By: Jim Easter, ACHE, MArch, Principal, Easter Healthcare Consulting (Ehc)

A look at recent hospital closures in Tennessee clearly shows rural communities need organizational, operational and community support. Many have converted their facilities to the Critical Access Hospital (CAH) status (see note below describing this 1997 CMS program). This transition to CAH status has been beneficial to those communities who agreed to reduce their bed complement to 25 private rooms or less beds (many have fewer beds and expanded outpatient care), and they strategically adjusted their ancillary and diagnostic programs to work in tandem with the reduction in beds (some circumstances for step down care permit growth to 35 beds). This government-sponsored CMS program helped improve the reimbursement for rural community hospitals and streamline the service delivery process for rural acute care services.

The intent of this program from the 1997 era was to motivate rural hospitals to be more efficient, less wasteful and, in many cases, to relocate and re-design and construct new facilities. During that period, and over the subsequent years, new CAH designs and community-based programs have evolved, re-designed and re-structured to meet the challenges of change. Another program that enhanced this transformation was the Medicare Rural Hospital Flexibility program, which provides grants in 2018 for the following (Check the National Rural Health Resource Center at

  • Quality Improvement (required),
  • Financial and Operational Improvement (required),
  • Population Health Improvement (optional),
  • Emergency Medical Services Improvement (optional), and
  • Rural Innovation (optional).

Many of those hospitals, in rural counties, chose to “sign up and join in with the CAH transformation” and they have realized the benefits of smaller, more efficient, innovative, regionally linked, and more accessible CAH facilities (several added rural clinics and Federally Qualified Health Clinics (FQHC). This author believes the program was a positive “role model” for communities who were facing closure, obsolete facilities, and loss of market share (not too much has changed as we face similar rural concerns today). Those rural hospitals that chose not to become CAH are suffering the most. These rural CAH communities were also required to be located at a designed distance from the larger, competing hospitals, and they were encouraged to establish secondary and tertiary care supportive partnerships. Possibly the hindsight 20:20 rule applies, but it is never too late to change and begin anew.

Note: The CAH designation and CAH status resulted from the CMS program under the Balanced Budget Act of 1997 (Public Law 105-33). A number of rural health legislation and policy enhancement programs were introduced during this period. The CAH


Planning Perspectives

The answer to the question of: “Why are many of our rural hospitals closing?” is relatively clear and recognizable. The answer to the question of: “What can we do to fix this problem of rural hospital closures?” is more complex. There aren’t obvious and “one size fits all” responses to either of these questions.  Within the State of Tennessee (TN), we have 95 counties which represent an evolving number of residents (census updates will invariable change these head counts). The top ten largest counties in TN range from Shelby County with 935,640 residents to Wilson County with 140,625 residents. Maury County is ranked No. 16 with 94,340 residents and Wayne County nearby is ranked 75th with 16,558 residents. See  The smallest county is Pickett County with 5,082 residents. The size of a county, from a population health perspective is an important factor in the survival equation. Smaller counties have greater challenges since they are without meaningful partnerships, local financial subsidy (in some cases) and recruitment challenges.

I share these “evolving” resident/population numbers to point out the importance of healthcare services being based on populations served and resident/consumer accessibility. As a planner, we are required to review healthcare needs on the basis of: Access, Quality and Cost.

In addition, we are encouraged to use the Certificate of Need (CON) or the Community Health Needs Assessment (CHNA) planning methods to ascertain healthcare service program needs, consumer access, and operational feasibility (service gaps are also studied). Each state in the USA and all the counties in TN and around the USA have varying attributes of CON and CHNA programs. They vary because legislative bodies, municipal governments, and agencies having jurisdiction (AHJ) responsible for a specific region or population base, have chosen to adopt and enforce varying forms of planning policy and procedural responsiveness. This is part of the American Democratic system of liberty, justice and care for all. Unfortunately, without proper empowered planning, community involvement, and stakeholder ownership, rural hospitals in some communities become “at risk”. Below are a few reasons:

