The Journal of Science and Business Research
ISOLATION AND RELATIONSHIPS:
Some Determinates of Health Purchasing
Decisions in Rural Montana
Sam J. Allen, MBA, FACHE
Abstract
Much of the population of the United States is served by healthcare organizations that are considered "rural." In some areas, "rural" may only indicate a few miles driving distance from a major urban area. In other areas, as in much of the state of Montana, the term "rural" may truly be synonymous with "isolated." This article examines the results of six community health needs analyses performed in rural areas of Montana.
The patient-self-reported factors which may tend to affect an organization's ability to retain patients for hospitalization, and the factors which may tend to affect a physician's ability to retain patients for care are examined and compared for rural health care organizations both closer to, and more isolated from urban centers. Patient-self-reported usage of "alternative medicine" practices is discussed. Finally, patient-self-reported factors that most strongly influence a patient's care decisions are discussed.
Several observations and conclusions are drawn, which might allow the small, rural, and/or isolated health care organization to better serve its patient base, and therefore better compete for the retention of patients in the local area.
Introduction
Within the last decade, several authors have discussed the concept of "outmigration" of rural persons, in relation to seeking or obtaining medical care. Much of the work, however, has roots in either academic research or as forums for otherwise policy-making debates.
Within the last few years, I have had the opportunity to become involved in the process of conducting several community health needs analyses. From this work I have become convinced that the future of healthcare provision in the smaller markets will necessarily be driven by a conscious consideration on the part of the provider of two factors: 1) what the consumer wants (indeed intends) to buy, and 2) how the consumer decides which, among competing products, is right for her/him.
This article summarizes the results of six community health needs analyses, conducted in rural areas of Montana, and surmises some of the factors that may cause consumers to choose one over other, seemingly equivalent health care offerings or products.
It is of note that the surveys included in this work were all conducted with very specific organizational goals in mind. For instance, one survey delved specifically into whether the organization should build a new hospital building, another whether the organization should formally affiliate with a large urban medical center, two with whether the organization should enter into specific new service lines, and two to identify community trends and feelings toward the local health care products. In actuality, therefore, there were many unique questions on each survey, in as much as each was designed to probe one or more specific concepts important to the particular geographic area and organizational objective.
This article, however, focuses on two common areas of information which were addressed on each survey: firstly, general satisfaction with, and utilization of the hospital portion of the organization, including questions relating to why purchasers might use another hospital, and secondly, general satisfaction with, and utilization of the community's medical practitioners, again including questions concerning why purchasers might use practitioners in another community. A third area, information related to purchasers use of "alternative" medicine services demonstrates data from five communities; and a fourth, the factors which influence a person's choice of healthcare products, demonstrates data from four communities. A set of demographic data was also collected. The surveys consisted of paper questionnaires mailed out to all households in the hospital's perceived service area. The results were compiled from all surveys actually returned.
About the communities
Several aspects of the six communities studied deserve some explanation. The communities designated A and B represent areas with truly isolated health care organizations, although B is very much more isolated than A. Both represent the only health care enterprise within 35 miles. In the case of A, there are 2 other competitors with comparable or slightly larger hospitals within 40 miles, another small but complex hospital within 45 miles, and a much larger, but still small hospital within 55 miles. Community B has one competitor with a larger hospital 35 miles away, and a much larger, but still small hospital 85 miles away. Both are at least 200 miles from the closest large metropolitan area with 300+ bed hospital offerings. In this study, communities A and B are termed "isolated." In both cases, all physicians (practitioners) are employed directly by the hospitals.
The communities designated C & D, conversely, are much nearer to large metropolitan areas (with 300+ bed hospitals.) Community C is within 50 miles from its metropolitan area, and has an additional competing hospital of similar small size within 35 miles. Some of the local residents commute to the metropolitan area for employment. Community D is 100 miles from its metropolitan area, and has a larger, but still small competing hospital 45 miles away. In both cases some or all of the local physicians are employed by large health care organizations in the nearby metropolitan areas, or they are in private practice, but in no case is a physician employed directly by the local (rural) hospital.
The community designated E is unusual in the respect that it is within 60 miles of a major metropolitan area with a 125 bed hospital, and has many persons who actually reside either out of state, or in other areas of Montana, most of the year. Other than the nearby metropolitan area, there are no other competing healthcare offerings within 75 miles. All of the local physicians are employed directly by the hospital.
