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Healthcare Physician Staff Spending in Rural America versus Metropolitan Medical Centers

Healthcare Physician Staff Spending in Rural America versus Metropolitan Medical Centers

There is an ongoing debate in the medical community about the reasons for regional disparities among healthcare expenditure spending in rural areas versus metropolitan medical centers. According to a published report recently by the American Economic Association, physician organizational factors matter, but the most important factor are physician beliefs about treatment. Furthermore, the American Economic Association’s report pointed out for Medicare, they estimate that 35 percent of spending for end-of-life care and 12 percent of spending for heart attack patients (and for all enrollees) is associated with physician beliefs unsupported by clinical evidence. Are there different beliefs embedded in rural areas vastly contrasting theories found in highly-populated urban centers? By now, most rural towns and large American cities are indeed a melting pot of doctors from diverse global backgrounds and cultures. Yet, are some of those physicians and their leadership conforming to the good ole ways of rural America when it comes to regional healthcare spending and belief structure?

Bottom-line: everyone wants to get paid more.

As a primary care provider or specialist, it is of utmost importance to know where the best pay and benefits are available in the rural setting versus big city environment. According to a report by the McCourt School of Public Policy, Georgetown University, Health Policy Institute, Median total health care expenditures for the rural population, $434, are slightly higher than those for the urban population, $418. Rural residents pay a larger proportion, 29 percent, of their health care costs out-of-pocket than do urban residents, 23 percent.

Better payer mix in rural areas, yet a higher rate on uninsured.

The report points out in our population under the age of 65, 19 percent of rural residents are uninsured versus and 16 percent of their urban resident counterparts who don’t carry health insurance. According to the aforementioned report, rural residents tend to stay uninsured for longer periods of time than urban residents. Factors that may contribute to this disparity include the higher percentage of self-employed persons, small businesses, and agricultural enterprises in rural areas.

So, if rural residents have a higher payer mix, why aren’t healthcare organizations taking their business to rural areas, or are they?

One reason is insurance coverage. According to the report, over one-third of rural residents, compared to about one-quarter of urban residents, have been uninsured for more than three years. A larger proportion of urban residents have never been insured. Large healthcare organizations align themselves with insurance carriers, often negotiating for ways to make money and their bottom-line more profitable. Doesn’t really make sense, because it is thought in may circles, a great payer mix makes a hospital or medical practice more profitable.

One thing for sure, there are fewer healthcare providers available in rural areas.

This report points out that less than 11 percent of physicians in the U.S. practice in rural areas, yet about 20 percent of the population resides in rural areas. Provider recruitment and retention problems in rural areas are related to several factors including lower salaries, geographic isolation from peers and educational opportunities, and fewer amenities such as schools and recreation. While there is an opportunity to help more people with care in a rural market, providers are probably going to make a lot less money than if they were employed in an urban center. Except if they expand into telemedicine. More on that later…

According to The Department of Health and Human Services, they recommend a provider-to-patient ratio of one primary care physician to every 2,000 individuals. They point out over 20 million rural Americans live in areas that have a provider-to-patient ratio of 1 to 3,500 or less and are federally designated as health professional shortage areas (HPSAs). More than 2,200 physicians are needed to remove the HPSA designation from all rural areas, but more than twice that number is needed to achieve the recommended ratio of 1 to 2,000 in these areas. Furthermore, the report point out that shortage of mental health professionals in rural areas is even more severe. More than three-quarters of the counties designated as federal mental HPSAs are rural.

Can telemedicine bridge the gap?

The answer is yes! According to the report, Telemedicine can bring services to underserved areas. Also, in the aforementioned report, telemedicine offers the potential to provide health care services across vast distances to underserved urban and rural areas. Telemedicine is the use of electronic communication and information technologies to provide clinical care at a distance. It can provide individuals in rural areas access to teleconsultations with health care providers and specialists that otherwise may not occur. Telemedicine may also help attract and retain health care providers in rural areas by providing ongoing training and interaction with other providers. An investment in telemedicine will surely increase the profitability of a provider.

Note: the landmark job may be in a rural area due to current and trending needs.

Providers who are trained in telemedicine will benefit with a higher volume and payer mix in rural areas resulting in a better chance of equaling their peers working in urban healthcare markets.