By NextBestFitGlobal budgets for rural hospitals
Pay rural hospitals a fixed annual budget instead of per service, so low volume does not cause closure.
Draft decision:ChosenPhase 2: Wave 1: seniors, near-seniors, and childrenConfidence: high · not yet reviewed
Stable funding for rural hospitals.
Review ledgerHow this path connects
Addresses
Rural hospital closuresThis path
Global budgets for rural hospitals
Requires:
Global budgets for hospitalsU.S. prices are far higher than in other countriesChosenCreates or worsens
Concrete changes if chosen
What would actually have to change in law, agencies, payment rules, or systems.
- Give rural hospitals fixed annual budgets
- Adjust for service changes
Effects
Each effect has its own page: the evidence, the case that it is or isn't a real cost, and whom it affects.
What it fixes
- Rural hospital closures
Fixed annual hospital budgets provide stable funding despite low service volume, allowing services to be redesigned for community needs and ending dependence on a few commercial payers.
What it creates or worsens
- Medical errors and poor care coordination
Keeping low-volume rural hospitals open can still leave lower quality for some procedures.
7 paths soften this
Mandatory error reporting and learning systemMedical errors and poor care coordinationChosenEvery person registered with a primary care homeMedical errors and poor care coordinationChosenStandby payments to keep labor units openMaternity care desertsChosenMinimum nurse staffing ratiosNursing and direct-care shortages and burnoutChosenEvidence-based coverage decisionsLow-value care and overtreatmentChosenShift to small homes and home careNursing home understaffing and qualityChosenNational health record and patient IDRecords don't follow patientsChosen - Fixed budgets can ration care
Fixed annual rural hospital budgets may fail to adjust to changing needs.
Who's affected
Who gains
- Rural residents
- Rural hospital closures: Hospital closures reduce local access to care.
- People needing emergency or trauma care
- Rural hospital closures: Closures require longer emergency and trauma transport.
- Doctors, nurses, and other clinicians
- Rural hospital closures: Fixed annual hospital budgets provide stable funding despite low service volume, allowing services to be redesigned for community needs and ending dependence on a few commercial payers.
- Hospitals, clinics, and care organizations
- Medical errors and poor care coordination: Fee-for-service providers are paid for treating complications.
- Taxpayers and public budgets
- Fixed budgets can ration care: Global budgets cap spending.
Who loses
- Hospitals, clinics, and care organizations
- Rural hospital closures: Urban systems sometimes gain patients from rural hospital closures.
- People with ongoing or specialist care needs
- Medical errors and poor care coordination: Delivery and coordination failures cause preventable harm.
- Fixed budgets can ration care: Hospitals may slow elective procedures when demand exceeds fixed budgets.
- Taxpayers and public budgets
- Medical errors and poor care coordination: Keeping low-volume rural hospitals open can still leave lower quality for some procedures.
Where it has been tried
- Pennsylvania Rural Health Model: Global budgets for rural hospitals since 2019.
- Pennsylvania, United States: In 2021, 18 of Pennsylvania's 65 eligible hospitals participated in the rural global-budget model, covering about 125,000 Medicare patients.