The community designated F is within 35 miles of a metropolitan area with a 100 bed hospital and 60 miles of another metropolitan area with a 125 bed hospital, and within 45 miles of another hospital of similar small size. Many of the local residents commute to the first metropolitan area for employment. The local physician is in private practice, and a mid-level practitioner is employed by the hospital.
Rates of retention of hospitalizations in the local facility
Support for the local hospital offerings may be judged in several ways. An obvious measure of support, however, is the percentage of all hospitalizations which are accomplished within the rural community. Retention rates of hospitalizations in this survey ranged from 20 - 40 percent, which is similar to the finding of Buczo.1
The retention rate of hospitalizations for a rural facility is undoubtedly a complex process that depends on a number of factors, and indeed those factors appear to vary, depending on the relative isolation of the hospital. "Isolation" in this case likely has to do with the driving distance to a large, urban referral center.
By examining Figure 1, the chart showing the location of hospitalizations, it is clear that truly isolated facilities (hospitals A & B) have two characteristics not seen in less isolated areas (hospitals C, D, E, & F) - first, both A & B exhibit loss of hospitalizations to both major and minor competitors. Rural organizations which are less isolated (communities C, D, E, & F) lack either major or minor competition (or perhaps both), with a major referral center often taking the place of the other competitors. Second, a truly isolated organization may be able to keep a greater percentage of hospitalizations for itself, than can non-isolated organizations. Hospital A demonstrates the highest retention rate of hospitalizations and the second lowest rate of loss to a major referral center. Hospital B is actually more isolated than A, but does not have a physician - it is staffed by a physician assistant only. It is unknown whether it might exhibit hospitalization and loss rates similar to A, if it indeed had a physician. A "major competitor" in this case would be a facility of up to 100 beds, within 50 miles, and in a town with a population up to perhaps 45,000. A "minor competitor" would be a facility of up to 40 beds, within 50 miles, and in a town with a population up to perhaps 5,000.
Figure 1
Patients in communities C & D are not isolated by large driving distances from major healthcare referral centers. In both cases, the referral centers capture a major portion of the rural hospitalization market, and in the process effectively eliminate, or at least greatly diminish, the number of health care competitors in the surrounding area, and thus diminish or eliminate competition between the rural facilities.
Community E captures local hospitalizations similar to C & D, and its nearby city competitor captures slightly fewer hospitalizations (from the rural community) than in the other non-isolated areas, due no doubt to the fact that a significant number of persons utilize only the medical facilities in their "home" (out of the area or out of state) area.
Community F is undoubtedly influenced by two facts: 1) of all the communities represented, it likely has the largest proportion of residents who drive to the urban area to work, and 2) the local physician does not participate in the managed care products offered by those urban employers.
By studying Figure 2, the graph concerning the reason a patient might use an out of town hospital, again driving distance may be imputed to be a determinant. In every case,"The (hospital) services I want are not available locally," is the factor cited most often. This is consistent with at least the implications of Borders.2 Note however, that patients in the two most isolated areas (hospitals A & B) cite this less often. Patients in every other community cite this more often (than in the isolated communities.) Additionally, patients in communities C, E, & F reference the highest rates of "I was referred out by my doctor." The concept of "The (hospital) quality is better out of town," is significant in C & D, and very significant in community F. The perception of "It costs less out of town" seems to be only an incidental factor.
Figure 2
A brief examination of Figure 3, which reflects satisfaction with the local hospital, clearly demonstrates that there is little perceptual difference in satisfaction with the rural hospital, regardless of whether the hospital is isolated, or whether it captures many or few hospitalizations. The concepts of quality, friendliness, etc., therefore do not appear to be determinants in the choice of a hospital for hospitalization, and this is consistent with Hagopian.3
Figure 3
Rates of retention of physician services
Figure 4, the graph concerning the question "Where is your doctor" demonstrates that most people utilize a physician in their community. This is consistent with the findings of Borders.4 One instance where this was not true is community B, where the local practitioner is not a physician, as explained above. Whether this is true in other communities without physicians is not known. The other instance where the retention rate was less than 50% was in community F. None of the data directly addresses managed care steerage of patients; however it is noted that 11% of the respondents in community F reported that the local physician was not funded by their insurance. Only hospitals C & D exhibit any significant level of managed care penetration, and in both cases, the hospital payor mix was 48% commercial insurance, and 39% (in C) and 40% (in D) Medicare insurance. In both communities C and D the physicians participate in the managed care panels.
