Fair Market Value Considerations for Rural Health Clinics

Technology (Part V of V)

Over the past decade, there has been a rapid adoption of technological innovations in the U.S., which has fundamentally changed the healthcare delivery system, improving the quality of patient care, as well as the efficiency of healthcare processes and practices. Research indicates that implementation of healthcare information technology (HIT) may lead to improved efficiency and quality management, especially in rural areas. This article, the last in the five-part rural healthcare series, will discuss the various technological advancements that may assist rural health clinics (RHCs) in providing more tailored and advanced care to a greater number of patients.

[su_pullquote align=”right”]Resources:

Fair Market Value Considerations for Rural Health Clinics (Part I of V)

Fair Market Value Considerations for Rural Health Clinics Competition (Part II of V)

Fair Market Value Considerations for Rural Health Clinics Reimbursement Environment (Part III of V)

Fair Market Value Considerations for Rural Health Clinics Regulatory Issues (Part IV of V)

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Over the past decade, there has been a rapid adoption of technological innovations in the U.S., which has fundamentally changed the healthcare delivery system, improving the quality of patient care, as well as the efficiency of healthcare processes and practices.^[i] Research indicates that implementation of healthcare information technology (HIT) may lead to improved efficiency and quality management,^[ii] especially in rural areas.[iii] This article will discuss the various technological advancements that may assist rural health clinics (RHCs) in providing more tailored and advanced care to a greater number of patients.

HIT “uses technology to store, secure, retrieve, and transfer protected health information electronically,” and includes a variety of software applications, such as:

1. Electronic health records (EHR);
2. Digital networks to electronically transmit medical test results and patient records;
3. Electronic communication between providers, as well as with their patients;
4. Electronic prescribing/ordering;
5. Digital support systems;
6. Billing software; and
7. Staffing models.[iv]

EHR systems are linked to clinical improvements,[v] and have the ability to ameliorate cost savings, quality, and coordination of care, as well as increase efficiencies,^[vi] which could financially benefit the operations of RHCs. Specifically, the Office of the National Coordinator for Health Information Technology (ONC) asserts that HIT can help rural areas in the following ways:

1. Improving access to and coordination of care;
2. Improving the surveillance of disease;
3. Improving health education; and
4. Helping in the compilation of regional data.[vii]

Despite the obvious capabilities of HIT, the technology has a number of drawbacks, especially for smaller facilities with limited resources and expertise (such as RHCs), including capital requirements and the ongoing maintenance.[viii] In addition to the prohibitive cost of purchasing and implementing the HIT,[ix] the technology (like most software) requires constant maintenance, including updates and optimization to the HIT.[x] However, rural providers have access to a number of resources that may help alleviate these issues, including various grant programs and funding opportunities, as well as toolkits and technical assistance, from the ONC and other governmental entities.[xi]

In addition to EHR systems, the utilization of telehealth in rural areas can significantly increase patient access to healthcare. Telehealth is broadly defined as “the use of information and telecommunications technology to provide health care across time and/or distance,” and is often used interchangeably with the term telemedicine.[xii] Telehealth can take several forms, including:

1. Provider/patient videoconferencing;
2. Remote patient monitoring (which may be the most common form of telehealth in rural healthcare);
3. The “store and forward transmission” of medical data and information; and
4. Mobile health communication (mHealth), such as through various smartphone apps.[xiii]

Telemedicine has grown significantly over the past fifteen years, with rural Medicare beneficiary visits increasing at an annual growth rate of 28% between 2004 and 2013, with nearly 80% of these telehealth visits for the purpose of treating mental health conditions.[xiv]

The ONC lists the following as telehealth benefits for rural providers:

1. “Give[s] health care clinicians instant access to information to make timely, vital decisions and save lives
2. Decrease[s] travel time for patients and their families
3. Help[s] rural hospitals use remote clinicians, pharmacists, and staff to improve and extend access
4. Simplif[ies] efficient transfer to other facilities for vital services
5. Facilitate[s] post-hospitalization care close to patients’ families and primary care clinicians.”[xv]

