Being a small, rural hospital poses a special set of challenges. But the innovative ways in which these under-resourced organizations manage to meet their needs present new opportunities for vendors.

"The smaller market segment is a lot less penetrated," says Steve Puckett, vice president of acute care systems at Atlanta-based EHR-maker NextGen, whose parent company, Quality Systems, recently acquired (in separate deals) Opus Healthcare Solutions and Sphere Health Systems. Each develops software and services for the inpatient market.

Folded into NextGen, which already has a "strong penetration into a lot of the rural ambulatory setings," the acquisitions will allow the firm to cater to historically underserved hospitals with 100 beds or less.

"We have seen demand grow in the rural and community marketplace due to the Stark relaxation, the emergence of health information exchange initiatives and impending incentives resulting from ARRA," says Scott Decker, president at NextGen Healthcare. "It became clear that we could meet this demand by broadening our offering to include both ambulatory and inpatient solutions.

"In addition, clients have expressed the need for a single, 'cloud-based' technology platform that can be leveraged across ambulatory and inpatient care settings," Decker adds. "These new acquisitions afford us the necessary capabilities to address client needs and fill a void currently present within the rural and community hospital marketplace."

For NextGen, says Puckett, "it was a great opportunity. We saw that people didn't have a lot of choices, so we wanted to respond to that."

The reasons the small-town markets are underserved aren't a surprise. "Price point is probably the biggest one: There's not a lot of money there so most vendors are dealing with a very small margin," says Puckett. Many larger vendors aren't inclined to dip their toes in those waters, preferring "the high end of the market, where a lot of the people play because the margins are a lot greater there."

Also, in rural areas, "you can't find the talent that's needed to support the large infrastructures that you need for a lot of these [EHR] systems," says Puckett. Moreover, he adds, up until recently, rural hospitals simply "haven't demanded it like they have in some of the [more urban] areas. "With new incentives – and, soon enough, penalties – "I do think the market will grow significantly."

Some small providers are choosing a slightly different direction. Consider tiny Columbia Basin Hospital in Ephrata, Wash. (pop. 6,800).

"Being both a rural and a critical access hospital, with the legislation to move to meaningful use of the EMR we started looking at the options available," says the hospital's CEO, Robert F. Reeder.

The decision was made to contract with Phoenix Health Systems for IT support, which implemented Medsphere's OpenVista EHR. Saving money by availing themselves of both outsourcing and the open-source model, Columbia Basin – which was built more than half a century ago – was able to undertake some much-needed modernization at considerable savings.

One initial EHR option considered "was going to cost us $1.5 million … and then it would be about $450,000 a year for maintenance," says Reeder. "And that was just more than what we could swallow with our finances."
Columbia Basin is composed of a 25-bed critical access hospital, a 29-bed nursing home, a 32-bed assisted living center, and an attached provider-based rural health clinic. Reeder wanted an EHR that could be integrated across those facilities without breaking his budget.

OpenVista, which is the open-source version of VistA, the widely used enterprise grade healthcare information system developed by the U.S. Department of Veterans Affairs (VA), was just the trick. And Phoenix Health Sytems were just the people to install it.

"I was very pleased with their solution: not just to implement a software system, but to provide the IT services that a small critical access hospital could utilize," says Reeder. "Phoenix was talking about being on-site five days a week, and providing our total IT support services. And the fee structure that they came up with was within our budgetary constraints, and it worked really well. Plus, we got the EMR system we were looking for, so we can meet meaningful use.

"We're an older facility," Reeder says. "As I like to tell people, 'A '57 Chevy with original parts is a classic. But a '57 hospital with original parts leaves something to be desired."