Figure 4
Community A (isolated) now becomes even more interesting, in that it has not only the highest retention rate of hospitalizations, but a local-physician utilization rate essentially equal to that of the two non-isolated facilities C & D, (where we see a much lower local hospitalization rate and higher utilization of the regional referral center.)
An examination of Figure 5 shows that the scores reflecting satisfaction with physician services are again generally centralized around "good."
Figure 5
An examination of Figure 6, the graph concerning why patients might choose a physician in another town sheds little light on the matter. This graph is markedly similar to Figure 2, the graph concerning the use of other facilities for hospitalization. "The (physician) quality is better elsewhere" is again a major reason cited. Interestingly, in spite of the fact that the concept of physician quality seems to centralize around "good" on the satisfaction graph, in communities C & D the perception of "better quality out of town" is shown to be a major consideration when patients choose to use an out-of-town physician. Of particular interest is the fact that in five of the six communities, a full 20% or more of persons who use an out of town physician stated that one of their reasons is that they have more privacy out of town." The (physician) services I want are not available locally" again scores highest in every locality.
Figure 6
In order to attempt to gain some understanding concerning what the desired, but unavailable physician services are, we now turn to Figure 7, the graph concerning the use of specialists. But we quickly see that there is no discernable difference in specialist usage between towns that are isolated (A) and less isolated (C & D.) (Remember that town E represents a patient base where many persons actually live out of the area most of the year.) By comparing Figures 7 & 6, the graph of the use of specialists and the graph of reasons for using a physician elsewhere, we come to the inevitable conclusion that the desire to use specialists is not the only factor driving patients out of their local areas. Nor does Figure 5, the graph concerning patient satisfaction with their physicians clarify the matter - satisfaction seems to be universally pegged around "Good."
Figure 7
Without being overly assertive that we absolutely have the answer, it seems that two or three basic assumptions can be made. First, the degree of isolation in terms of driving distance of a community from metropolitan areas with large medical centers is extremely important. Greater isolation causes patients to use the local health care offerings, both in terms of hospital services and physician services. Less isolation causes patients to use the metropolitan referral center services more often, particularly for hospitalizations. Second, the concept of "satisfaction," in reality, has little effect on the choice of provider. Satisfaction scores for hospital services and physician services alike are typically centered on the notion of "good," regardless of the degree of isolation. Rather, patients will generally choose a physician in their local community. The amount of support which those physicians express for the local health care offerings appears to be a function of their financial relationships, particularly in the case of employment. Finally, the rate of usage of specialist physicians does not vary appreciably with the degree of isolation.
What's in the future?
We know that "alternative medicine" is becoming extremely popular across the United States. A study of Figure 8, the graph concerning the use of alternative medical delivery reveals that the mainstream alternative of chiropractic is widely used in Montana. The self-reported usage rate of chiropractic in the five communities reporting in this survey, ranged from 20% - 40%. Similarly, the use of nutritional supplements is widespread. As these, and other forms of alternative medical practice become more commonplace, the prudent health care organization should carefully discern which ones it might incorporate into its own operation, or at least partner with in some way - and thus reap the benefits of added volumes, revenues, and goodwill.
Figure 8
What drives healthcare decisions
Having all of this information in hand, we now come to the final question, concerning what exactly are the factors which cause health care consumers to choose one of seemingly equivalent health care products over another.
Based on the four communities which answered this question, we can clearly see in Figure 9 that the advice or suggestion of the patient's physician is by far the most important factor. In fact, the trio of "the advice of my physician, family, & friends" are consistently ranked as the three most important factors.
One additional factor deserves mention. In communities D, E, and F the concept of a seminar by a physician or nurse scored relatively well, while in community A it did not. Whether patients in relatively less isolated areas are more accustomed to the "advertising" of various seminars, and thus give those more credibility, is of course unknown, but that notion seems likely. The impact of a systematic and continued series of seminars in isolated areas might be well worth the investment.
Figure 9
Conclusion
There is one inevitable conclusion that can be extrapolated from this material. The degree of market penetration of a rural health care offering likely depends on a complex combination of the relative accessibility to an urban medical center, the support for local healthcare expressed and exhibited by the local rural medical staff, and the expectations of the community members. Rural facilities which are farther from a "city" and which have supportive local physicians will retain a larger percentage of work in the local community, than other rural facilities.