Perhaps most importantly, the technology allows specialists, who are disproportionally located in urban areas, to remotely connect with and consult on patients in rural areas, and improve the access to and quality of care in specialties including, but not limited to:

1. Audiology;
2. Cardiology;
3. Dentistry;
4. Dermatology;
5. Obstetrics;
6. Oncology;
7. Ophthalmology;
8. Psychiatry; and
9. [xvi]

Much like EHR systems, telemedicine models have certain drawbacks that may restrict rural providers’ adoption and implementation of the technology, including:

1. The restrictions on Medicare reimbursement of telemedicine services (including geographic/originating site, provider, and service type);
2. Interstate licensure issues; and
3. The lack of access to broadband (i.e., internet connection with sufficient upload/download speeds to support the transmission of data) in rural communities—according to the Federal Communications Commission (FCC), nearly 40% of Americans in rural areas lack access to adequate broadband.[xvii]

In regards to the last drawback, i.e., inadequate broadband access, the FCC recently announced plans for a $100 million pilot program to promote the provision of telemedicine services.[xviii] Named the Connected Care Pilot, the three-year program would support various projects focused on defraying the costs of broadband to promote the provision of telemedicine services to low-income Americans and veterans.[xix]

The market for rural health services is expected to experience increasing demand in the coming years, due to an aging U.S. population and an increasing number of people with insurance through the ACA. Both factors may increase the number of people seeking healthcare services. As demand increases, the supply of physicians is anticipated to decrease, due to an imbalance between the number of these physicians who are moving toward retirement and the number of residents that are entering these fields.[xx] While this may lead to a shortage of primary care services, especially in areas that are already underserved, RHCs and other rural providers have an opportunity to mitigate this shortage through technology such as EHR systems and telemedicine models, which allow providers to see more patients, and to augment their practices by remotely including specialists in patient care, thereby continuing to provide an invaluable service to areas that may not otherwise have access to primary and specialist services and increase the quality of care in their communities.

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Todd A. Zigrang, MBA, MHA, ASA, CVA, FACHE, is president of Health Capital Consultants, where he focuses on the areas of valuation and financial analysis for hospitals and other healthcare enterprises. Mr. Zigrang has significant physician-integration and financial analysis experience and has participated in the development of a physician-owned, multispecialty management service organization and networks involving a wide range of specialties, physician owned hospitals as well as several limited liability companies for acquiring acute care and specialty hospitals, ASCs, and other ancillary facilities.

Mr. Zigrang can be contacted at (800) 394-8258 or by e-mail to tzigrang@healthcapital.com.

Jessica Bailey-Wheaton is Vice President and General Counsel for Heath Capital Consultants, where she conducts project management and consulting services related to the impact of both federal and state regulations on healthcare exempt organization transactions, and provides research services necessary to support certified opinions of value related to the Fair Market Value and Commercial Reasonableness of transactions related to healthcare enterprises, assets, and services. She is a member of the Missouri and Illinois Bars and holds a J.D., with a concentration in Health Law, from Saint Louis University School of Law.

Ms. Bailey-Wheaton can be contacted at (800) 394-8258 or by e-mail to jbailey@healthca

[i]       “The Impact of Technology on Healthcare” By Bianca Banova, American Institute of Medical Sciences and Education, June 2, 2019, https://www.aimseducation.edu/blog/the-impact-of-technology-on-healthcare/ (Accessed 7/17/19).

[ii]      “Medical Practice Efficiencies & Cost Savings” The Office of the National Coordinator for Health Information Technology, https://www.healthit.gov/topic/health-it-and-health-information-exchange-basics/medical-practice-efficiencies-cost-savings (Accessed 7/17/19); “Understanding the Costs and Benefits of Health Information Technology in Nursing Homes and Home Health Agencies: Case Study Findings” By Andrew Kramer MD, et al., U.S. Department of Health and Human Services, June 2009, http://aspe.hhs.gov/sites/default/files/pdf/75876/HITcsf.pdf (Accessed 7/17/19), p. iv–v, 1.

[iii]     “Health Information Technology in Rural Healthcare” Rural Health Information Hub, https://www.ruralhealthinfo.org/topics/health-information-technology (Accessed 7/17/19).