  • Lack of Community Support (Financial and Emotional),
  • Weak Governance and Compliance (Need Better Management),
  • Obsolete Facilities (Old Buildings, Dated Technology, Life/Safety Compliance, Image),
  • Over-Sized Facilities (Didn’t Choose CAH Status and Have Too Many Licensed Beds),
  • Inefficiencies Due To Vacated and Wasted Space (Many With Empty Semi-Private Rooms),
  • Waste and Poor Energy Management,
  • Loss of Credibility Within the Community (Poor Image),
  • Inability to Recruit Due to Image and Technology,
  • Poorly Located, Hard to Access, and Non-Compliant With National Design Standards, and/or
  • Fear of Failure and Willingness to Accept New, Innovative and Creative Standards.

The trends are pointing to rural communities losing residential populations and the aging of America as primary “negative factors” in the provision of healthcare services. The smaller a county, the less resources there are to subsidize and support;  local public health needs, emergency medical services, outpatient clinics, pharmacies, small physician practices, schools, prisons, and hospitals. With the aging of our communities, we are experiencing an increase in post-acute rehabilitation needs (follow-up after surgeries or cancer), and longer-term nursing home care (residents that may need full time support due to dementia and chronic disease like cancer or heart disease). This growth in care programs includes, for example ;  Assisted Living Apartments and Residences, Nursing Homes for Skilled Care, Memory Care/Alzheimer’s care, and those Comprehensive Continuum of Care Retirement Communities (CCRC) when appropriate and market driven.

The future of “healthcare for seniors” has significant rural community implications. Where will Mom and Dad live as they age, leave their home or farm, and move to affordable residential care in the city?  We are seeing a trend toward larger hospitals providing clinical pathways within the emergency service program to manage the growing needs of seniors. Home based care is a growing option as well.

As we observe today, many aging residents are relocating;  living with their children who serve as care givers in their own family homes, assisted living in the city, Veteran’s Housing and Domiciliary Care and traditional nursing home care. Most of these facilities are located outside their small, rural county in communities where a “larger resident population” is both affordable and justifiable as a business for the provider. This impacts the previous demand for the county where they previously lived and their market share diminishes. This is part of the challenge for those cities and counties who are gaining resident populations without adequate healthcare and nursing home care. Clarksville was recently cited as one of the USA’s best cities to live in. Many of our TN cities and counties are being “blessed” with these positive indicators.


Planning and Transformational Response

First, we study these counties and those at highest risk of closure and “loss of service”. This is happening in TN through the Statewide Economic Development programs (ideally we will learn more about this effort over the upcoming months). Secondly, we seek federal funding through whatever means available. At present, the potential for block grant funding is being presented to our government for consideration. This billion-dollar request would “potentially” provide grant monies that might be utilized for outpatient programs, disease awareness, drug addiction, aging consumers and  programs for “at risk” populations. The billion dollars would be a start. The state (our rural communities) need more money, but the money will likely need to come from those counties demonstrating the highest and best use of resources and the expenditure of funds to augment and correct the concerns mentioned herein. Some of the problems are PEOPLE and COUNTY RESIDENT driven concerns. Without a community vision and understanding of needs, we tend to flounder and lose momentum. This isn’t a criticism of our populace here in Tennessee, but instead a “call to action” for counties nationwide to take ownership of this “quality of life” problem we have in front of us. There are four very important aspects of community survival (yes, there are others):

  1. The School,
  2. The Hospital,
  3. The Church/Spiritual Base, and
  4. The Business

It is apparent that these factors align with contemporary planning, design, promotion and economic development. People gravitate toward those cities, counties and multiple counties that work together for the good of the residents. The demands that the “CAH of the past and today” link into a network partnership and build a regional service delivery program is tantamount to future survival of many healthcare delivery systems. Partnerships, linkages and creative service delivery (along with technology and telehealth) will create a “brandable” program that is supportive by the healthcare consumer. Brandable refers to a number of key attributes, including:

