds, but the larger facility can treat more complex cases that present less often. Complex care is more expensive to deliver due to specialized personnel and equipment, but because fewer people will need those services, complex providers must serve a larger population in order to avoid operating at a loss.
To create the Blueprint, we analyzed eight different access points for rural patients, ranging from small physician practices to regional referral centers with 150 beds or more. From simple to complex, these access points are: 1) Primary Care Practices, 2) Ambulatory Health Parks, 3) Rural Emergency Hospitals, 4) Critical Access Hospitals, 5) Small Rural Hospitals, 6) Community Hospitals, 7) Regional Referral Centers, and 8) Tertiary Hospitals/Academic Medical Centers. Full definitions can be found in Appendix A.
Distinctive 2: Patient Perspective
Oftentimes in rural North Carolina, multiple health systems operate small hospitals that offer redundant services to a small population within the same geographic area. From the patient perspective, there is little advantage to this kind of duplication. Rather than reducing costs or promoting better services, overlapping hospitals can create a glut of low-acuity inpatient care while siphoning off the resources that would allow health systems to invest in other types of care more appropriate to community needs.
As independent professionals with no healthcare system loyalties, RHI has worked to understand the needs of the patient while remaining agnostic as to which hospital or health system should meet those needs. Many of today’s rural hospitals were built under the 1946 Hill-Burton Act, when poor transportation meant that every county felt the need for its own hospital. But with changes in transportation and technology, county hospitals are not automatically the best option, and patients today want the best, most timely care possible – regardless of jurisdiction.
The goal of our project is a Blueprint that reflects everyday life in rural North Carolina. Rural residents expect to find groceries and pet supplies close to home, but they will willingly drive longer distances for occasional needs like back-to-school clothes or a wedding gown. Healthcare follows a similar pattern, so the patient perspective can help to ensure that services and facilities are matched to real-world expectations.
Distinctive 3: Scope of Analysis
The General Assembly also charged RHI with designing effective models of rural healthcare delivery – something that goes far beyond the economic viability of hospitals and health systems. While sustainability is largely about institutions, effectiveness is judged largely at the individual level: Are people having their healthcare needs met? Are they getting the services that match their risk profile or lifestyle? Are they receiving care that keeps them healthy and prevents existing problems from getting worse?
To answer those questions, we needed a detailed directory of the healthcare resources available in all 78 rural counties across the state. Using hospital discharge data, regulatory filings, cost reports, and national directories, we created a first-of-its-kind inventory of more than 50 different services and provider types in every rural county. (Please see Appendix B for the full list.) Notably, our inventory includes medical specialists, surgical specialists, and primary care providers of all types, such as nurse practitioners and physician assistants. This level of analysis is often overlooked in the State Medical Facilities Plan and similar planning processes focused on regulated assets like beds and buildings.
With a complete inventory, we were then able to use standard measures of health outcomes (mortality, life expectancy, age-adjusted morbidity, etc.) and health factors (disease prevalence, tobacco use, obesity, etc.) to determine how well the existing resources in a county matched the needs of its residents, while also taking into account key demographic factors such as population size, race/ethnicity, and age distribution.
Distinctive 4: Study Design
The fourth distinctive feature of RHI’s approach is a study design featuring deep quantitative analysis alongside qualitative research across rural North Carolina. Carried out over 18 months, this blended approach yielded a rich data profile of healthcare needs and resources augmented by a statewide survey and stakeholder feedback designed to check our assumptions, expose any blind spots, and test the feasibility of possible solutions.
As with our quantitative data analysis, we designed our qualitative research around the principles of systems thinking and broad scope. In 12 listening sessions and over 100 interviews, we reached far beyond the usual boundaries of healthcare delivery to include social service, educators, and faith leaders with unique perspectives on the fabric of their communities.
Churches and charities play an outsized role in rural North Carolina, earning levels of trust that other institutions cannot match. From poverty to literacy to addiction, rural nonprofit leaders are working every day to address the social drivers of health that can be easy to recognize but difficult to solve. Hospitals and health systems, for better or worse, typically deliver care that is episodic or irregular, while social service organizations tend to be more integrated in the daily lives of their customers. In the long run, healthcare sustainability will hinge on meeting people where they are to mitigate health-related social needs before they reach the level of a doctor visit or hospital stay.
Distinctive 5: Flexible, Future Focus
Healthcare is incredibly complex, driven by dynamics that are unique to each market. As such, the ultimate decisions around configuring healthcare resources are (rightly) made by providers of care, local stakeholders, and state policymakers working together for the good of the community.
This is why we used the term “Blueprint” so intentionally in our work. Blueprints, by design, offer flexibility in execution. With an architectural blueprint, walls can be moved and building materials can be substituted according to needs and preferences. The Sustainability Blueprint allows for similar flexibility, with the understanding that local dynamics and industry structural issues, such as increasing systemization and challenges to collaboration, are important considerations.
For instance, there are individual hospitals that might look unsustainable on their own, though they play an important role in the stability of a larger health system. A flexible, future focus might justify continued support for a struggling local hospital that would otherwise appear to be a drain on resources.
For all of these reasons, the Blueprint does not prescribe outcomes for specific facilities (including who should operate them). Instead, our goal is to provide decision-makers with a data-informed picture of healthcare supply and demand in rural North Carolina, including real-world applications that would create a more sustainable network of care across the state.