[iv]     Ibid.

[v]          “Improved Diagnostics and Patient Outcomes” Health IT, March 2014, https://www.healthit.gov/providers-professionals/improved-diagnostics-patient-outcomes (Accessed 11/27/18).

[vi]     Banova, March 28, 2013; “Medical Practice Efficiencies and Cost Savings” Health IT, March 2014, https://www.healthit.gov/providers-professionals/medical-practice-efficiencies-cost-savings (Accessed 11/27/18).

[vii]    “9.2 Improve Care in Rural Areas” in Section 9 of “Health IT Playbook” The Office of the National Coordinator for Health Information Technology, https://www.healthit.gov/playbook/care-settings/#section-9-2 (Accessed 7/17/19).

[viii]    “What electronic health record implementation issues are unique to rural settings?” The Office of the National Coordinator for Health Information Technology, https://www.healthit.gov/faq/what-electronic-health-record-implementation-issues-are-unique-rural-settings (Accessed 7/17/19); Rural Health Information Hub, https://www.ruralhealthinfo.org/topics/health-information-technology.

[ix]     The Office of the National Coordinator for Health Information Technology, https://www.healthit.gov/faq/what-electronic-health-record-implementation-issues-are-unique-rural-settings.

[x]      Rural Health Information Hub, https://www.ruralhealthinfo.org/topics/health-information-technology.

[xi]     See, e.g., “What available health IT resources are specific to rural communities?” The Office of the National Coordinator for Health Information Technology, https://www.healthit.gov/faq/what-available-health-it-resources-are-specific-rural-communities (Accessed 7/17/19); “What resources other than incentive payments are available for health IT in rural settings?” The Office of the National Coordinator for Health Information Technology, https://www.healthit.gov/faq/what-resources-other-incentive-payments-are-available-health-it-rural-settings (Accessed 7/17/19).

[xii]    “Telehealth for Acute and Chronic Care Consultations” Agency for Healthcare Research and Quality, Research Protocol, February 16, 2017, https://effectivehealthcare.ahrq.gov/topics/telehealth-acute-chronic/research-protocol (Accessed 7/17/19); “What is Telehealth?” American Academy of Pediatrics, https://www.aap.org/en-us/professional-resources/practice-transformation/telehealth/Pages/What-is-Telehealth.aspx (Accessed 7/17/19).

[xiii]   “Telehealth Use in Rural Healthcare” Rural Health Information Hub, https://www.ruralhealthinfo.org/topics/telehealth (Accessed 7/17/19).

[xiv]    Ibid.

[xv]   The Office of the National Coordinator for Health Information Technology, https://www.healthit.gov/playbook/care-settings/#section-9-2

[xvi]    Rural Health Information Hub, https://www.ruralhealthinfo.org/topics/telehealth

[xvii]   Ibid; “Fact Sheet: Telehealth” American Hospital Association, February 2019, https://www.aha.org/system/files/2019-02/fact-sheet-telehealth-2-4-19.pdf (Accessed 7/17/19), p. 2.

[xviii]   “FCC Fact Sheet: Promoting Telehealth for Low-Income Consumers” Notice of proposed Rulemaking, WC Docket No. 18-213, June 19, 2019, https://docs.fcc.gov/public/attachments/DOC-358067A1.pdf (Accessed 7/17/19); “FCC moves forward with $100 million Connected Care proposal” By Jessica Kim Cohen, Modern Healthcare, July 10, 2019, https://www.modernhealthcare.com/information-technology/fcc-moves-forward-100-million-connected-care-proposal (Accessed 7/17/19).

[xix]      Ibid.

[xx]     “The Complexities of Physician Supply and Demand: Projections from 2016 to 2030” Submitted by IHS Markit Limited, for the Association of American Medical Colleges, March 2018, https://aamc-black.global.ssl.fastly.net/production/media/filer_public/85/d7/85d7b689-f417-4ef0-97fb-ecc129836829/aamc_2018_workforce_projections_update_april_11_2018.pdf (Accessed 12/28/18).