The health care landscape in the United States continues to be transformed by powerful market forces and hospitals everywhere face an array of daunting competitive challenges: navigating the shift from traditional fee-for-service to value-based payment models, raising investment funds for capital projects, negotiating reimbursement rates, and operating in an increasingly sophisticated financial environment.

A new report from the University of Iowa-based Rural Policy Research Institute (RUPRI) Center for Rural Health Policy Analysis highlights how rural, generally smaller, hospitals confront these same market hurdles while also trying to manage care for a decreasing population that is often older, sicker, and poorer than that of their urban counterparts. These challenges have prompted many rural hospitals to consider affiliations with larger, regional health systems.

The RUPRI analysis, The Rural Hospital and Health System Affiliation Landscape – A Brief Review, shows continued growth in system affiliation among both metropolitan and non-metropolitan hospitals, including Critical Access Hospitals (CAHs), from 2007 to 2016. Metropolitan hospitals affiliating with systems increased from 61.1 percent in 2007 to 73.5 percent; non-metropolitan hospital system affiliation increased from 40.9 percent to 48.6 percent, and non-metropolitan CAH system affiliation grew from 36.6 percent to 42.8 percent over the same period.

The RUPRI researchers recommend rural hospitals assess potential affiliation opportunities and understand the various options along the “spectrum of integration.” The authors suggest that affiliations defined by “interdependence” may best serve rural hospitals and their communities because rural hospitals can remain independent while pursuing affiliations that will address their financial, operational, and clinical needs.

Researchers outlined five steps rural hospital leaders should use to determine if a potential affiliation would prove beneficial:

1. Understand what the hospital should offer the community and region and whether a potential affiliation would help achieve that goal.
2. Gather information from hospital and community stakeholders about the advantages and disadvantages of an affiliation, and what value the rural hospital may bring to the affiliation.
3. Assess the hospital’s current capabilities and financial resources to establish the hospital’s value to stakeholders and potential partners.
4. Prepare a formal request for proposal (RFP) for affiliation. A formal RFP may bring unexpected partners or reveal the hospital’s openness to structural options with partners in the same region.
5. Negotiate governance and control to protect an appropriate level of governance and management authority.

The full report is available on the RUPRI Center for Rural Health Policy Analysis website https://www.public-health.uiowa.edu/rupri/ .