Rural Healthcare Challenged by Changing Demographics

    • 3 August 2018– Matthew Meyer is photographed at FNB Wintergarden.
    • Matthew Meyer

      Sr. Director, Sponsor Finance
      Jul 31 2019

Rural Healthcare Challenged by Changing Demographics

The healthcare industry is facing many challenges; however, healthcare providers in rural areas are up against their own unique set of issues. Patients in rural America need to travel farther distances to receive care than their urban counterparts but providers who care for this patient population know that the challenges don’t stop there.

Tight Margins and an Aging Population

Demographics in rural communities are changing. Nearly 35 percent of rural counties in the U.S. are experiencing population loss, especially when it comes to young adults, leaving a smaller, aging population. This population shift means healthcare providers have fewer patients using private payers and a higher Medicare and potentially higher Medicaid concentration. This trend causes concern for providers due to already tight reimbursements.

Shrinking Labor Pool

Another major issue facilities face is the limited labor supply in rural communities. It’s difficult to find primary care physicians, specialty physicians and nurses in these areas. Not only does this mean that some facilities may be understaffed but fewer specialty procedures (with higher reimbursement rates) can be performed. It also results in patients having to travel for specialty care or delay care because they don’t want to travel. According to a recent study, one out of every four people living in rural areas said they couldn’t get the care they needed – and a quarter of those said the reason was that their healthcare location was too far to get to.  This leads to facilities having to recruit through incentives like student loan forgiveness and bonuses, which can be problematic considering margin compression across the industry.

Finding Unique Solutions

Even though rural providers can be faced with demographic challenges and smaller labor pools, that doesn’t mean that they’re without solutions. Rural facilities may leverage contracted labor and traveling nurses to fill staffing gaps. However, the issue with this solution is that it’s temporary and it doesn’t provide the opportunity to develop relationships between providers and the community. Nevertheless, providers are getting creative to attract talent to rural areas. One unique solution is recruiting students out of medical school that are seeking mission-driven careers in underserved locations. For example, Kearny County Hospital in Lakin, Kansas, recruits talented young physicians who want to treat patients in developing nations. Instead of moving across the world, physicians can treat patients who need care in rural America. Facilities can also work with organizations like the National Rural Recruitment and Retention Network (3RNet) to assist with recruitment. Organizations like 3RNet provide recruitment tools and connect employers to job seekers.

Hospitals can also focus on building relationships with community physicians to reduce lost revenue.  Building this relationship may help minimize the number of patients who are referred outside of the community for specialty services. In addition, some facilities partner with specialists in nearby cities to travel to rural hospitals and provide specialty services, bringing in additional revenue and reducing the distance patients have to travel.

It’s no surprise that efficiency is also being looked at. Facilities are evaluating where things can be streamlined while maintaining the highest level of care. Some low-hanging fruit may be evaluating the revenue cycle and payment processes. Improving the patient payment experience through online payment portals may help reduce the amount of patients who go to collections while reducing burden on back office staff, freeing them up for other tasks.  Providers can also partner with financial institutions through patient finance programs, which monetize the providers’ self-pay receivables and offers patients attractive financing terms.

Evaluating facilities is another way to improve efficiency. For some facilities, the current building may be too large for its patient base. Other providers may see benefits from opening an outpatient clinic. Gains can also be made by renegotiating supplier contracts, utilizing purchasing programs to generate rebates and maximizing investment returns.

Even though providers in rural communities are up against some unique issues compared to their urban counterparts, that doesn’t mean they’re going to stop providing high-quality care anytime soon. There are creative solutions and technologies being used to address these challenges and prepare for tomorrow’s problems.


First National Healthcare Banking offers a full suite of revenue cycle solutions that allow our customers to focus their time and resources on what matters most – providing the best possible healthcare services throughout our communities. We offer financing for working capital, new construction, renovations, equipment acquisitions and patient financing.

About the Author

Matt joined First National Bank in 2013. In his role as Director of Healthcare Banking, he partners with clients on lending, payables and patient financing solutions. Matt finds great satisfaction in helping healthcare providers ensure the sustainability of their organizations for generations to come.

The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.