The data certainly supports the notion that physicians in rural areas practice in alignment with the financial incentives and relationships which they enjoy. Just as in big cities, rural health care organizations should strive to create relationships with physicians that stress an alignment of financial goals. Physicians should be expected to be both loyal to the community and the organization. Although the data at this point is limited, rural healthcare organizations should likely emulate their urban counterparts in using various marketing strategies. Particularly, educational seminars and programs may be an avenue to expose patients to the medical expertise available in the rural settings. Similarly, although news letters in general were not ranked as highly influential in decision making, they very well may be the perfect avenue for rural healthcare to sell itself, through articles written by (or attributed to) physicians, and the use of testimonials, thank you letters, and the like - which represent endorsements by family and friends. Finally, the rural organization should diligently strive to create and maintain a culture of quality service and customer centered care.
The concept of performing a community survey, which indeed started this whole discussion, may be seen as a way to discern not only information required for specific strategic decisions, but valuable information for daily operation and marketing, which is not available in any other way.
Notes on Figures:
Figure 1
The question which generated information for this graph asked where a respondent or a member of their family had been hospitalized in the past twelve months.
The answers represent: “In (the name of the local town)”; “In (the names of several other nearby communities where respondents might have been hospitalized)”.
Figure 2
The question which generated information for this graph asked what the reasons were that a person would have chosen to be hospitalized in a location other than their local hospital.
The answers represent: "The services I want are not available locally"; "I was referred out by my doctor"; "The quality is better out of town"; "The costs are less out of town"; "I have more privacy out of town"; and "My regular doctor is out of town".
Figure 3
The question which generated information for this graph asked respondents to rate their satisfaction with the local hospital, on a 1 – 4 scale.
The answers represent the ratings of: "Overall quality"; "Competence of the nurses"; "Overall costs"; "Cleanliness of the facility"; "Friendliness of the staff"; "Service in the Emergency Room"; "Overall experience with the outpatient services"; and "Overall experience with the billing and business office departments".
Figure 4
The question which generated information for this graph asked respondents to specify the location of their "regular family physician".
The answers represent: "In (the name of the local town)"; "In (the names of several other nearby communities or cities where respondents might have a physician)".
Figure 5
The question which generated information for this graph asked respondents to rate their satisfaction with the local medical providers, on a 1 – 4 scale.
The answers represent the ratings of: "Overall quality"; "Bedside manner"; "Overall charges"; "Able to get an appointment quickly"; "Availability at night or on weekends"; "Friendliness of the office staff".
Figure 6
The question which generated information for this graph asked respondents to indicate the reasons why they would choose a physician in a community other than their own locality.
The answers represent "The (physician) services I want are not available locally"; "The (physician) quality is better out of town"; "The costs are less out of town"; "I have more privacy out of town"; "It takes too long to get an appointment"; and "I only go to specialists".
Figure 7
The question which generated information for this graph asked respondents to specify which specialist physicians they had seen in the past year. The percentages demonstrated represent the percentage of all respondents, which saw the specific specialty. Many other specialties were represented, but the ones shown were the six most frequently cited.
The answers represent: "Cardiology"; "Orthopedics"; "Pediatrics"; "Obstetrics and Gynecology"; "Urology"; and "Podiatry".
Figure 8
The question which generated information for this graph asked respondents to specify which alternative medicine disciplines they had used within the past year.
The answers represent: "Chiropractic"; "Nutritional therapy / Nutritional supplements"; "Aroma therapy"; "Acupuncture"; "Spiritualist healer".
Figure 9
The question which generated information for this graph asked respondents to rate the importance of various factors which might influence their health care service purchasing decisions, on a 1 – 3 scale.
The answers represent the ratings of: "The recommendation of my physician"; "The recommendation of a family member"; "The recommendation of a friend"; "A newsletter from the hospital or from a doctor"; "A seminar put on by a doctor or nurse"; "An ad on the television"; "An article or ad in the newspaper"; and "An ad on the internet".
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About the Author:
Sam J. Allen holds a Master of Business Administration Degree from the University of North Texas, and is a Fellow in the American College of Healthcare Executives. He owns his own consulting practice, specializing in the strategic positioning of health care organizations, including focusing those strategies on community expectations, and interim organization management including financial turn-around strategies.
Acknowledgement
Partial funding for several of the community health needs analyses cited in this work was provided through the Montana Health Research and Education Foundation.
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