  • A Dashboard With Good and Improving Outcomes by Service Line,
  • An Emergency Program That Covers Urgent, Emergent and Mental Health Programs,
  • An Outpatient, Awareness and Disease Prevention System Linking County Clinics to Families, Schools and Employers (A Regional PR and Communication Effort),
  • A Post-Acute Rehabilitation and Medium-Term Care Plan,
  • A Senior Care and Longer-Term Care Plan,
  • A Day Care and Hospitalization Plan For Respite and Short Stay,
  • A Restoration and Renovation Program For Obsolete Assets,
  • A Right-Sized “Acute Care Center of Excellence” Program, With Proper Amenities,
  • A Wellness, Fitness and Public Health Program Linked to The Economic Development Efforts, and
  • A Partnership for Healthy Living (Rotary, Kiwanis, Civitan, Chamber of Commerce, etc.).


Action on The Transformation Program

There is a business response to the “closure dilemma”, but it requires discipline and dedication by the county and/or counties working in partnership.  This step-by-step process is defined as a Strategic and Asset Master Plan (SMP). In the past, this was simply called a hospital master plan, but that is not enough. Now it’s bigger than the “hospital.” The problem, along with the closures, has escalated due to the changing dynamics of our communities. What would we include in this SMP, for the State of Tennessee, as one example?  For this discussion, I suggest the following (brief informal summary only):

  • Assess The County Situation (Seek A Partnership)
  • Assess The Communities Priorities and Set The Agenda for Change
  • Understand The County Leadership’s Status and Willingness to Partner on Health Affairs
  • Define the County and/or Tri-County Healthcare Needs and Service Gaps/Risks/Rewards
  • Define the Population Factors, Demographic Forces and Migration Patterns
  • Conduct a 50,000 Foot Google Earth Perspective of:
    • Healthcare Service Providers Within The Market (What, Where, When)
    • Access Routing, Image and Quality of Services Provided
    • Define the Type of Service and Linkage Potential Within The Market
  • Define Clear Primary, Secondary and Tertiary Care Provider Partnerships:
    • Build on Existing Programs (CAH, FQHC, County Health)
    • Build on University, Public Health and Teaching Programs
    • Build on Private Sector, Investor-Owned and Not-For-Profit Programs
    • Build on Volunteer Support and Philanthropy
  • Create an SMP Road Map for 3, 5 and 7-Year Improvements:
    • Define Formal Linkages
    • Define Capital Dollar Needs and ROI
    • Define Stakeholder Commitments
    • Demonstrate ROI
    • Demonstrate Business Value
    • Demonstrate Longer Term Survival and Enhancement Metrics
    • Demonstrate Quality of Life and Public Health Value Added Attributes
  • Present FINDINGS and ACTIONS in the SMP to:
    • Community Consumers
    • Private Third Party Insurance Providers
    • Public Providers (CMS, County and State)
    • Stakeholders
    • Agencies

This approach to community and regional planning isn’t new to America. This was the foundational protocol for the Councils of Government (COG) and regional planning agencies initiated through the Certificate of Need (CON) programs of the early 1970s. Our grandfathering (closure) of these programs over the years (over half the states in the USA) has led us to this situation where counties and small rural hospitals are “falling through the cracks”. The merging and consolidation of healthcare is added to our challenges (there is significant economic value in the healthcare business). The State of Tennessee has a CON program which can and will address these issues in a proactive, public, creative, innovative and transformational fashion. Let’s get on their agenda for the future of rural hospitals. We have very strong leadership within the Tennessee CON team, and now might be a good time to define these planning needs for all 95 counties with the facts, figures, trends and opportunities defined and publicly evaluated. If we win some “block funding,” we can combine that money with our county-by-county funds to support those lifestyle and community priorities, I mentioned earlier.

Yes, hospitals and healthcare providers are key to successful living, at all levels of life from cradle to grave!

Oct Blog.Rural Health.Jim Easter PhotoJim Easter, ACHE, MArch is founding principal of Easter Healthcare Consulting (Ehc). With more than four decades of architecture, planning and design experience, he is a sought after national speaker and presenter. Easter has more than 1,200 healthcare engagements to his credit and has worked on projects across the country and across the globe.







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