Ballad Health to collaborate with Harvard Medical School  and ETSU on rural health research

Published 12:22 pm Wednesday, June 3, 2020

Study will address competition and hospital closure in rural America

JOHNSON CITY — Ballad Health announced today that Dr. Michael Chernew, the Leonard D. Schaeffer Professor of Health Care Policy and the Director of the Healthcare Markets and Regulation Lab at Harvard Medical School, will lead an independent study to evaluate hospital competition in small rural markets, and how service offerings and expenses are affected by rural hospital closures and mergers. Conducted in coordination with the East Tennessee State University Center for Rural Health Research, this work will help provide a more comprehensive understanding of health and health care in rural America.

Dr. Chernew has extensive experience in health care market research, including health care spending growth, novel benefit designs, payment reform, Medicare Advantage and pricing in commercial health insurance markets, the causes and consequences of rising health care spending, and geographic variation in spending and spending growth and quality. In addition to being recognized with multiple awards for the quality of his research, Dr. Chernew is a member of the Congressional Budget Office’s Panel of Health Advisors, a research associate of the National Bureau of Economic Research and editor of the American Journal of Managed Care. Dr. Chernew was recently named chair of the Medicare Payment Advisory Commission (MedPAC), on which he previously served as a member from 2008-2012 and as vice chair from 2012-2014.

“The acute care hospital industry has undergone substantial restructuring during the last few decades, and in recent years this frequently involves health systems that stretch across markets and state lines,” said Dr. Chernew. “While several studies have examined the effect of mergers and acquisitions on prices and quality, most have focused on urban markets. Small rural and non-urban markets differ in ways that could affect the social benefits and costs of hospital consolidation.

“The study announced today will examine the competitive dynamics of small hospital markets characterized by areas with relatively low population density and a small number of competing hospitals. Hospitals in these markets typically employ a substantial proportion of the local population and have a significant influence over the local economy. Recent data suggest that many hospitals in these small markets are struggling financially and failing to keep pace with the adoption of the latest technology and best practices. The project will:

1. Identify and study small markets with three or fewer hospitals and assess how these markets have evolved over time, including predictors of hospital closure and acquisition among hospitals in these markets and whether they are purchased by chains from outside of the market.

2. Measure service offerings and expenses in small markets and assess how these have evolved over time and how they are affected by closure and merger, including estimating the availability of high expense services, and hospital expenses, to create benchmark levels that can be used to judge over or under capacity.

“Health policy should be driven by the facts, and this analysis will provide much-needed information about the dynamics in rural and non-urban markets and what happens to health care in those markets due to a variety of pressures these hospitals face,” said Alan Levine, CEO of Ballad Health. “Given the massive number of rural and non-urban hospitals that are failing financially, we hope this study, wherever the data takes it, will inform future policy decisions by Congress, the administration and other enforcement agencies as we try to better understand why so many hospitals are struggling. Once we have this information, it could prescribe a new path forward.”

This latest announcement follows on a partnership between Tennessee Governor Bill Lee, the Tennessee Legislature and Ballad Health last July to create the Center for Rural Health Research at ETSU — a multidisciplinary institute for research impacting rural health. Over a 10-year period, Ballad Health’s $15 million contribution commitment was matched with nearly $10 million by the governor and Tennessee legislature.

At the time of the creation of the Center for Rural Health Research at ETSU, Governor Lee said, “I believe the Center for Rural Health Research at ETSU is going to be a major contributor to solving problems that have been developing in rural America for decades. This center will be a leader on this issue and will attract partners from all over the country.”

Dr. Randy Wykoff, the dean of the ETSU College of Public Health and director of the Center for Rural Health Research, said, “We know that health is driven not only by health care services, but income, education, race and a host of other so-called social determinants. ETSU’s highly ranked public health program will combine with the best health care economics team in the country at Harvard to build knowledge that will help bridge research and policy gaps in rural and non-urban health.”

Ballad Health is an integrated health care system serving the Appalachian Highlands — 21 counties of Northeast Tennessee and Southwest Virginia — as well as Northwest North Carolina and Southeast Kentucky. Our system was created to improve the health of the people we serve. Ballad Health operates 21 hospitals, including three tertiary medical centers, a dedicated children’s hospital, community hospitals, three critical access hospitals, a behavioral health hospital, an addiction treatment facility, long-term care facilities, home care and hospice services, retail pharmacies, outpatient services and a multispecialty physician group. Learn more at www.BalladHealth.org.