Understanding the PA Rural Health Model
The Pennsylvania Rural Health Model (PARHM) was embarked upon to test whether fundamentally changing how rural hospitals are compensated could enhance their financial stability and improve the associated community health outcomes, all while aiming to reduce overall healthcare costs. With participation from 18 hospitals across the state, the model managed to assist in stabilizing finances and improving care quality, despite a few challenges. Notably, the program’s seven-year framework includes six performance years, of which 2024 marked the final year. Through its execution, the program bestowed approximately $238 million in additional financial benefits to participant hospitals.
“The PARHM has helped maintain financial viability at Punxsutawney Area Hospital. It has transformed wellness and healthcare avoidance with the desire to generate less fee for service transactions at the same time as expanding the healthcare services being provided in our community.” – Jack Sisk, President, Punxsutawney Area Hospital
Core Components of the PARHM
- Stakeholder Engagement: One of the principal strategies for successful change reflected the importance of engaging stakeholders early. Identifying and understanding the interests and needs of every stakeholder ensured a shared vision and alignment of purpose throughout Model implementation.
- Transformation Plans: An integral component of the Model was the hospital transformation plans. Hospitals were required to identify SMART goals, focusing on areas like care management and substance use, thus encouraging a shift from volume to value-based care.
- Quality Metrics and Accountability: The Model emphasized the use of existing quality metrics to gauge progress. Transformation plans encouraged hospitals to craft goals around vital healthcare outcomes, such as reducing avoidable hospital utilization and improving preventive care access.
- Data Infrastructure: Robust infrastructure was required to facilitate the data collection and management associated with hospital transformation plans, global budgets, and quality reporting.
- Working with Multiple Payers: In collaboration with various payers like Medicare, Medicaid, and commercial insurers, the Model was able to cover a significant population, highlighting the importance of multi-payer alignment in achieving broad healthcare goals.
- Continual Feedback and Adaptation: Feedback mechanisms were vital, as they allowed ongoing adjustments and refinements to be made in methodology, tactics, and strategies, helping to maintain alignment with the overarching goal of improved rural health care access and outcomes.
What’s Next for Pennsylvania
As formal implementation of the PARHM concluded in 2024, the model allowed for a two-year transition period for participants to determine a path forward. Sixteen of the eighteen hospitals have opted to continue with participation in the transition period, working alongside the RHRC, payers, and other key stakeholders to develop next generation funding strategies rather than revert to fee-for-service (FFS). In 2025, the RHRC received funding from the Appalachian Regional Commission to continue this exploration, offering an avenue for sustainability of the progress made to-date through the PARHM.
Getting Started with Alternative Payment
The lessons learned from the PARHM offer valuable insights for other states or regions considering similar healthcare innovation journeys. At RHRC, we take pride in sharing our unparalleled expertise to help guide broader implementation efforts of new alternative payment approaches, with the ultimate aim of enhancing rural healthcare quality, access, and sustainability. Our work in Pennsylvania and other states, including Vermont, demonstrate our pragmatic approaches and real-world experience that can assist in anticipating and navigating the potential issues unique to rural healthcare and what it takes to manage and achieve changes of magnitude.
Contact us at support@rhrco.org to arrange a meeting with our team and discuss how RHRC can help facilitate transitions to alternative payment and value-based care.
