How Telemedicine Can Improve Rural Hospital Financial Performance

By Tom Fee
Director, North America
Hippo Technologies, Inc.

Rural hospitals have endured years of shrinking demand. More than 100 rural hospitals have closed over the past decade in the US, and over 600 additional rural hospitals (30% of rural hospitals) are at risk of closing in the near future. As regional urban health systems have increased their coverage, the local rural hospitals have been reduced to “treat and transfer” urgent care centers. Yet, rural hospitals can play a significant role in managing patient care for most chronic disease episodes and recovery periods after critical care stays. What rural hospitals lack is the specialist physician support to direct ongoing patient care. With new Telemedicine technologies, remote specialist care is now readily available. These innovative solutions can implement remote care in an affordable, practical way that is safe and secure in both hospital and post-acute settings (e.g., nursing home, home care, etc.) New assisted reality technology (AR headsets) provides quick access to remote specialists, assisted by local caregivers.

A recent study in The American Journal of Managed Care (AJMC)1 interviewed 20 rural hospital CEOs to find that Telehealth had improved perceptions of quality and satisfaction, but failed to improve their financial performance. The CFOs reported that limited reimbursement, low volumes, preference for in-person care, and insufficient broadband were key challenges to telehealth’s financial viability. To make real impacts in revenue, rural hospitals need to evolve beyond simple Telehealth transactions to Telemedicine episodes that include in-person caregivers or “clinician extenders” who can assist with patient diagnosis and care, directed by remote specialists. That’s the essential difference between Telehealth and Telemedicine.

The AJMC study defined Telehealth as a computer-based remote consultation between a clinician and a patient. This primary form of Telehealth provides minimal revenue and often deters patients from visiting the hospital. Rural hospitals need increased patient volumes to improve their financials. The next evolution in virtual care, Telemedicine, overcomes most of the barriers that rural hospital CFOs identified in the study by building personal relationships, collaboration, volumes and reimbursement for local hospitals.

Unlike Telehealth, Telemedicine relies on a local caregiver, such as a nurse or other allied healthcare professional, to provide hands-on diagnostic and treatment support for remote physicians, using wearable Assisted Reality headsets like Hippo Virtual Care. Specialist physicians require more advanced qualitative diagnostics that local caregivers can provide to support diagnostic decisions for more complex cases. Hippo provides a “through the eyes of the clinician” viewpoint, enabling the remote specialist to examine a patient virtually as if they were physically in the room. Telemedicine enables specialist home visits for patients with chronic conditions, as well as remote specialist consultations in rural hospitals. This new connection with a local caregiver creates strong patient care relationships that build trust and patient loyalty for local rural and community hospital care.

Telemedicine also fulfills the promise of regional health systems to provide local specialty care support for their affiliated network of rural hospitals. Using Telemedicine solutions, urban specialist physicians can easily support distant rural clinics and inpatient care without the unproductive “windshield time” driving for hours weekly to visit affiliate hospital locations. A physician assistant or clinician extender can collaborate with a remote specialist physician to provide local patient orientation, tests, diagnostic support, education and treatment. This improves physician productivity and keeps the patient care volume in the local facilities.

These innovative Telemedicine collaborative care teams can keep specialty care in the local hospitals and clinics, recovering much of the volume lost to regional health systems. This includes clinic visits, chronic care management and hospital stays. Regional specialists will be more comfortable transferring patients back to their local hospital for recovery, after their critical care event is resolved. This will provide inpatient volume for rural hospitals and reduce the load on regional hospitals. It will also bring the patient back home, closer to their family for the majority of their stay. Discharging patients from local rural hospitals versus regional centers also improves the patient transition of care, recovery and outpatient follow-up volume for rural caregivers.

Increased rural hospital volumes due to Telemedicine-supported care can improve reimbursement. Both the caregiver-assisted remote specialist visits and the increased inpatient stays generate more revenue than primary care telehealth visits. CMS and Health Plans pay more for in-person care. Telemedicine also enables the shift of chronic care management from the regional center to the local rural hospital, reducing the travel and delays inherent in distant care management. With a closer chronic care management relationship comes patient confidence and trust in the staff, safety and outcomes of their local rural hospital – leading to increased ambulatory and inpatient volumes.

Telehealth has undoubtedly provided improvements in rural hospital quality and service levels, but their very survival requires increased volume and reimbursement. Telemedicine provides the benefits of Telehealth while also delivering new levels of patient access, regional collaboration, local volume and revenue. CFOs can find a winning formula for reviving their bottom line with a Telemedicine program that utilizes local clinician extenders working with remote specialist physicians in the hospital, nursing home and in the home.

Tom Fee leads Hippo North America and the Hippo@Home subsidiary, developing workflow solutions for Hippo customers in hospitals, post-acute care, physician practices, long-term care and home self-care. Tom has over 38 years of healthcare leadership experience, helping organizations with innovation, performance improvement, technology implementation, agile development, customer engagement, organizational development and strategy. Contact him at:

1 Lori Uscher-Pines, PhD, “Financial Impact of Telehealth: Rural Chief Financial Officer Perspectives”, American Journal of Managed Care, December 5, 2022,

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